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The traditional retirement was mandatory retirement at age 65. Today, people want to retire earlier and earlier. Why? Some hate their job and can't wait until they attain some level of financial comfort. Others picture a life of leisure as depicted in the London Life Freedom 55 ads. For others, early retirement is a status symbol that demonstrates they have achieved a certain level of financial success.
Is retirement all that it is cracked up to be?
According to a recent study, 43% of Americans felt that adjusting to retirement was difficult. Another research study determined that 20% of retirees have so much difficulty transitioning to retirement that it leads to depression. And another study showed that 40% of those who retired at age 55 or younger went back to work in some way. Some of these people went back because they had to for financial reasons. But others went back to work because they wanted to.
What does it take to make retirement the best time of your life?
Start with a vision
Have you ever tried to put together a jigsaw puzzle without the picture on the box? The puzzle is easier to do if you have some sense of what it is supposed to look like when finished. Retirement planning is similar because you need some sense of what you want from retirement. What are you going to do with your time? What activities would you like to do?
Plan financially
Obviously, one of the most straightforward answers to the question is to be prepared by having enough money. The next most logical question is, How much is enough? The answer depends on how much you need and the kind of retirement you want. I've often said that a successful retirement is not just about how much money you have saved, but about what you have saved versus how much you need.
Plan your activities
Although retirement and money go hand in hand, planning your activities is probably more important. What are you going to do with your time will often dictate how much money you need. Far too often people get this mixed up because they focus on the financial side first, when it is understanding what you want to do with your time that determines how much money you need.
Many will know that you don't always need a lot of money to live a happy retirement. For example, Alice was busier than she ever was before retirement. She filled her time with activities, hobbies and even some part-time work that she found rewarding. Retirement is a time to do the things that you did not have time to do before you retired.
Some people retire with lots of money only to find disappointment. For example, Joe was a workaholic who loved his work. When he retired, he found himself missing the routines. He did not have a guiding purpose to get up in the morning. He also missed his friends at work.
A successful retirement happens when retirees find that balance between using their time effectively while having sufficient money to sustain their lifestyle. The coordination of time and money is the ultimate goal.
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