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The key to a successful transition to retirement is several strategies, and preparation – financial and non-financial – is one of the most important, an expert.
“The biggest single link to that success is how much time you spend preparing for retirement – not just on the financial side, obviously, and everyone does it, but also on the non-financial side,” Fritz Gilbert said. , author of “Keys to a Successful Retirement” and a recent guest on Yahoo Financial Retirement.
According to Gilbert, he also printed Retirement Manifesto BlogBy spending a lot of time planning for both parts of retirement, “you’ll find things in retirement that will bring you the satisfaction you hope for in retirement.”
Many future retirees don’t start thinking about their post-retirement plans until after they leave the workforce. However, Gilbert took a different approach by starting the plan years ago – a move he credits with his success.
“It definitely helps,” he said. “It turns out that the more you do on this plan, the easier this transition will be.”
To make sure retirees have enough money to maintain the lifestyle they want, Gilbert recommends keeping an eye on spending before they enter retirement.
“You can’t get into retirement if you don’t have a good spending baseline,” he said. “Ultimately it’s a math problem. And the more variables you can eliminate, the better your plan will be.”
Read more: Retirement Planning: A Step-by-Step Guide
According to Boston College’s National Retirement Risk Foundation Index39% of working age households will not be able to maintain their standard of living in retirement.
In Gilbert’s case, he and his wife tracked every expense for 11 months to establish a baseline, adjusting for retirement by making deductions, travel and other adjustments. He used tools like the 4% rule (withdrawing 4% of your portfolio) as a guideline.
“Then see how it compares to the estimated cost number,” he said, and if it’s close, you should be fine. But if it’s not close, you need to consider working longer or cutting costs.
Gilbert also recommended his “90/10”. Before he retired, the self-proclaimed spreadsheet nerd said he spent 90% of his time thinking about money and 10% of his time focused on non-financial retirement.
“I was a real financier,” he said. “I was really focused on the numbers.”
However, once he knew his money was secure and retired, his focus on money was completely reversed.
“When that transition happens, you see that you’ve thought about the money a little bit, because you’ve worked through the kinks and you know what to spend. “And you start thinking, what am I going to do with my life? What brings me that satisfaction and joy every day? And not the money. Money is a means to an end. But when you retire, you start looking for the end, not just the means.”
And that change came as a surprise to Gilbert. “What I don’t expect is a mental shift,” he said. “It was one of my biggest surprises. It’s a very common reality that you worry about[money]once you get in.”
Gilbert explained how work often gives people the “big five”: identity, structure, purpose, sense of accomplishment, and connection.
Retirees must find a way to replace those. How can you go about doing this? First, it’s important to recognize that replacing the Big Five is important because they disappear when a retiree retires.
Many struggle to find structure, purpose or connection early in retirement, Gilbert said. “That’s when you start to know you’ve lost these things. Suddenly you have no structure in your life.
In his case, Gilbert started his blog three years before his retirement and began to replace the “big five”. “I was looking for things that would give me satisfaction in retirement,” he said. “So I followed through… and what does that get me now?”
In short, it is given a sense of identity, purpose and structure.
That’s why he encourages future and current retirees to actively explore their curiosity and replace the “big five.”
“Pursuing your curiosity is not a long-practiced skill,” Gilbert says. “So building that muscle back and learning to explore and just have fun with it and know that you’re going to try a lot of things that don’t work … it’s a tedious process. It’s not a spreadsheet. But if you get better in time.
Retirement is not just an individual decision – it affects the whole family.
Gilbert emphasized the importance of discussing expectations before retirement. In his own experience, he and his wife did a “trial retirement,” spending 10 days together to talk about their goals, the balance between “me time” and “us time,” and their travel preferences.
It has also helped to address the needs and expectations of post-retirement regular check-ups.
Linda Rial and Todd Nielsen in Issaquah, Wash. , Friday, Nov. 22, 2024, at a charging station at the Issaquah Senior Center, looking at each other’s phones. (AP Photo/Manuel Valdes) ·Corresponding Press
Although he planned and prepared for it, retirement came with many unexpected surprises and challenges for Gilbert.
Moving from a saving mindset to spending was harder than expected.
“It’s hard to go from building your nest egg to using it, knowing it’s going to last a lifetime,” he said. This is especially true for retirees who are worried about losing their money. “It’s a very common tendency to continue to be conservative (and) lower costs.”
In the year In a 2024 Goldman Sachs survey, 67% of retiree respondents indicated they had too many monthly expenses, and 55% said they had credit card debt.
Gilbert suggests using the bucket approach to creating a retirement income plan as one way to address the risk of cash shortages. The bucket approach involves dividing your assets into separate “buckets,” each designated for a specific time horizon or purpose.
Typically, it includes a short-term bucket (eg 1-3 years) that holds cash or low-risk investments to cover immediate expenses. A medium-term bucket containing moderately conservative investments for expenditures over the next 3-10 years; and the long-term bucket, which includes growth-oriented investments, such as stocks, that are intended for use in retirement over 10 and 10 years.
In terms of thinking, Gilbert’s retirement turned out exactly as he had hoped: he continued to be curious and explored new interests as planned.
However, where that thinking took him was completely unexpected. For example, he never thought he would have a woodworking shop or a specialized writing studio, but those came about through unexpected opportunities like charity work.
“The greatest surprises—and greatest joy—came from following where my curiosity led me,” says Gilbert.
He also realized that he would find satisfaction in retirement by focusing on others. Retirement, he said, is a good time to give back through consulting, volunteering or philanthropic work.
“Maybe start looking at people who haven’t done it yet,” he said. And find ways to use your time to benefit those in need.
Every Tuesday, retirement expert and financial educator Robert Powell gives you tools to help you plan for the future Solving retirement. You can find more parts on us. Video center Or look at yours Preferred streaming service.
