Finding Your “Why” In Retirement (and How to Pay for It)

Some people leap into retirement with joy, excited to finally have the time to indulge in hobbies and interests they put on hold for years or spend time with the people they love. But many others end up feeling unsatisfied. Even people who choose to retire — rather than being forced to because of an illness or a job loss — can experience negative emotions. In fact, 28% of retirees are characterized as depressed, a number that’s significantly higher than the overall population.

Why is that? There are several reasons:

• Loss of work: Next to family, work is where people spend the most time and energy. Without a job to go to, they can feel adrift and lack purpose. 
• Loneliness: Work may not be where your closest friendships are, but small daily interactions are vital and help maintain social connection. 
• Loss of income: Retirees worry that they'll outlive their money when they no longer have a regular paycheck. 

Retirement planning is more than dollars and cents. To have a satisfying post-work life, you must address your “why.” Finding your purpose in retirement is at the root of retirement’s most important decisions, like how much to save, how to build your budget and where to live.

What are you retiring “to”?

At a certain point, you might be ready to give up the daily grind. But that doesn’t mean you’re ready to retreat from the world. Whether we realize it or not, work gives us meaning, more so if you love what you do. Without the structure of work, you’ll have to create that meaning for yourself. In a recent survey, 22% of retirees said that retirement was worse than they expected it to be.

To improve your chances of enjoying retirement, think of it as an opportunity for self-discovery and redefining your identity beyond your career. But it takes work, and that requires some thoughtful planning.

Start by mapping out what you want to do when you're in charge of your own time. Will you volunteer with an organization whose mission moves you? Will you spend time with your grandchildren? Are you itching to live abroad and give ex-pat life a try?

For retirement to be meaningful, these ideas must be more than simply fleeting thoughts.

Retirement Readiness Guide

Our comprehensive retirement guide is full of practical tips that can help you and your family make more informed financial decisions.

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Reality vs. expectation

At the beginning, you might experience a retirement honeymoon. The newness and the relief of leaving work might allow you to overlook a lack of purpose in retirement. However, that’s likely to catch up with you as the novelty wears off. It’s OK to have some unstructured time initially, and then as you settle into retirement, you’ll want to figure out how to fill the days, months and years ahead. Consider:

• Part-time work: Retirement doesn’t have to be an all-or-nothing proposition. Many people continue to work a few hours a week, both to stay socially engaged and to supplement their retirement savings. In fact, nearly a quarter of retirees say they expect they'll continue to work. If you retire before your full retirement age and begin taking your Social Security, make sure you understand how work will impact your benefits. Depending on how much you make, your benefits could be reduced.
• Start a business: Don’t think entrepreneurship is for older people? Think again. In fact, researchers from MIT, Northwestern, Wharton and the U.S. Census Bureau found that older company founders were more likely to have successful businesses than younger people.
• Volunteer: There are so many worthy organizations and causes that can use your talents, whether that’s cooking at a soup kitchen or helping an elementary school child learn to read.
• Learn something new: Have you always wanted to learn French or build your own furniture? Retirement is a great time to learn. Many colleges offer reduced tuition for non-credit students.
• Be social: An active social life has been shown to help older people avoid cognitive decline. Use your lighter schedule to surround yourself with family, friends and former colleagues.
• Get physical: Regular exercise helps to prevent disease, lowers the risk of falls and can even improve cognitive function. So, grab your pickleball racket and head out for a game or two.

How much will it cost?

When you have a good idea of what retirement you’re working toward, you can start putting some dollar amounts towards these activities. Naturally, you’ll need less money for a retirement that revolves around volunteer work, local hikes and spending time with family than if you plan to travel each year and renovate your home.

Start by assessing your anticipated expenses. Consider factors such as housing, healthcare, transportation, leisure activities and any additional costs associated with your desired lifestyle. Don’t forget to take inflation into account, which can reduce your purchasing power over time.

Then evaluate your potential sources of retirement income, which may include:

• Retirement accounts (such as 401(k)s and individual retirement accounts) 
• Social Security 
• Pensions 
• Investment income 
• Rental property income 
• Any other source of income you might have 

Be sure to factor in taxes to understand how much money will be available to spend.

Now, you can create a comprehensive retirement budget. If you find a mismatch between your income sources and your desired lifestyle, make adjustments, either by reducing your expenses or working longer to bring in additional income.

I encourage you to reference our detailed Retirement Readiness Guide, which includes practical tips and strategies to help you assess your financial preparedness, maximize retirement savings and create a retirement lifestyle that reflects your values and aspirations.

Bottom line

Financial preparedness for retirement is undeniably important, yet it’s just one piece of your overall retirement puzzle. It’s equally important to address the emotional and psychological aspects, too. By aligning your financial resources with your desired lifestyle, you can create a retirement that’s not only financially secure but rewarding too.

If you’d like professional advice, connect with one of our wealth advisors who can work with you to uncover your retirement why and then help you figure out how to afford it.