The plan is simple: work until age 65, then retire and enjoy the good life — golfing, travel, gardening, being a grandparent, and sleeping in. It’s what you’ve been looking forward to for the last forty or so years, but you could be in for big surprises. There are quite a few important issues that no one tells you about retirement.
Many people have trouble adjusting from the working world to a life of leisure. Here are 5 things you need to know that most people don’t talk about:
1. Depression is Common
For many people, their identities become wrapped up in what they do for a living. When their careers end, unless there is something else to fill that space, depression can become an issue.
A 2013 report from the Institute of Economic Affairs showed that retirement increases your risk of depression by 40 percent. Two of the biggest contributors to that statistic are social isolation and inactivity. That’s why so many experts on the mental health aspects of retirement recommend coming up with a plan for retirement beyond your finances.
Few people like to talk about depression so it is no surprise that it is one of the things that no one tells you about retirement. So, be prepared. When you retire, what will motivate you to get out of bed and do something?
To ward off feelings of disconnect and despondency:
- Stay in shape. Remaining active as you age helps your physical health and your mental well-being.
- Get up at the same time each day and develop a routine. Retirees fare better when they have a plan for the day – even if it’s just meeting up with friends or hitting the golf course.
- Give back to others. Seniors who volunteer have a greater feeling of mental well-being than those who don’t.
- Stimulate your mind. Retirement doesn’t have to be all leisure. Some of the happiest retirees continue working a reduced schedule or pursue higher education.
- Retire to something, not just to get away from the daily grind: here are 120 ideas for what to do in retirement.
- Find purpose. Here are 3 ways to find meaning in retirement.
2. Divorce Rates Among Retirees Are Skyrocketing
A 2013 study from Bowling Green State University found that the divorce rate among couples age 50 or older doubled between 1990 and 2012. In 1990, fewer than one in ten people over the age of 50 divorced. By 2012, that number was more than one in four.
One of the reasons for the increase in divorce among retirees may be that we’re living longer. When you reach retirement age, you may have decades of life ahead of you. Who wants to spend that time with someone you just don’t get along with anymore? That, combined with a reduced stigma surrounding divorce, both from a religious and societal perspective, means people are less likely to stay in a marriage they no longer find fulfilling.
However, it’s important to consider the financial aspects of divorce at or near retirement. Older divorcees tend to be less financially secure than married or widowed adults, especially women. In fact, according to a study published by the National Bureau of Economic Research, the later a woman divorces, the more likely she is to need to continue working full time later in life. Suddenly the nest egg that you thought was sufficient to support a comfortable retirement doesn’t stretch far enough when it needs to support two separate households.
When creating your retirement plan, be honest about your future prospects and if you fear that a break up could possibly be in your future, look hard at what that might do to your finances. A tool like the NewRetirement retirement planner can enable you to run various what if scenarios. Learn more about divorce after 50.
3. Some Retirees Drink Too Much
Some people leaving the working world feel like they’ve lost their status, identity, social support, or even their purpose. In some cases, these feelings of loss lead to an increase in alcohol consumption and even alcohol abuse. Earlier this year, a study based on National Health Interview Surveys from 1997 to 2014 showed that drinking alcohol is increasing among those age 60 and older, especially women. During that time period, the number of male drinkers in that age bracket rose by 0.7 percent per year. Among women, the number increased by 1.6 percent per year.
While those seem like small increases, a 2009 study in the American Journal of Psychiatry found that roughly 27 percent of women and 49 percent of men aged 75 to 85 drink beyond the recommended guidelines for their age.
In general, the CDC recommends limiting drinking to no more than one drink per day for women and two drinks per day for men, but even that can be too much for some. As people age, they often become more sensitive to the effects of alcohol and heavy drinking can make some health problems – such as osteoporosis and high blood sugar – even worse. Drinking and taking certain medications, even over-the-counter medications or herbal remedies can be dangerous or even deadly.
4. You Might Spend More than You Have Budgeted
Traditional retirement planning recommends aiming for 80% of your pre-retirement income each year to maintain your quality of living in retirement. The thinking is that once you retire, certain expenses, including housing costs, commuting, dining out, payroll taxes and retirement savings will decrease.
However, a recent survey from the Employee Benefit Research Institute found that almost half of households spend more in the first two years of retirement, with 28% spending more than 120% of what they did in the years leading up to retirement.
That overspending is not on necessities such as food and health care but on discretionary spending such as travel and maintaining a more expensive home than they need. It’s understandable that after a lifetime of working, new retirees may want to treat themselves a bit. However, overspending in the early years of retirement can significantly increase your chances of not having enough to last a lifetime.
Even the best-laid retirement plans can come unraveled if you aren’t proactive about setting a reasonable budget for retirement spending — the more detailed the better — and sticking to it.
The NewRetirement retirement planner let’s you set different levels of spending and earning for different phases of your retirement. This tool makes it easy to get started planning your future finances, but it addresses many details not covered in other tools which can mean a more reliable plan for your future. Forbes Magazine calls this system “a new approach to retirement planning” and it was named a best retirement calculator by the American Association of Individual Investor’s (AAII) and CanIRetireYet.
5. And… Some Good News: Most People Report Being Happier than Ever Before
With all of the data on depression, drinking, divorce, and overspending in retirement, it’s easy to believe that retirees are some of the most miserable people on the planet, but that is far from the truth. Age Wave and Bank of America Merrill Lynch recently partnered on research that found that a majority of retirees (93%) feel their life is as good or better than it was before they retired.
What’s not surprising about that finding is that money is not the primary factor in a happy retirement. Regardless of net worth, most retirees enjoy the increased flexibility and freedom that retirement brings.
No matter how little or how much money they have, 86% of retirees report enjoying inexpensive leisure activities, such as reading a good book, hiking a nearby trail, and spending time with their grandchildren.
In an article for Inc., author Jeff Haden summarized some of the behaviors and characteristics that lead to the happiest retirement, according to financial advisor Wes Moss’s book, You Can Retire Sooner Than You Think. Among those:
- Happy retirees own homes averaging $300,000. That’s less than the current average sales price for new homes in the U.S., so owning luxury real estate is not necessary.
- Happy retirees own their homes or are about to pay off their mortgage. Owning your home outright provides a sense of security and frees up money for other purposes.
- Happy retirees have 3.5 core pursuits. That’s activities and interests they love to pursue, which might include volunteering, traveling, sports or other hobbies.
Financial planning for retirement is essential, but just as important is planning for the aspects of retirement that money can’t buy: social connections, a sense of purpose, and passions beyond your career. As you near retirement age, start focusing on how you’ll use your new-found flexibility and freedom. You may encounter a few unexpected twists along the way, but the more you plan for the “soft” side of retirement, the better prepared you’ll be to confront those inevitable bumps in the road.
Ready to plan your emotional AND financial future?
- Explore 41 tips for happiness, health and wealth in retirement
- Create a detailed retirement plan with the NewRetirement retirement planner
Imagine and plan for a happy retirement
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