If I only knew then what I know now. Way back when I was 20 thoughts of retirement never crossed my mind. There were plenty other distractions. I could not even imagine being retirement age. But funny thing – here I am.
I have learned a thing or two over the years whether through my personal experience or those of friends and family. If I could share with the 20-year-old-Dave any words of wisdom to prepare for the road ahead, it would go something like this:
Prepare for the non-financial side of retirement
Everyone knows it is critical to save enough to subsidize the retirement lifestyle you hope to live. But too few consider the importance of preparing beyond finances. What will you do to find meaning in your day? Who will you become once you are no longer defined by the person you were on the job? How does your spouse envision retirement? It is too easy to waltz into retirement without preparing for the coming 10 or 20 or more years ahead. Without genuine preparation you risk boredom and dissatisfaction during a time of life that should be anything but.
Hands off retirement savings accounts
Over my 30 year career I moved from job to job quite a bit. One consequence was repeatedly facing the option to cash out 401k accounts. In most cases the temptation proved too great. Too often I withdrew the funds, paid the 10% additional tax fine and had money to do as I wanted. The only good thing is I did not use the money to splurge but rather to pay off bills that had accumulated. Still I sacrificed potential growth over multiple years that could have added to my ultimate retirement nest egg. “Leave it alone and let I grow” would be my suggestion to the younger me.
Don’t count on staying at the same company
In my career as a sales manager focused on start-up companies there was not much latitude when it came to hitting target goals. If quota was not achieved, no matter how unreasonable or inflated the number, your job was on the line. I had a pretty good batting average over all but there were times when missing a quarterly target cost my job.
Message to younger self: be prepared to work at many different companies over your working years. The days of spending an entire career at one place are gone.
Understand the financial realities of retirement
Retirement will not be cheap. According to Fidelity healthcare costs for the average couple retiring in 2016 will ring in at $260,000. Healthcare insurance rates are sky rocketing with double digit yearly increases becoming the accepted norm. Everything is getting more expensive while your income remains fixed.
No one knows what unplanned health event their future may hold. My parents experienced this recently when my dad had a stroke. Initial hospital charges were huge and the bills keep coming. Thankfully they have a Medigap plan which helps pay healthcare costs not covered by Medicare including co-payments and deductibles.
In retirement you want to do those things you have dreamed of. Realizing those dreams will generally not be cheap either. When budgeting don’t forget to account for those things you have been waiting all your life to do.
Note to 20-year-self: put those dollars aside now so you can do all you dream of when you finally have the time to do it.
Getting retirement right takes practice
Since this will be our first time at it, none of us has any real experience being retired. It is possible you may not get everything exactly right from the get go. Be prepared to be dynamic, to go with the flow. Make changes where necessary, try new things, and don’t be too hard on yourself. There is no deadline to get everything right. So long as you continue to learn as you go you are making progress.
When I was around twenty I began a life-long commitment to good health setting aside time for regular exercise and attempting to eat a decent diet. I would remind the younger me that good habits now will continue to be good habits later in life. Exercise is an important part of any happy retirement. Keep weight training for muscle and bone strength. Continue yoga and stretching for balance and flexibility. Get some cardio to keep the heart healthy. And don’t neglect exercise for your brain one very important “muscle” to keep in shape. The retirement journey will be that much more enjoyable when you are healthy in mind and body.
It might have been helpful to hear these words of wisdom when I was younger. But I cannot complain. I am retired with my wonderful wife in a beautiful part of the world. We are healthy and happy. And I just started a part time job pouring wine at a wonderful little winery walking distance from where we live. All in all, retirement has turned out a-okay for us.