Adjusting to Retirement | Planning Insights

Anne Hussman |

  If you have saved and invested consistently for retirement, you may find yourself ready to leave work on your terms – with abundant free time, new opportunities, and wonderful adventures ahead. However, the reality of your retirement may not always correspond to your conception of retirement.  

Here are a few of the little things people tend to realize after settling into retirement: 
Your kids may see your retirement differently than you do. Some couples retire and figure on spending more time with kids and grandkids.  They hang onto that five-bedroom home even though two people are living in it because they figure on regular family gatherings.  Others move to another state to be closer to their kids. Then they find out that their children didn’t really count on having such frequent company.  

Keeping up a big home in retirement can cost big dollars.  If you move to another area, there is always the chance that the right job offer could make your son or daughter relocate just a few years later. Less than 10% of U.S. workers in their twenties and thirties stay at the same job for a decade.  The average American worker spends 4.6 years at a given job.    

Healthcare can take an unexpectedly large share of retirement income.  For example, Medicare falls short when it comes to dental, vision and hearing care. Medicare Parts A and B will pay for some things like cataract surgery and yearly glaucoma tests for people at risk for that disease.  It also covers dental procedures that are deemed necessary prior to another medical procedure covered under Medicare. These are exceptions to the norm, however, and as people’s sight, teeth and hearing become more problematic as they age, it can be frustrating to realize what Medicare won’t cover.

You may lose the impulse to work. Most retirees think about working part-time, but doing that may not be as easy as it seems. It is a lot harder to get a job at age 65 than it is at age 45 and part-time work tends toward the mundane and unfulfilling. On the other hand, consulting or other types of self-employment may be more satisfying and allow you to set your own schedule. 

Retirement income comes with income taxes. While retirees anticipate distributions from an IRA or an employer-sponsored retirement plan, few retirees map out a sequence or strategy intended to let them take distributions from retirement and investment accounts with the least tax impact. A tax efficient withdrawal strategy a) offers the potential to reduce the tax bite from all these distributions, and b) promotes greater longevity of retirement savings. Of course, health and longevity factors also influence withdrawal strategies.3 

Retirement is a transition, but it isn’t a solution. Some believe that retirement will wipe away all that is dull and restrictive from their lives. Retiring often leads to a rewarding new phase of life, but it won’t solve health issues, family dilemmas or business or money problems.  

You may have plenty of time on your hands. If you and/or your spouse have routinely worked 50-60 hours a week, it can be tough to cut back once you are retired. Your urge to be productive may persist, but sooner or later, you will find ways to stay busy.  Thinking about how you will spend your time in retirement before retiring is wise, as you don’t want to risk staring at (or climbing) the walls.  

Citations:
1 marketwatch.com/story/americans-less-likely-to-change-jobs-now-than-in-1980s-2014-01-10 [1/10/14]
2 ncoa.org/enhance-economic-security/benefits-access/how-to-get-help-for-dental.html [4/17/14]
3 tiaa-crefinstitute.org/public/institute/research/trends_issues/ti_taxefficient_1006.html [10/06]