You Want to Retire, But Are You Mentally Prepared?

May 09, 2022

When we think about retirement, we pay attention to only the financial aspect of it most times. How much will we need per month? How much do we need to save? Will we have enough? The truth is retirement is more than just those questions. You also want to ask yourself if you are mentally prepared for that shift in your life. You're thinking, "Why would I need to be mentally prepared to quit work," but you may be surprised. Even people with healthy nest eggs can face boredom or depression in retirement.

They also may share a common fear of retirement, running out of money. So how can new retirees try to calm these worries?

There are a couple of things you can do to help ease the leap into retirement. First, make a gradual retirement transition and get some guidance from a financial professional.

Gradual Transition

As mentioned above, a swift break from your career that you have been at for 30-plus years may affect you more than you think. Here are two examples. In the first example, imagine a well-paid area manager at a financial institution whose personal identity is closely tied to his job. He has worked and partnered with many friends that he considers very close. They have been there for kids' birth, graduations, and marriages, and they are more than just co-workers. Every day there is a conversation; think about it, you see your close co-workers way more than you see other friends. Then, he retires, and suddenly, those relationships aren't there anymore. Sure he can still talk to those people, but the proximity of seeing them every day could be weird. It can be tough to adjust to this new life and find a sense of purpose.

On the other hand, if he prepares for retirement years in advance of his farewell party by exploring an encore career, engaging in self-employment, or volunteering, he can retire with something promising ahead of him. Suppose he broadens the scope of his social life to see friends and family regularly and interact with both older and younger people in different settings. In that case, his retirement may also become more enjoyable. It won't be such a shock when he "clocks out" for that last time.

The interests of a retiree can change over time, and they may need to adjust their lifestyles in response to this evolution.

Professional Guidance

A lot of the worries can be tied to the financial anxiety of retirement. You aren't earning a regular paycheck anymore, at least in the conventional way. You see it in couples who have $100,000 saved for retirement; you see it in couples who have $1 million saved for retirement. Their retirement strategies will be tested in real life now, not on paper. All that careful preparation is ready to come to fruition, but there are always unknowns. You could address this by working with a professional.

Working with a professional can hopefully help you plan for several scenarios to alleviate some of your worries. Most retirees that we work with have the main fear of running out of money in retirement.

It can be linked to retirees fearing they will spend too much too soon. A great way to tackle that fear is to plan on a tiered spending approach in retirement. Account for the fact that you will spend earlier on and see how that affects your ability to not run out of money. After the initial surge of spending in retirement, you also will account for healthcare in retirement. Working with a professional, you will be able to lean on their expertise regarding estimated costs of healthcare in retirement, especially if you plan on retiring earlier.

So, remember that there are two ways it can affect you as you approach retirement, financial and mental.

If you would like to discuss your retirement challenges, we can help. You can schedule a discovery call today to learn how we could help.