We all think life will be better and easier after retirement. To a degree, that assumption is correct. Creating financial independence means you are no longer beholden to a job or employer. This gives tremendous freedom. However, with that freedom comes greater personal responsibility. As you make the transition from employment to retirement, here are a few areas you should focus on:
Have a plan for keeping busy.
Don’t retire with nothing to do. However, “keeping busy” is not a way to spend the lifetime of experience and skills you have acquired. You have not been put out to pasture. Your long-term plan should include finding a way to use your skills that are enjoyable and provide sense of worth. Do you have hobbies that you enjoy? Is there a local charity or your church where skills can be put to good use?
Consider your priorities carefully.
You aren’t just retiring from a job; you’re retiring to financial independence. Even though you are retired, you will still have to prioritize because you may find there aren’t enough hours in the day to do everything. Learn how to prioritize the day when no one is telling you where to go, when to be there or what to do. I often warn clients about telling too many people they are retired. Offers start pouring in from friends who think the new retiree has nothing to do. If “yes” becomes your default answer to every offer, you will soon find you have little time for yourself.
Make a lifestyle plan, not just a list.
The first year of retirement is the reorientation stage. A lot of clients tell me about the list of things they want to do when they retire—fix things around the house, play more golf, and travel. This is more of a “to-do” list then a lifestyle plan. A good lifestyle plan should involve working on things that bring meaning and fulfillment into your life.
Rebuild your social network.
Many people discover a large part of their social network included people connected to their employment. The local community senior center may be a place to start. Many senior centers offer recreational and social opportunities. They often hold luncheons and dances and organize day trips to places like historical sites and shopping destinations. Senior centers also may have clubs or groups for different interests.
Create time for health and fitness.
Some people think this will be easier in retirement because finding time to exercise regularly was a constant challenge during the working years. Don’t assume this will happen on its own unless you make it a priority. Sitting around the house isn’t just bad for your mental health, it’s bad for your physical health, too. Time for fitness can include enjoying a walk at the mall or riding your bike. Some gyms have discounts for retirees and have fitness instructors who are trained to work with older adults. Combining exercise with a nutritious diet can keep you healthy and protect you from various health issues. A good place to start may be to prepare more meals at home using ingredients that are good for your health. The internet makes it easier than ever to browse for recipes that are nutritious and can be prepared easily.
Monitor your spending.
Nobody likes to live on a budget, but it is important to monitor spending early to confirm that you are living within your plan. Make small adjustments to your spending if needed that allow your investment portfolio to grow with inflation.
Determine when to draw Social Security Benefits.
Those who retire below full retirement age for Social Security need to understand the earnings limit rules if they plan to draw benefits right away. Anyone who retires mid-year may have already earned more than Social Security’s annual earnings limit. If you’re younger than full retirement age during all of 2020, Social Security deducts $1 from your benefits for each $2 you earn above $18,240 until the year you reach full retirement age. Then they deduct $1 from your benefits for each $3 you earn above $48,600 until the month you reach full retirement age.
There is a special one-year rule that applies to earnings during the first year of retirement. Under this rule, an individual can get a full Social Security check for any whole month he or she is retired, regardless of yearly earnings prior to claiming benefits. A person who is under full retirement age for the entire year of 2020 is considered retired if his or her monthly earnings are $1,520 or less.
Retirement can be the best time of life, but you must have a plan in place and a willingness to adapt to changing circumstances. Without a plan, many retirees find themselves sitting in front of the television. Studies have found that the average retiree spends approximately 43½ hours per week watching television. Don’t replace the hours you spent at work sitting in front of the TV. Spend your first year in retirement building your new lifestyle plan!
- Learn to prioritize your day even in retirement.
- A good life plan involves working on things that bring meaning and fulfillment into your life.
- Adopt a healthy diet plan in order to maintain a healthy weight and stay active and independent.
1 The annual earnings limit usually is increased each year to reflect inflation.
2 Source: How Work Affects Your Benefits. SocialSecurity.gov.
3 Source: Age Wave, Ken Dychtwald, July 5, 2018