Retirement Readiness

People have been nagging my friend Nora to retire for years, pointing out that she has an excellent pension plus 401K after 35 years with one employer.  They point out how comfortable her life could be.  But she has always shrugged the advice off with "I'm not ready." And people always look shocked, thinking that she has all the financial resources anyone could want, so what's the problem? But she hasn't felt ready emotionally to make this major life transition. Over time, it has struck me how wise she has been to recognize the considerable difference between financial and emotional readiness for retirement.

There are countless books, numerous online discussions and resources, an explosion of companies ready and willing to help with retirement financial planning. But the financial aspects of retirement, while important, are only part of the equation.

Emotional preparation and planning for this major life transition is as important as financial planning.  Until you know what you want to do and the person you want to be in retirement, the pieces of your new life in retirement won't fit. And all the financial planning in the world won't prepare you fully for life changes linked to the retirement transition -- or for the unexpected.

Perhaps the most important major adjustment in retirement is: to live fully with what is.

Bob and I started serious financial planning for retirement in our forties -- a little later than optimal, but still in time to set some sound financial practices in place and in time to give a lot of thought to the kind of retirement we wanted.  We saved as much as we could. We made the decision to keep living in our modest starter home and pay the mortgage down rather than move up to a grander place. We drove our cars as long as possible.

The last five years, we made major adjustments career-wise. I took a full-time day job in a large organization that offered pensions and 401k's as well as higher salaries than would have been possible elsewhere.  The private practice I loved, as well as my writing, were both relegated to evenings and weekends as I focused on saving money for retirement. It was also a good emotional preparation for retirement to have as my primary occupation a job I didn't especially like: any doubts or conflicts I might have had about leaving the full-time workforce were diminished in those five difficult years. Nora, who was my boss during those years, used to tease me that the job was "your retirement job" meaning that it wasn't my career and would thus be easier to leave without looking back. She was right. Bob worked several years longer than he had planned, compensating a bit by working four day weeks his last four years of employment. We were elated that our savings and home equity were growing steadily and that money would not be a concern.

We also prepared emotionally, as much as possible, for the day when we would step away from our jobs into the next phase of our life together. We asked ourselves what we most wanted to do in retirement and who we wanted to be after our long years of full-time work were over. We discussed life priorities. We explored places to live. We dreamed out loud -- imagining all the things we would do and passions we would re-discover in retirement. When work seemed most tedious, a quick retirement fantasy would bring back our good humor. We both thought a lot about who we were -- and the people we hoped to be.

By the summer of 2008, we had discovered and decided on the community where we wanted to spend our retirement years.  We dreamed of a nice, but not lavish, home there -- exercising, swimming, taking classes on a daily basis. We planned to buy a new car for frequent road trips and made plans for some more extensive, exotic travel. The future seemed blissfully set.

Then came the crash of 2008.  Almost instantly, 40% of our 401K funds and 33% of our home equity vanished.  We wondered if we would be able to retire -- as so carefully planned -- in April 2010. We wondered if we would ever realize any of our dreams.

We began to imagine working until age 70. As an option, that was a mixed bag. Bob's job was very secure, his boss didn't want him to leave and he could easily have worked five or six more years if absolutely necessary. But he had dropped down to four day weeks at age 62 and loved his day off each week. He was eager to move on to full retirement.  My day job wasn't nearly as secure. The department where I worked was in a state of reorganization. There were massive budget cuts in the organization (UCLA).  My job was considered non-essential and my boss Nora had plans to retire within the next few years. I knew I was highly unlikely to have a job there until age 70. We did the math over and over. We re-examined our priorities. And we decided to take the risk of sticking with our original plans to retire in April 2010.

It meant downsizing a few of our dreams and living with what is. But what is has turned out to be very close to that long-planned retirement dream.

We now live in that community we saw and loved in 2008 -- Sun City Anthem Merrill Ranch in Florence, Arizona.  While our home equity in California continued to free fall up to the day we sold our home of 29 years, what we came away with was more than enough to pay cash for our dream home here.  In fact, due to the plunge in real estate prices in Arizona, we were able to buy a much larger, more beautiful home here in Arizona than we had ever imagined. We chose not to buy that new car quite yet, realizing that our old car -- a 9-year-old Honda Civic, with low mileage and in excellent condition was up to any trips we might choose to take. We have decided to scale down some travel plans, realizing that extensive international travel was never high on our priority list and we have opted instead to restrict travel, at least initially, only to the places we have most wanted to see.

Life is still very good.  We're comfortable with the limits and tradeoffs.  And so much of our original plan is still intact: we are exercising every day, learning on a daily basis. I'm writing. Bob is making music. We're reading voraciously. We're learning to cook and eat in a healthy way. We swim and socialize more than we ever imagined. We have time to smell the roses and cuddle with our three beloved cats. Emotionally, our retirement is exactly what we had hoped and dreamed.

So if the economy has you wondering about your retirement future, it helps immensely to have a plan for retirement that makes sense emotionally. So, then, whatever happens or doesn't happen financially, you can find a way to have a satisfying retirement or semi-retirement.

Retirement readiness is a key in making sensible choices about which trade-offs and limits work -- and which ones don't work -- for you.

Retirement readiness means much more than straining on the leash to leave a job, office politics, long commutes and days when you feel your time is never your own. It means that you are emotionally ready to run toward something rather than away from something. It means you have an active plan for your immediate and extended future.

Here, from our experience, are the five most important considerations in emotional retirement planning.

1. Have a plan emotionally as well as financially.
How will you structure your life once you retire? Maybe you'll give yourself a transitional vacation and then pursue some new interests, old passions or both in leisure and/or in part-time work. Maybe you'll choose to tweak the lifestyle you have always had, substituting part-time work or volunteer work for full-time work.  What matters most is what feels right to you.

Particularly when your identity is very much tied in with your work, it's especially important to have a transition plan. Think very specifically: what aspects of yourself and your passions do you want to explore once you retire? Start pursuing these before you retire, if possible, to fine-tune your plans, deciding with a clear vision what is going to work for you once you leave your workplace.

My major retirement dream was to reconnect with the work that most defines me -- writing. In the last fifteen years before retirement, I avoided the financial uncertainties of writing by pursuing other careers and jobs that offered more security. I did a bit of writing here and there, but, on a daily basis, I missed it terribly.  However, I didn't plunge into writing projects immediately after I retired in April 2010.  I was so exhausted and depleted that I made a very conscious decision to take a six-month vacation: to rest and exercise and settle in to my new neighborhood without giving any thought to work.  It felt wonderful.  And six months later, I felt refreshed, renewed and ready to start writing again.

It's important to know emotionally what we need as we near and enter retirement. And it's important to examine these needs through the prism of what is. Are you prepared to live on less? What can you do without?

2. Have a clear vision of how and where you want to live.
 Do you need to be near family and see them on a daily or weekly basis? Do you want to break away from the familiar and explore a whole new area and lifestyle? Have you and your partner discussed candidly what it would mean to each of you to relocate? Have you tried out new locations in all seasons? Florida during buggy, humid summers? Arizona and Nevada during blazing hot summer days? Colorado in the winter? It's important to experience a retirement spot in the most challenging -- as well as most attractive -- seasons.

It's also vital to ask yourself if a relocation decision is being made with your own, independent plans and interests in mind. Planning to relocate in order to be closer to adult children and grandchildren can be risky. Some people I know here have adult children who have had to relocate away recently in search of professional advancement or by necessity in a challenging job market -- and their parents are left living in a place they may or may not have chosen, on their own, to spend their retirement years. And some find that life near the kids isn't what they had imagined when they pulled up stakes. Their kids have lives of their own and their parents, while dearly loved, are not necessarily at the center of their lives. Some parents deal with this shift well at close range-- but some don't.

3. Know that retirement can greatly impact your marriage.
 Even long, stable marriages can be shaken by the changes that retirement brings.  Planning your lives together and apart is an important part of retirement readiness.  Do you envision doing some things on your own and some things with your partner? Or do you hope for constant togetherness?

Togetherness can take on a whole new meaning when it is 24/7 -- especially when your time together has been much more limited during your working lives.  A wife who has not worked outside the home may feel that her territory and time has been invaded when her husband is home for good.  Even a dual-career couple can struggle with personal priorities and needs for space after retirement. It can help to anticipate such needs before the fact and plan accordingly.

Bob and I enjoy spending most of our time together. But he likes movies more than I do, so he often goes to the movies on his own while I use the time alone to write or to pursue another interest that we don't necessarily share. One surprise during retirement has been our sometimes conflicting desires to socialize. I like getting together with neighbors and friends and attending community events more often than Bob does. We have agreed that I will do whatever socializing I like and that Bob will join me when he has the inclination. Our friends are very supportive of our agreement -- very happy to see Bob when he chooses to join us, very inclusive of me despite the prevailing couples' culture here.

We see some couples struggle with their interests, needs and priorities, however.  A couple I'll call Ben and Brenda are generally happy. But he likes to read and surf the Internet. She thinks books equal clutter and resents the time he spends on the computer. Her major recreation is shopping, which he hates but gets pulled into because she has given up driving and all major shopping is at least a 30 minute drive.  When they were busy working, their differences weren't quite so apparent. Now, in retirement, they're struggling to find a way to compromise on a daily basis.

4. Prepare for a change in friendship dynamics.
It can also help, in preparing emotionally for retirement, to realize how your changed status can impact friendships. Your friends who are still working will not have the time and flexibility you have in retirement. You may not see them as much as you would like.  If you choose to relocate, you will face the task of keeping up old, now long-distance friendships as well as making new friends. How open are you to making new friendships?

Some fear that it really isn't possible to expand one's circle of trusted friends in late adulthood. But some of us have been surprised, quite happily, to find that it is entirely possible.  "Isn't it amazing?" my neighbor and friend Phyllis observed the other day. "We all started as neighbors. Then we became friends. And now we're family! Who knew that would be possible?"

5. Keep your expectations realistic.
Sometimes reality exceeds our happy expectations.  And sometimes our expectations are altered by reality. A week after I retired and two days after Bob retired, we loaded ourselves and our cats Gus, Maggie and Marina in the car and drove to our new home in Arizona. In general, our first month here was exactly what we had hoped and dreamed. But real life details did intrude. Two weeks after our move, I had an abscessed tooth. Quickly hunting up a new dentist long before I had planned, I had complicated and painful oral surgery. The next week, our beloved cat Marina died, quite unexpectedly, of leukemia. And during all of this, new friendships were developing to soothe our pain and raise our spirits.  Life's ups and downs continue to happen even after you realize your dreams.

I got an email from my friend Nora today. She has finally decided to retire after 35 years at her current job.  Her last day will be next Wednesday, June 29. She says she feels ready at last.  She's anxious, nervous, excited and happy.  Her overwhelming feeling is one of satisfaction in her work and her legacy at her workplace where, for the past year, she has concentrated on getting new positions and promotions for long-time, key employees.  Her generativity has kicked in and she is delighted to have made a difference in the lives of others. She has a plan for her retirement, but is taking three months of delicious, languid vacation first.  She feels she has much left to do in making a difference for others.  She is stepping away from the familiar and running toward a new phase of life with confidence that she knows where she is going and joy in this new life transition. And that makes all the difference!