Transitioning from work to retirement doesn't have to be difficult. All it takes is a little bit of planning. Perhaps the most important part of thinking about retirement is evaluating your financial situation, looking at your current lifestyle and income and determining what changes you anticipate in retirement. Here are some basic principles to consider as you plan for retirement.
Staying busy doesn't require a job
Wondering what you'll do with the extra time in retirement? The good news is that there are countless retirement things to do. Start with what you enjoy most about your job. Will you miss the work? If you're the type who can't imagine letting go of the daily responsibilities, work some into your vision. You can do this by working part-time or seasonally in retirement. You could also consider offering childcare or household help to family members in need. Or you can endeavor a new project that requires focused time and energy.
Keep in mind that if you start collecting Social Security before the year you reach full retirement age, working can impact Social Security benefits—with as much as a $1 reduction for every $2 you earn more than $17,040 in 2018. And consider work-related costs (commute, lunch, equipment, clothing, etc.) when planning your retirement budget. Consider strategizing with your spouse to stagger retirement dates in a way that maximizes lifetime benefits for you both.
You can also phase into retirement gradually by working fewer days per week or serving as an hourly consultant at your existing job.1 If you decide to keep working remember to pursue a second career or philanthropic opportunity that inspires and motivates you. There are so many things to do when you retire. Just make sure you do what you love.
Will you miss the people? If the social aspect is difficult to let go, focus on building meaningful personal connections and social networks. Staying connected with people can keep you feeling engaged and active. Old friends and colleagues are a good place to start. Create a contact list of the people closest to you in your working life. You can connect online or informally with whom you would like to stay in touch with. Build a few hours of your weekly routine around catching up with old friends and acquaintances.
This is also a chance to make new connections doing things you enjoy: a favorite hobby, an adult learning course, a yoga class, a book club . . . you get the idea. There are plenty of free retiree groups, classes and events. Investigate online resources like AARP.comOpens in a new window in your area through local retirement centers.
Online social networks, like Facebook, LinkedIn and Pinterest, can also help you expand your network to include all sorts of communities. Share your experiences through social media sites and talk to long-distance family and friends using video calls.
Will you miss the sense of purpose? If you thrive on a sense of contribution, giving back to others can truly inspire. Try volunteering at interesting organizations looking for skills like yours. For every cause that motivates you, there's likely to be a qualified nonprofit that needs help. Keep in mind that it might take a few attempts before finding the right fit. You can visit sites like encore.orgOpens dialog to read inspiring stories of people making a difference in their second acts.
Enjoy a laid back retirement
Will you miss nothing about working? There's nothing wrong with leaving the office behind and never looking back. Retirement is a chance to do what you've always wanted to do. That may mean traveling all over the map, or staying local and taking in your hometown like a tourist. Maybe attend regional film festivals, visit the planetarium and museums, or indulge at the homemade ice cream shop.
If you'd prefer to venture out, there are lots of ways to save a few bucks, including traveling during off-peak seasons, retiree discounts from airlines, skipping the car rental, and combining multiple stops.2
Wherever you go, there you are
Whether you picture yourself staying put or are ready to relocate during retirement, there are things to consider about each option.
Ready to move? Look for somewhere that offers family and hobby opportunities, along with the climate, cost of living, healthcare, and transportation options you need. And once you have a potential place in mind, try vacationing there as a test run.
Looking to downsize? A smaller space can be more affordable and less trouble. But consider the costs of selling and buying before jumping into something. Also factor in new costs, like association fees, along with the social impacts of moving to a new location.
If you prefer the familiarity of home—as well as the network of friends and connections you've built—staying put can make a lot of sense. Just consider it carefully if it requires you to tap into your home's equity with a reverse mortgage or line of credit.