Some Things to Consider Before You Retire

The email was happy, newsy and wistful: my former co-worker Claudia has changed jobs happily and is doing well, but she dreams of retirement on a daily basis. "I guess it's a matter of looking at maybe nine more years of working and having the sense that it feels like forever," she wrote. "I can't imagine the wonder of taking my 401K and running off to a desert resort like yours. It's a dream and sometimes it feels really far away."

I could hear much of my pre-retirement self in Claudia, remembering how I had envisioned absolute bliss in a place far away. I wanted to inject a note of caution in my reply to Claudia without dampening her spirits or her dreams for the future. Now more than three years into retirement,  the dreams have leveled out to daily reality.  This reality is terrific overall. But there are some considerations I'd like to run by Claudia -- and anyone else dreaming of retirement -- at a point when such information might make a positive difference.

What would I encourage Claudia and other pre-retirees to consider?

Carefully weigh money vs. time. When you're living on Social Security and savings, money dwindles faster than one ever imagined. Assuming that you're healthy, it might be wise to think about working an extra year or two if that is an option, to get a higher Social Security monthly payment and to build savings. It's a highly personal decision. If you feel time urgency, due to health concerns or ominous talk of company layoffs, on the other hand, time may mean more than money. It makes sense to plan your exit strategy carefully.

Think financial diversity. Savings  and investments should be diversified among taxable and non-taxable savings. The disadvantage of having all one's savings in a 401K is that these funds count as income when withdrawn. This may lead to the taxing of your Social Security benefits if this money withdrawn causes you to go over the quite modest income limit for a tax-free Social Security benefit. Money taken from a Roth account or regular savings is not taxable and doesn't cause that income spike.

Realize that what looks good on the surface may not wear well. An active adult community may feel initially like a fantastic resort but the appeal can fade when you realize you're not a joiner, find people largely tiresome, have little interest in activities offered and use the recreational facilities less and less as you age.

You may find that you prefer to visit resorts in various locations for vacations. Life in an amenity-filled active adult community can be wonderful if you actually use the facilities. It can be great if you prefer the company of peers rather than a more age-diverse community.

But if you find being around a lot of people your age or older depressing, this will not be a good choice for you. Also, if you envision having grandchildren visit frequently, check the rules about length of stay allowed and children's access to the recreational facilities. At some over-55 communities, children are allowed in community pools only certain hours of the day. At our community, children are not allowed to use the Sun City pools at all, having to go over to the all-ages side of the development and pay to use the pool there. It's advisable to know the rules -- and to realize that these are generally very firm rules -- before you make a commitment to buy.

Don't be hasty about moving to a new location. Try retirement out where you're currently living first. Life in your current location might be quite different when you're not working. When Bob and I were imagining retirement, we could hardly wait to get out of our suburban planned community that seemed to be focused on young families while marginalizing seniors. We felt isolated, despite having lived in the same home for 29 years. Neighbors were so busy commuting to distant jobs that there didn't seem to be time to socialize. We felt we had to move in order to live in a more elder-friendly environment. And so we moved to a new Sun City in rural Arizona.

Yet, looking back, there were a number of people we knew who had retired to our former hometown, sometimes to be near children and grandchildren and sometimes to take advantage of all the close by amenities in a very walkable city.

There are a lot of reasons we're happy that we moved: some lovely new friends, a larger, nicer home for half the price of the old one, wide open spaces, little traffic.  But there is a dark side: except for a supermarket, bank, Starbuck's, McDonalds, a UPS store and a nice little Chinese restaurant, which are a mile away, and two excellent libraries within 10 miles, we're a good 25-50 miles from many of the services that were within walking distance in our former community.  The distance isn't a particular issue right now and, as the economy improves, some essential services may start to pop up nearby. But if this doesn't happen and we get to a point where driving is difficult to impossible, we'll be marooned.  This area doesn't offer the handy senior bus service that was readily available where we lived before.

If we were doing this over, we might still very well move here. But we also might have waited a year or so to see how living a retirement lifestyle might play out in our previous community. Everything was walking distance or a very short drive. City buses and senior vans abounded. It was, in hindsight, quite a good place to grow old.

Think about what it would mean to live at a distance from long-time friends and family. Fantasies of your loved ones visiting may be largely that: people have busy lives and limited budgets.  They may not choose to spend all their vacation time with you.

And some people, because of frail health or financial constraints, aren't able to travel at all.

Bob and I have a separate guest house just for visiting friends and kin. In over three years, that guest house has been occupied for perhaps a total of two weeks by a sparse assortment of family and close friends.

In order to help my friend Mary, whose husband is slipping into the throes of dementia and whose caregiving tasks are ever more demanding, I've been flying over to Los Angeles at regular intervals. It's a win-win situation: I want to help and I love seeing Mary and John.  But what I am able to offer from a distance is much less than I would be able to help if I still lived nearby.  And there are times when Bob and I miss family and old friends more than we ever imagined.

A sense of loss can sneak up on you. The emotional impact of stepping away from work life into a whole new life is often larger than one expects. You may have feelings of loss you never could have imagined when you were working.

I've seen many newly retired people feel a sharp loss of identity. Sometimes this is truly unexpected. Bob, a former hydraulic engineer, could hardly wait to retire from commuting, office politics and long hours of doing what he thought he didn't love. Until he stopped doing it -- and found that he had enjoyed being the go-to person for complicated pump applications, a guy even competitors would consult. He was widely known as The Pump God. (In the pump business, most competitors are friendly and share ideas and resources regularly.)  He could have continued to work part-time or have taken advantage of some consulting work post-retirement, but said "No" to all offers before realizing that he rather missed it.

This is not to say that he doesn't enjoy retirement thoroughly. He is one of the busiest people I know with his exercise, his music and his reading as well time spent with his friends Theo and Wally. But there are times when I sense a bit of wistfulness and a wanting to be useful to others in the way he was before.

There are other people in this community who look like lost souls: they don't know what to do with themselves now that they're no longer working. They play golf and then they come home and watch the golf channel. Others just sit in front of the t.v. all day or play endless card games and complain about how long the days are.

I would caution would-be retirees to consider available part-time work or consulting options with their present employers. Recent surveys show that while many new retirees plan to work at least part-time in retirement, it can be difficult to get hired at our ages and in this economy. If you're thinking about keeping your hand in your previous career, check out opportunities with your current employer before your retirement plans are firm.

Also, I would advise anyone contemplating retirement to rediscover long-ago interests and hobbies set aside in the busy years of working or to discover new interests somewhat before retirement so that there is always something to do, to learn, to look forward to on a daily basis.

Claudia and others now seeing retirement as a distant prospect may be stunned to find how quickly the years fly by. These can be years to plan and prepare so that their retirement will turn out to be an even happier, more rewarding time than they're imagining!