Are you retiring for the right reasons?
"I can't take it anymore -- I'm outta here!" is one reason people might decide to retire. But that's not really a good reason to call an end to your working life, even though it might feel compelling.
People retire for a variety of reasons. They might have been laid off from their career jobs; they might be tired, and bored with the jobs they've been doing for many years; they might have health issues, or need to take care of family members, and so on. A recent study from the Society of Actuaries found another reason: People may feel pushed out or unwelcome at their workplace, or the work environment might have changed for the worse, and they retire even though they haven't been laid off.
The retirement that's advocated in the popular media -- of retiring to your dream life of travel and hobbies -- may actually be less prevalent than you think. Nevertheless, the lessons learned from those articles about the dream retirement are appropriate, because the steps you'd take to achieve your dream retirement are often the same steps you'd take to deal with a tough life situation.
Let's start with bad reasons to retire:
- You're bored with your job. (So what? Wait awhile before you pull the plug -- if you're patient, sometimes issues get resolved or your attitudes change.)
- You're at the age when your parents and older relatives retired. (Keep in mind that you'll most likely live longer than they did.)
- Your friends and relatives are retiring. (You probably don't know what their financial circumstances are.)
- You've been laid off. (Tough situation, but people of all ages get laid off. I don't mean to minimize the difficulty of this situation, but unless you have enough financial resources to retire, looking for another job is your best bet.)
- You feel unwelcome at your work, or as if you're being pushed out. (Another tough situation, but if you really feel unwelcome, put on a good front, do the best job you can, and wait until you're financially ready to retire. At least wait until your employer actually lays you off, in which case they might sweeten the deal with a buyout.)
- Your 401(k) account looks like a lot of money, so you're guessing that you have enough money to retire. (Guessing is not planning! Make sure your money will last for the rest of your life.)
Here are some compelling reasons to retire, even though they're not ideal:
- You need to take care of older relatives or dependents. (Another tough situation, but at least explore your options. Some enlightened employers want to help employees in these situations with reduced hours and maybe even special supportive services.)
- You're unable to work for health reasons. (Again, explore your options. As noted above, some enlightened employers may be willing to accommodate you. Or look for work that you're able to complete -- many people facing health challenges still find work that give them spending money.)
Finally, here are two really good reasons to retire:
- You've spent time preparing a financial plan you know will generate enough retirement income to cover your living expenses, and you've put in place strategies to address common retirement risks.
- You have a good idea of what you want to do with your newfound freedom from work, or you have a plan to find out.
A good exercise that I conduct in retirement planning workshops distinguishes "hopes and dreams versus fears and concerns."
To get started, make a list of all the things you'd like to do in retirement, and for the moment, think big! Don't worry about the barriers that might hold you back -- just dream a little for a moment. Once you've finished your hopes and dreams list, make another list of your fears and concerns. These are the roadblocks that can hold you back, or blow up any well-made plans. Common fears include health issues and running out of money.
The next step is to make plans to overcome each of the barriers you listed and address the common risks that can derail your retirement. At the very least, you might realize that some of your dreams are unrealistic. Share your lists with your spouse, partner, or close friends -- often, creative solutions arise by talking about challenges with people who care about you and may be in the same boat.
No matter what your reasons for retiring, having a good plan in place that addresses all the major issues that come up most often during your retirement years will most likely result in better outcomes for your life rather than just succumbing and giving in to unfortunate circumstances. A good plan will make you feel more confident to deal with whatever life throws your way.
