Early Retirement - Is that what You Really Want?

Early retirement sounds tempting. It’s a goal for many folks. But for some, it falls into the category of: “Be careful what you wish for. You might just get it!”

Planning for retirement, particularly early retirement, usually tends to focus on the financial factors: What are my annual income needs? How much will be supplied by my company pension and from Social Security? When should I start Social Security? How fast will I need to draw down my retirement funds to supplement my income? Should I draw first from IRAs and 401(k)s or from savings and other investments? How do I protect my assets if I should need long-term care? How do I make sure my spouse is secure at my death? Will I run out of money? How do I account for inflation? And on and on …

Wow! That’s a lot to think about! Fortunately, these issues can be addressed readily by working with a trusted financial planner.

Once your retirement goals are established and your current financial picture is well-understood, a competent financial planner can then identify barriers that might stand in the way of reaching your goals and suggest pathways to bypass those barriers.

But money is just a part of the picture. Let’s assume that your finances are in order and you can retire safely. What about the “soft stuff”? Are you REALLY ready to retire? Let’s explore some of those non-financial issues.

How will you spend your time? Daily rounds of golf and the long-overdue painting of the bathroom can get old quickly, particularly if your friends are still working or have moved away. It is a particular challenge for early retirement, having just left a 25 or 30-year working career where you had an active, daily, structured routine in which you were likely called-upon to problem solve continuously.

Remember, you may be looking at a 30-40 year retirement period – quite possibly longer than the total of your prior working years.

What are your spouse’s plans? It is common, particularly with early retirement, that spouses will not retire at the same time. That can present challenges. The working spouse may have increased expectations of the retired spouse regarding responsibilities around the house or may become resentful if the retired spouse sleeps in every morning. Also, the retired spouse, given newly-found free time, may want to travel more, go south for the winter – something the working spouse is not as free to do.

Are you prepared for a change in social contact? Work is a ready-made, automatic source of social contact. Losing touch with co-workers can be difficult under normal retirement circumstances. Early retirement may amplify the problem. Replacing such contact with a new or expanded social network takes time and energy.

While these and other non-financial issues may be on your mind as you plan for early retirement, there are some things you can do to avoid or minimize these hurdles:

 • Prepare starting now, regardless of your age. Think about what you truly want to do and how you’ll handle some of the issues noted previously.

 • Don’t retire from work, retire to something else. Simply quitting work may not necessarily create a fulfilling, enjoyable retirement.

 • “Practice” your retirement before you retire. Hobbies are a good example. Your best chance to make this work is to develop outside interests and hobbies well before you clean out your desk and receive your gold watch.

• Consider volunteer opportunities. Whatever your capabilities are, it’s a good bet there are plenty of non-profit organizations that have the perfect fit for your time and talents. As with hobbies, cultivating these interests during your working years will make your community-service choices easier to make and more rewarding.

• Talk it over carefully with your spouse and reach a common agreement on expectations.

• Consider a next career. This is becoming a more popular option these days as people retire from their current careers earlier. In fact, a recent AARP survey of 1,500 employed workers, ages 45 to 74, showed that nearly 70% plan to work in some capacity in their “retirement” years.

Looking back on decades of work and life experiences, this is an ideal time to consider what you would enjoy doing most in your work life – what you would “really” like to do. Once you’ve decided, get the necessary training or education, if called for, then just do it! This may be part or full time or may shift from one to the other. A next career provides a great psychological transition to ultimate full retirement as well as additional financial benefits.

James Terwilliger is a personal financial planner with the Wealth Strategies Group, Canandaigua National Bank & Trust Company. He can be reached at 585-419-0670 ext 50630 or by email at jterwilliger@cnbank.com.