Planning for the lean and mean retirement

(MoneyWatch) If it's not realistic to expect a traditional retirement -- one in which we have enough financial resources to be able to afford to no longer work and instead do whatever we like -- what can we do instead? Welcome back to my series on this critical issue that we face, both as individuals and as a society.

As summarized in my last posts, Americans have some significant challenges to overcome if we want to be able to afford and enjoy our retirement years. As a result, I'm focusing on a new vision for my retirement years -- one in which I'm happy, healthy, and financially secure but that doesn't necessarily involve "not working."

Here are more details about my plan:

  • I'll take inspiration from research that shows that older people are happier than younger people, or when they were younger. For an inspiring video clip on this topic, see this presentation at the TED talks by Dr. Laura Carstensen, Founding Director of the Stanford Center on Longevity. As a result, I'll focus on finding meaning, purpose, and happiness in life.

  • I plan to work or volunteer as long as I'm productive and physically able so I can help make a positive difference in the world. I expect that to be an age well past my mid-sixties (the traditional retirement age), and that's realistic for most people who haven't developed a serious disability or worked in physically demanding jobs. There are many ways to stay productive and engaged, including part-time work, self-employment, temporary gigs, seasonal work, working at home, and so on. Continuing to work may require making a shift in my attitude: I'm fine with accepting work that pays less or may not have as much authority or prestige as in my career years.

  • I plan to stay engaged with family, friends, and community; research from the MacArthur Foundation shows that if I do, it will help my physical and mental health. Plus, I'll have a network of trusted people who can provide physical and emotional support if I need it. So I'll be careful to nurture my network, including my business contacts.

  • I'll buy just enough stuff to meet my needs and be happy instead of wasting my paycheck on things I don't really need. I'll constantly look for ways to pool resources and share expenses with family and friends, and I'll use public transportation whenever possible. This will enable me to save more money for the time when I'm no longer able to work. And at that time, I'll need less retirement income to cover my living expenses.

  • I'll postpone drawing on my financial resources to let them grow as much as possible. This means delaying the start of my Social Security income until age 70 and not tapping into my retirement savings until I fully retire -- most likely sometime in my 70s or beyond.

  • I'll continue to be serious about taking care of my health by exercising and eating the right amounts and kinds of food. This will help reduce the odds of needing expensive and debilitating medical care in the future. Despite taking these steps, however, I know it's inevitable that at some point in my life, I'll need medical care. So I'll make sure to buy the right kind of medical insurance to cover those needs.

  • I'll adopt a new analogy for my health and longevity -- my mind and body is like a favorite vintage car. Regular maintenance will make it last longer, but eventually, that treasure will start breaking down, and it won't be as fast or efficient as the new models. So I'll need some new parts and occasional overhauls to keep it running. And at some point, I'll be driving it less -- I'll still take it out for a spin to run basic errands and for fun, but I can't drive it into the ground if I want it to last.

  • Most likely our friends and family are in the same boat. In the event of an illness or crisis, we will be the ones to provide emotional, logistical, and even financial support for each other. I'll participate in the giving part of this relationship, knowing that at some time, I might need to be on the receiving end. And we should all investigate ways to share resources before our backs are against a wall. For example, the "Golden Girls" example of sharing housing during retirement is a great way to reduce living expenses and address loneliness, an important risk to our health and enjoyment of life in our later years. Can we support each other in our quest to stay healthy, maybe by forming walking clubs or sharing tips on nutrition? I'll bet you can find many ways to help each other.

  • I'll plan for the last laps. We all have an eventual conclusion to our life's adventure; at that time, we might be incapacitated and could need special care to carry out basic living activities. I'll take responsibility by putting in place contingency plans and financial resources now to mitigate the inevitable burden this might place on my family later.

When you think about it, the traditional retirement may not be the best way to complete our lives. Will we still even call this period of our lives "retirement"? There are many alternative descriptions that are colorful and insightful, such as Life 2.0, rewirement, renewment, reinvention, the third age (or fourth age, depending on how you're counting), rest-of-life, encore career -- you get the picture.

No matter what we call it, let's face it with courage, creativity, and resilience. Stay tuned for my forthcoming series of posts that provide a week-by-week program for planning to make the best of your retirement years.

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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.

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