In the song, “Beautiful Boy,” John Lennon sings, Life is what happens to you while you’re busy making other plans. That lyric is worth getting stuck in your head when planning for retirement. Because not all retirement mistakes are financial.
Traditionally, retirement planning has been the business of one big thing: money. It has focused on financial details, such as how much do you need, where should you invest your savings, when should you file for Social Security, and so on. But with millions of baby boomers retiring and living longer than ever before, it has become apparent that there is much more to consider than just the financial side of retirement.
Busy yourself too much with money, you could neglect the other important elements of a happy retirement, like your well-being, sense of purpose and relationships. A 2020 Edward Jones/New Wave retirement study reports that most retirees wish they had done a better job planning for the non-financial (54%) aspects of retirement. That’s why it’s important to incorporate these life qualities into your retirement plan, too.
Some retirees struggle with feelings of boredom, loss of identity and lack of purpose
Feeling unsatisfied in retirement can have financial consequences
Specific details about your goals and desired lifestyle should be part of your retirement planning process
As retirement nears and you start crunching the numbers, give some attention to the other parts of your life so that you can avoid these major non-financial retirement mistakes.
Mistake 1: Thinking that all you need is enough money
Money isn’t everything. That may sound strange coming from a company that specializes in money, but it’s true. All the money in the world won’t make a difference in retirement if you don’t know what you want to do, what you value or what even makes you happy.
Consider that a U.K. survey found the average British retiree became bored after just one year in retirement. And, according to a 2016 Federal Reserve study, one-third of retirees eventually give up on retirement and return to the workforce.
Boredom can cause some people to spend money aimlessly to chase hits of happiness, which is not a good habit to adopt in retirement. And, while it’s okay to change your mind about working, you should be aware of how returning to the workforce could impact your finances in retirement. For example, if you file for Social Security, your work earnings could reduce your benefit payments.
Therefore, before you leave your job, invest heavily in time exploring what might interest you later in life, whether it’s pursuing a hobby, traveling around in an RV or starting your own business. That way, you have something to truly look forward to in retirement.
Retirement is no guarantee of happiness. In fact, as noted in a 2014 article published by the American Psychological Association, research has found some people experience “anxiety, depression and debilitating feelings of loss” after retiring. In addition to uncertainty about what to do, those feelings can be a result of unrealistic expectations.
Often the expectation is that life will just automatically become better in retirement. Without the demands of a busy work schedule, you may aspire to live a dramatically different lifestyle. Perhaps, you plan to eat healthier, get more exercise, learn new skills, volunteer, etc. Yes, retirement can involve all those things, but they still take time and effort. Who you go to sleep as on the last day of work is who you’ll wake as on the first day of retirement.
It is testament to the benefits of detailed planning, of which your finances can play a big part. Think of what things you truly value and want out of retirement, then build a detailed retirement budget around them, instead of the other way around. Further, set up a spending strategy for when life takes a turn, whether it is age and health related or something financial, like a market downturn.
Mistake 3: Underestimating how much you’ll miss from your old life
Retirement can be a major social and psychological shift. Research shows the feeling of loss some retirees experience is the loss of identity, a condition known as “identity distress.” Whether you love your job or not, it’s not easy to let go of something that has been a part of your life for decades.
You may miss the comfort of having a daily routine, the workplace camaraderie, the satisfaction that comes from accomplishing a goal, etc.
If you’re not prepared for that separation, the sense of identity loss can adversely persist. The solution isn’t necessarily replacing your working hours with something else, but rather getting comfortable with retirement. One idea is to consider living out one of your top retirement goals right away as a special way to mark the occasion.
Mistake 4: Overlooking the human need for purpose
Even in the most unsatisfying job, you could find a sense of purpose – to work and earn money to provide for you and your family. Here’s the thing: that desire for purpose doesn’t stop. So, one of the biggest retirement mistakes is not to have something that provides meaning and purpose.
A majority of retirees in a 2021 Edward Jones/New Wave study said “having a sense of purpose” is necessary to achieve optimal well-being, along with good health, close relationships and financial security.
Where can you find a sense of purpose? Retirees say the top four sources are “spending time with loved ones,” “doing interesting and enjoyable things,” “being true to myself” and “being generous or giving back.”
That doesn’t mean making a bunch of obligations on your time, which could create its own problems by making retirement feel like a routine – or worse, a job. But it is important to have options so that you can feel useful and fulfilled. After all, you are still obligated to make your time in retirement count.
Mistake 5: Neglecting your “community”
What ultimately makes for a happy retirement may not be what you do, but who you share it with.
Perhaps the biggest study ever conducted on happiness, Harvard researchers tracked people for 80 years and found that the single best predictor of health and happiness was not wealth or professional success, but close relationships.
This is supported by a Gallup poll that determined happier retirees tended to be those with more social interactions. And believe it or not, a low level of social interaction is just as unhealthy as smoking, obesity, alcohol abuse or physical inactivity.
Needless to say, one of the best retirement moves you can make is to nurture your relationships and stay connected.
If, unfortunately, you are not closely surrounded by family and friends, there are a variety of things you can do to help combat social isolation. For example, participating in social events at your local community center or library (game nights, weekly outings to a movie or museum and book clubs). Also, one positive outcome from the COVID-19 pandemic is that we’ve all found ways to socialize, even from a distance. Various online programs let you chat by video and even watch the same movies together.
The bottom line
These non-financial retirement mistakes affirm the importance of a comprehensive financial plan. Such a plan includes more than just savings targets and projected investment returns. A good resource for putting one together is a financial adviser who can speak to you on a human level to help ensure you know what you want out of retirement and how your finances can align with your non-finance needs.