Retirement Downsides and Happy Surprises
I came across an interesting article I found on Morningstar. I originally found the article “When Retirement Has Its Downsides” and poked around a little more and found the happy version, quite literally with “The Happiest Surprise of Retirement”. The basis of both articles started with a simple forum thread to take a look at the ups and downs of retirement. Since I plan to retire in less than 7 years, I thought I would take a look and see what I could learn.
Since it’s raining today in my neck of the woods, I decided to start with the Downsides. Now my first thought from the title was a bunch of 65 year old retirees complaining about how their children never come to visit, gas is too expensive, and my dentures keep falling out. I cleared out all those older generation stereotypes of what they would say and read on.
‘More Stressful Financially Than We Had Ever Contemplated’
The first item they mentioned was the financial stress they dealt with during the market of 2008-2009. Losing so much money with the bear market was a real shock for those especially if they retired so close to the market crashing. One retiree said we took our beating, another mentions that retirement has been more stressful than we had ever contemplated.
So there is a history lesson in all of that. When you get close to retirement, become diversified as possible in dividend paying stocks, bonds, CD’s, money market funds, real estate, small business, and rainy day money sitting there in case a huge storm hits. It should also be mentioned that holding on for dear life in your rain suit is also important. Some contributors mentioned staying put during the crisis because eventually everything has come back, also making sure you stop trying to outsmart the market, the person in the mirror can screw it up even more. This is one of the reasons my retirement investments are in low cost index funds, I put the money in and keep putting the money in, that’s it. I also plan to have rental income as part of my retirement diversification which is another stream of income.
‘I Never Dreamed That Money Market Funds Would Yield 0%’
I have only seen low interest rates in the time that I have had money, so I have never looked on the other side of the coin looking for 5-7% no risk money market accounts. So far this has benefited us with very low interest rates on mortgage debt and student loans. I have no intentions to rely on my money market interest income now or in the future, I will only consider this as a dead money account and expect no return on my money.
Another topic that was combined in the money market discussion was the cost of health and health care. While it will be difficult to see my health 30 years down the road, I will look at some of the shorter time frame of years 7-30. I plan to start maxing out my H.S.A account in the upcoming year, then buy private health insurance/Obama Care after I retire from work, and when I turn 60 I will buy long-term care insurance. This is not going to be the answer to every health concern that arises, but it should cover a great deal. In my opinion more important than all of those things mentioned above is to eat right and be active, which I take seriously and will continue to do so.
‘A Less Stimulating Social Environment’ and ‘More Than A Little Bored’
I think I’m going to have to cross this bridge when I get there, but travel, family, and friends certainly jump out at me when I read this statement. I plan to be more involved in charities with a hands on approach plus I am starting a great financial family right here on Even Steven Money, I can share with others about my own experiences and learn from others along the way. One thing that cannot be understated enough: retirement is not sitting in a chair watching TV, if that is the definition of retirement, I am not retiring rather I am maintaining financial independence to pursue interests and dreams without limitations.
Let’s get to the good stuff, “The Happiest Surprise of Retirement”. Sing it Pharrell…
‘I Don’t Know Where I Would Find the Time to Go Back to Work’ and ‘Not Having to Set an Alarm Clock’
Many retirees are happy to stop the nose to the grind stone 9-5 work they have been doing for 30 or more years. An overall level of being content came over many of the retirees, maybe it’s because they don’t have to hear the 5:30, 5:45, and 6:00 am alarm to get up, shower, get dressed, and make their way to work. Some of these very people went through all 12,000 days till retirement, they are ready to relax.
‘I Have Gone from a Type A Person to About a B+ Person’
This one rings close to home for me and many out there with plans to retire early through financial independence. One of the contributors said that they can be active as they want with plenty of things to do, but they have the option to sit back and enjoy life. Staying busy with things you enjoy while interacting with people keeps you relaxed and develop a level of patience you may not have had before.
‘A Delightful Daily Treat’
The ability to spend more time with your spouse, friends and family was spoken on a regular basis. I think this is the opposite of ‘A Less Stimulating Social Environment’ and ‘More Than A Little Bored’ from above. I think this is what you make of it with social interaction, if you are stopping downtown for a lunch with old co-workers or your niece, you are probably pretty happy.
One thing that I loved reading which is pretty similar to my thoughts behind Even Steven Money is taking all the experience you have from your history of financial lessons and sharing them with others, many discussed financial forums on Morningstar and Bogleheads alike as a personal enjoyment.
‘I Am Going to Live a Lot Longer Now That I Am Taking Care of Myself’
I am happy people are starting to take care of themselves, if time is all they need to go running or for a bike ride this is the perfect time to incorporate exercising and eating right. Your health is equally important and should be taken just as seriously as punching numbers in your excel spreadsheet to create a budget. You can become rich and die early, but you can’t die early and then become rich.
‘Preparation Paid Off When the Time Came’
Many of the contributors were met with quite a good report card for their financial wellness. I think my favorite was one of the contributors mentioning how much they were able to save by not going to work with fuel costs, car maintenance, business attire, meals and so on. Just off the top of old noggin, if I stopped working today, I would easily stop spending $200-$300 per month and that’s on the already tight budget I use today.
So what can we all take from this? Retirement has some happy surprises and certainly some ugly downsides. The most important thing to do is learn from history and others mistakes and of course successes. Some of these people retired in one of the toughest economies in the last 50 years, but the successful ones weathered the storm and were prepared. Make sure we are properly funded if not over funded when we retire, enjoy being debt free, and prepare for medical costs by maintaining our fitness and health while also insuring properly for some of the larger medical costs. Are you prepared for the ups and downs?
What’s your biggest fear about retirement? Is there anything that you have been putting off?
Photo courtesy of retirehappy.com