An Honest Conversation About Retirement Preparation
Planning for RetirementAn interview with Clayton Johnson, CFP®
Clayton Johnson, CFP®️ at Squire Wealth Advisors, provides a non-traditional perspective on retirement preparation. “Rather than solely focusing on just the numbers, I like to invite people to intentionally reflect on their emotional readiness as they prepare for this transition. It is important to plan how you are going to navigate these changes and identify what brings you fulfillment outside of your career.”
When most people talk to financial advisors about retirement planning, they think about investment portfolios, 401K contributions, Social Security, and Medicare. While this is an important element, Johnson points out that we can't forget the soft side of financial planning. "The technical aspect of retirement definitely needs to be handled. But retirees often fail to plan for the soft side of retirement. For many people, their career wasn't just a source of income, it gave them a sense of purpose and fulfillment. "
"I want to encourage people to take a moment and consider whether they are retiring TO something or just retiring FROM something. It's an important distinction to make." Johnson acknowledges the uncomfortable difficulties retirement can potentially pose for people whose sense of purpose and self-worth is directly tied to their careers. According to Swedroe & Grogan (2021), authors of Your Complete Guide to a Successful and Secure Retirement, approximately 1/3 of men over the age of 65 experience some level of depression within their first year of retirement. Additionally, the portion of society with the highest divorce rate is couples over the age of 55, and the highest suicide rate of any age category is men over the age of 70.
"I know this isn't the most uplifting thing to talk about, but it's obvious something is going on that needs to be addressed. The financial aspect of retirement planning is certainly important, but we can't forget about the human component. As society continues to emphasize a hustle culture for both male and female employees, how can we help people shift their sense of self-worth away from the workplace and towards a healthier and happier life?"
In an effort to prioritize life planning during the retirement planning process, ask yourself this: are you emotionally ready to retire? Here are a few things you can do to prepare.
Develop a Written Life Plan
Take some time to identify the key values of your life that you want to carry over into retirement. Discuss this plan with those closest and dearest to you. Then, practice this plan before you retire. This is an introspective process that will greatly inform the financial side of your retirement plan.
Identify Your Passions
We're all familiar with that one family member or friend who claims they will spend every day of their retirement out on the golf course. But what happens a couple of months in? They get bored. It just isn't what they expected. By identifying your passions, you can make a list of all the things that make you happy and fulfilled. If you realize the list is a bit shorter than you would like, take this time to make a list of new hobbies you'd like to explore.
Maintain Relationships
How do you plan to maintain relationships? Are you going to visit friends and family more often? Host regular get-togethers at your house? To avoid feeling isolated, it is necessary to plan social engagements so you can stay connected and have a sense of community outside of work.
Prioritize Intellectual Growth
The idea of watching football or meeting up with friends for brunch anytime you want certainly has its appeal, but how are you going to challenge yourself intellectually? Is there something new you would like to learn, such as an instrument or foreign language? What about that bookshelf full of books you haven't had time to read?
Create a Bucket List
To avoid feeling lost, create a bucket list of things you want to do or accomplish in retirement. It might be time to finally restore that ruby-red 1967 Chevy Camaro sitting in your garage.
No matter where you are on your path to retirement, it might be worthwhile to sit down with someone who will prioritize not only the financial components of retirement but also the life planning component.
"Remember, you're no longer working with an active income but a depleting resource. The account balances are going to go down [over time]. Make sure you partner with someone who can help you successfully navigate it all."