For those of you nearing, pondering, or working toward that last day of your career, I thought it might be helpful to provide some basic information that I have learned in my first three years of retirement. I must admit that I am not an expert on many technical aspects of these topics. However, I feel that I now have enough real-world experience that can assist you in your own preparation. If you have other questions that you would like me to try to address in future posts, just send me a separate note and I’ll add your questions to the list.

Just to set the stage, I retired at age 61. My wife is also retired. We have no pension and do not plan to work part-time during retirement.

1. In your opinion, what are those key markers or indicators (financial or otherwise) that tell you that you can consider retirement? – There are three elements of preparing for retirement: financial (Do I have enough money to live how I want that will last the rest of my life?), emotional (To a large extent, my work has defined me for the last 40 years… can I give that up?), and social (How do I replace my workplace social network with a new network). So, you need to consider factors in all three areas to determine if it is time to consider retirement. If you are comfortable with your answers to these questions, the time might be right:
   • Financial – Hopefully, you have been looking at your own financial picture in preparation for retirement for several decades. At its core, you simply must determine if you have the financial means to provide enough ongoing income to live the lifestyle you desire and maintain that throughout the rest of your life. Several questions must be answered before you can check the financial box:
     • What income is required?
     • Do I have debt?
     • Will my lifestyle change (e.g., relocation, downsizing, etc.)?
     • Is my health good?
     • What sources of income can I expect in retirement and are they sustainable?
     • Am I prepared to handle unexpected large expenses (such as a new car, new roof, new furnace, etc.)?
     • Am I planning on leaving a legacy inheritance upon my death?
     • Can my finances withstand long-term care expenses?
   • Emotional – Most people do little to prepare for the changes to their routine and personal identity that come with retirement. Certainly, we all look forward to having more time for neglected hobbies. Filling the days with activities is not difficult. However, filling the days with activities you believe have value may be another thing entirely. Being prepared to handle these significant changes can mean the difference between a happy retirement and a depressing time of life. Several questions to help you prepare for this include:
     • Am I OK with leaving behind my career position, status, and everything that goes with it?
     • Do I have hobbies that I enjoy that can provide fulfilling activity and, possibly, interaction with others?
     • Is my spouse ready for me to spend more time at home?
     • Are there things I have been looking forward to doing once I have more time?
     • Can I truly relax (by this I mean… Can I be satisfied sitting on the deck for an hour each morning observing nature and enjoying time doing nothing? Or, am I miserable when I’m not actively involved in a project or other activity?)?
   • Social – Perhaps, one of the biggest shocks in retirement is going from daily/hourly interaction with your work team – possibly, individuals you have known and worked with for decades – to more isolation? In other words, will you go nuts without the frequent people interactions that defined your work life? Here are several things to consider:
     • Do you have other individuals in your life that you’ll spend more time with?
     • Do you enjoy quiet hobbies that you can do alone, such as reading, writing, crafts, etc.?
     • How much will it bother you to not be “in the loop” for work things?
     • Can you imagine, and accept, that your work colleagues will quickly be so consumed with their own work that contacts with you will become less and less frequent?
     • Are you readily able to make new friends and seek new social relationships?
2. What are some of the unexpected things you have experienced, so far, in your retirement experience? – Whenever you move into a new, unchartered chapter of life, there are always surprises or things you didn’t expect. I have had a few myself:
   • My wife and I did not expect that we would buy a vacation home shortly after retiring (more on that below).
   • I think our actual monthly expenses are lower than we expected. We monitor our expenses carefully and had conservatively estimated what they would be in retirement, but, so far, they have been lower.
   • The free time is even more enjoyable than expected. I tell people, “Every day is like Saturday, except Sunday.” The big difference is that, as opposed to Saturdays when you are working, if you don’t get a project done today, there is always tomorrow… or the next day. There is time to read (an activity that I simply didn’t do when I worked), resume old hobbies, or take up new ones. It is OK to accomplish nothing significant today. It is OK to stay up late. It is OK to take a nap. It is OK to do things for others because you still have so much time to do what you want.
   • I have not missed work. I can honestly say that I have not yet awaked wishing that I could go to work. Certainly, I miss interacting with friends and colleagues, but the transition to retirement for me was easy… when I drove away that last day, I left my work life behind.
3. How did you know when you were financially able to consider retirement and what tools did you use to monitor financial progress? – To be honest, I began monitoring my retirement savings progress shortly after taking my first job. I felt it was that important to ensure that I was staying on plan. The bottom line is this… when your combined retirement income (savings, pensions, and social security) safely exceeds your ongoing expenses AND you have a safety net to address unexpected expenses, inflation, etc., you are probably in a position financially to consider retirement. For me, there are three things that helped ensure that I stayed on track:
   • A trusted financial advisor – We have been advised for about 30 years by the same individual. Jean has a calm, financially conservative approach that has helped keep us investing intelligently, consistently, and in a focused way.
   • A personal finance tracking tool – I have used an Excel spreadsheet to tracking our retirement savings for many years. At least quarterly, I review account totals, then meet with our advisor annually to make any needed changes. About 5 years from retirement, I began projections of retirement balances that go 30+ years into retirement that considered social security, inflation, expected investment returns, projected spending, etc. to ensure that the numbers worked through the rest of our lives. This tool helped provide confidence when that ultimate retirement decision was near.
   • A careful spending plan – My wife and I are probably considered very conservative on spending. Our lifestyle was always good, but we didn’t feel the need to make many spontaneous or impulse purchases. We also were careful about big purchases, such as college expenses, wedding expenses, etc. By developing the habit of careful spending, we did not have to make significant lifestyle changes in retirement.
   • A commitment to avoid/eliminate debt – Debt is one of the most significant barriers to retirement for many. Our approach has been to pay off our mortgage as soon as possible and avoid debt to finance car and home repair expenditures. Thus, when it was time to consider retirement, we were not burdened by debt as an additional issue to consider. A lack of debt just makes the overall planning process easier and less complicated.
4. The biggest concern most people have for retirement is medical costs. What have you experienced, thus far, around medical care and costs? – While it is true that medical costs in retirement can be significant, there are ways to mitigate those costs. First of all, if you retire before reaching Medicare eligibility age (65), you can purchase COBRA coverage for up to 18 months. This coverage is comprehensive, though expensive. If you pay for full coverage, you can expect to pay over $1400/mo for a couple with no other dependents. After COBRA, you can purchase medical insurance either privately or through the Affordable Care Act (ACA) on the exchange at healthcare.gov. If your retirement income as a couple is below the threshold, you may be eligible for a tax credit that reduces significantly your cost. The ACA insurance should be viewed as catastrophic insurance, e.g., it may not be the most comprehensive, but it should protect you from potentially disastrous medical costs. In addition, if you are healthy, the ACA insurance might actually be less expensive that the coverage you had with your employer. The ACA insurance covers all preventive costs, such as annual check-ups, tests associated with it, and immunization costs. For us, COBRA followed by ACA insurance has bridged us from employer’s coverage to Medicare very well! One more thing about budgeting and medical insurance in retirement. For planning purposes, I have always assumed the worst-case costs. This would include premiums plus total out-of-pocket costs. Certainly, you should expect to spend less than that, but this gives you a planning amount that can help take unknowns out of your planning.
5. What is your biggest worry or concern in retirement? – I have a friend that says his biggest worry is “whether I should use a 6- or 7-iron on my next shot.” I wouldn’t say that retirement is that worry-free, but it is a time of less overall stress. By the time you reach retirement, many of those things that busied your mind previously have been resolved… your kids are educated, out-of-the-home, and off the payroll (hopefully!!); you have either retired your debt or something close to it; you no longer have to set an alarm just to get up, fight the traffic, and hurry to work; and you have reached a financially stable point in your life. However, that doesn’t mean that all worries have evaporated. By this time of life, there are still issues to deal with:
   • Aging – Someone once said, “After age 60, if you wake up with a pain anywhere in your body, get used to it… it will never go away.” There is some truth to that. Despite your best efforts to eat right, exercise, and do the right things, our bodies will break down. Staying active and busy help keep our minds off these personal ills.
   • Family members – Many retirees have other family members that consume time, energy, and worry. It is amazing how many retirees are still caring for aging parents. Others have dependent children and grandchildren. Helping them may increase overall stress.
   • Finances – Hopefully, careful planning can circumvent financial worries. However, there is always that small voice in your head that whispers a worry every time the stock market drops.
   • Purpose – Many retirees worry about whether they are still contributing to society. In other words, some wonder if they still have a purpose or do they still add value. Of course, this is preposterous, but one way to fend off these thoughts and worries is to find a way to serve others.
   • Decisions – Though life in retirement is simpler than earlier days, there are still decisions to make. Some individuals find it more difficult to make decisions as they age. Or, they worry more about the decisions they do need to make.
6. Is buying a vacation home or time share a good or bad idea? – We made the decision in our first year of retirement to buy a vacation home. We spend part of the year at this home each year.  Our decision was perfect for us because we found a lake cottage in an area where we formerly lived. We know the area, we still have great friends there, and we have plenty to do on and around the lake. We believe that our purchase was for an appreciating asset that can easily be converted to cash in the future if we are no longer able to visit. Before making any such purchase, you should consider the following – if you can answer affirmatively on each question, it may make sense for you as it did for us:
   • Can you afford it based on your retirement financial plan? – Don’t let this one expenditure destroy the plan you’ve made.
   • Can you foresee using the home/time share year after year without getting bored with that one location? – Will you wish later that you had more flexibility in locations?
   • Will the home/time share be an ongoing financial drain (repairs, maintenance fees, travel expenses, etc.)? – Be sure you carefully look at these in the context of your financial plan.
   • Do you have friends, family, or connections nearby? – This was important for us. We had a built-in network of friends in our lake cottage location.
   • How easy will it be to eventually sell or liquidate the home/time share? – If needed, can you convert this back to cash to supplement your income, if needed?
7. Everyone seems to have a recommendation about when to begin receiving Social Security. What have you decided about Social Security? – We decided to begin receiving social security at age 63. We have heard all the pro/con arguments for taking it early versus delaying and decided this made most sense for us. Our financial advisor said she has calculated this many times for clients and it almost always makes more sense to begin taking it early rather than waiting, assuming the client was invested in other long-term growth assets. This is an individual decision and a significant one, so combine the best advice you can get with your own situation to make this important decision for yourself.
8. What about Medicare? How should I plan and prepare for it? – We are nearly ready to begin Medicare coverage in a few months. I am in the research mode now. However, I have found that there is ample information available online AND friends that have already begun Medicare coverage are a tremendous source of help. In essence, do your research and determine the plan that best suits you. I have found that my insurance broker that provides home and car insurance was able to help answer most of the questions that we had. And, if you decide to purchase supplemental plans (such as Part G), shop among several insurers. We found a difference in price of over 35% between the highest and lowest insurers for the exact same coverage.
9. What have you experienced regarding ongoing expenses? I hear some say that you should plan on securing at least 85% of  your pre-retirement income in retirement. Is that reasonable and a good estimate for planning purposes? – I personally don’t think these standard estimates should be used by most individuals as their target. The best way to estimate needed retirement income is to do your homework regarding your current and needed monthly expenses. I would recommend tracking carefully your actual monthly expenses. This should be done over at least one full year to cover any significant expenses, such as repairs, taxes, etc. Once you have a complete picture of your ongoing expenses while working, you can better estimate your retirement expenses. For example, you may consume less car fuel when retired. You may also eat out more. Focus on where your expenses will be rather than trying to achieve a percentage of your pre-retirement income.
10. How do you spend your time? Do you get bored? – I think it is amazing how busy you get in retirement. You start doing things you have delayed for decades and enjoy new activities you’ve been waiting to try. For us, we are fully busy every day while at our lake cottage. These are activities we never did while working, such as kayaking, bike riding, etc. It is good to play more golf these days. My wife and I really do enjoy our extra time together. I admit, though, that there are times and days when there is not much to do. On those days, I read or enjoy other activities I didn’t participate in years ago. In short, for most people, you find that new activities fill the days of retirement in ways you didn’t expect.
11. What are a few of my recommendations for a satisfying retirement? – Here are a few things I do that makes my retirement time even more enjoyable:
    • I still create a weekly to-do list. Yes, I know that seems contrary to all the free time I now have, but there are times when you just need to feel as though you are making progress and doing things of value. Creating a list keeps the important things at the forefront of your mind PLUS it gives you positive motivation when you check things off the list.
    • Shop for bargains. With the added time you have in retirement, you can take the time to shop for the best deals on things like restaurants, travel, etc. And, take advantage of discounts offered for seniors.
    • Feel free to rearrange your schedule. On many days, we now often eat our big meal of the day at lunchtime. When eating out, this allows you to take advantage of lunch specials that are not available for dinner. You can also get better deals on movies, golf, etc. if you are flexible on when you go.
12. As you approach your later years in life, do you become more introspective? In other words, do you start to be concerned about the end of your life and what comes next? – Yes, I think for everyone, as you get past a certain age, you become more introspective. You start wondering what you might have done differently. You begin thinking about what’s next. There are three things that everyone should do to best prepare for that day when you’re gone from this world:
    • Ensure you spouse/children know the details of your finances and assets – I have heard many stories of left behind families having no idea what assets exist, where they reside, and how to access them. This should not occur. Be sure that a few people close to you know what you have and where to get it. One thought is to ensure that your financial advisor has information on all your retirement holdings, then ensure that family members know how to contact that advisor when the time comes. Don’t hinder your family by keeping this important information from them.
    • Prepare a will or trust – It is very important, as well, that you help your survivors by legalizing the distribution of your assets. Many individuals nearing retirement either have no will or it is sorely outdated (e.g., it still talks about guardianship for your now grown children). Take the time and minimal cost to update your will or create a trust to ensure that you minimize confusion, time, and heartache for those you love most after you pass.

Retirement for me has been a wonderful journey, thus far. I hope today that my experience can help you prepare and navigate through your transition from the work life to your next chapter.