The Importance of Being Self-Reliant in Retirement

From my US News & World Blog

Most baby boomers are at various stages of preparing for retirement, depending on whether they were born at the beginning or end of their generation. The smart ones realize that effective planning starts well before retirement age. Important calculations need to be made to determine what it will take to survive financially throughout the retirement years. Post-work lifestyles and passions also need to be defined, and consideration for unexpected events should be taken into account whenever possible.

Counting on others to provide for us in our old age is a risky proposition. In the U.S., the ratio of working-age citizens between ages 15 and 64 supporting those over 64 is currently 5:1. By the year 2050 this ratio will drop to 3:1, according to United Nations data. In China things are even worse. They will move from the current 9:1 ratio to 3:1. And in Japan the ratio will be 1:1 in 2050.

It is important to rely on ourselves and our own resourcefulness. Society is changing to deal with the aging demographic with less generous pension plans, longer working hours, and an increase in the retirement age. Back in the 1980s, 38 percent of people had traditional pensions. By 2008 the number dropped to 20 percent. If a traditional pension will not be part of our retirement equation, we need to fill in the blank with other investments and savings alternatives.

Don’t count on Social Security to foot your entire retirement bill either. With an average monthly amount of $1,230 paid at the beginning of 2012, it should only be viewed as a supplement to your other sources of retirement income. It is a piece of the puzzle, but should not be considered the entire solution.

Health demands and expenses will increase as we age. Fidelity estimates that a 65-year-old couple retiring in 2011 will need $230,000 to cover likely out-of-pocket medical expenses in retirement. And this estimate does not even include the cost of long-term care. Such burdens could prove catastrophic if we do not plan ahead with additional savings, health insurance, and long-term care coverage.

Most people approaching retirement would like the option to stay in their current home if they choose to and remain healthy enough to safely do so. Paying down your mortgage over the years provides flexibility, and the equity can be available for emergencies. Whether a decision is made to stay in the existing home or sell, having the option empowers senior citizens.

Remaining independent in retirement requires planning ahead, realistically evaluating your situation, and taking appropriate action to provide for your retirement needs. You can’t count on the government or your former employer to finance your retirement years. It’s something you need to take care of yourself.

Dave Bernard is the author of Are You Just Existing and Calling it a Life?, which offers guidelines to discover your personal passion and live a life of purpose. Not yet retired, Dave has begun his due diligence to plan for a fulfilling retirement. With a focus on the non-financial aspects of retiring, he shares his discoveries and insights on his blog Retirement–Only the Beginning.

Will Your Passion Dim in Retirement?

From my US News & World Blog

To enjoy a fulfilling and meaningful retirement, you need to identify what you are passionate about and figure out a way to pursue that activity. Living each day with the simplistic goal of just keeping busy can kill some hours. But to really enjoy retired life, there should be a purpose for each day.

Finding a passion that drives and excites you is not always easy. Just consider all the people who are drudging through life in careers they hate. If fully living each day were easy, everyone would have figured it out by now.

Once you have successfully identified a passion to pursue in retirement, there’s always the possibility that your passion for that activity could begin to dim. Over time you might not get as excited about what used to delight you. When this happens, your days may begin to drag on listlessly. Or perhaps your passion will become too expensive to afford when you are living on a fixed income and inflation slowly erodes your purchasing power.

A friend retired about twelve years ago from a fulfilling teaching career. Each day he was inspired to try to positively impact his students. He was a favorite among the students because of the passion he brought to the classroom and his clever ways of presenting otherwise boring material. When he retired, he knew exactly what he wanted to do: dancing and travel. So he became a dance instructor on cruise ships.

During the next ten years he danced the night away teaching novices the steps to ballroom dancing. As a passenger on various cruises traveling the world, he was able to fulfill his travel goals at the same time. He spent the early part of his retirement dancing with new people each evening while aboard a luxurious cruise ship sailing toward the next port of call.

Then, for some inexplicable reason, his passion for dancing and travel began to flicker. He found himself less interested in what had been giving meaning and inspiration to his retirement. Was he getting tired of the same thing? Had ten years of travel been enough to satisfy his bug to see the world? Although he is still a dedicated Dancing with the Stars viewer and remains physically fit, his desire to dance has diminished.

It is not surprising that the things that drive and excite us change over time. But it is scary to think that discovering your passion and pursuing it offers no guarantee of long-term satisfaction.

It may be that the best we can hope for in retirement is to pursue our passion for as long as it exists. The reality that a retirement passion may lose its luster at some point should serve as renewed motivation to keep at it while we are still drawn to an activity and to continue to search for new passions throughout retirement. Having more than one passion to pursue can help keep us engaged, should one passion lose its luster.

Dave Bernard is the author of Are You Just Existing and Calling it a Life?, which offers guidelines to discover your personal passion and live a life of purpose. Not yet retired, Dave has begun his due diligence to plan for a fulfilling retirement. With a focus on the non-financial aspects of retiring, he shares his discoveries and insights on his blog Retirement–Only the Beginning.