Mon, 20 Mar 2017
A group of recent retirees shares pleasant surprises and challenges they've encountered in making the transition away from work.
Christine: I thought I could get everyone warmed up by asking a really easy question. What's the most enjoyable part of retirement for you all so far?
Tom: I enjoy having a cup of coffee in the morning, watching the news and all the traffic.
Bill R.: One of the things I learned to enjoy in my extra time is having that time in the morning to work on me, go to health club and not have to meet a deadline or anything scheduled. I can go to the health club anytime I want. That's really less stressful, so that's what I enjoy.
Bill S.: I think taking advantage of city things and not worrying about am I going to get home too late and not be able to function well at work tomorrow. We've been able to schedule off times to go to the theater or to dinner some place that we wouldn't normally go during the week. If you live in a city like Chicago, it's nice to be able to take advantage of all the things in the city.
Jim: I think the variety. When you were working you have that flow and everything was oriented toward the job, but being able to get up in the morning and say, "Today, I am going to ... and then this afternoon I'm going to do something totally different," is just so unimaginable a couple of years ago that you could actually feel that way because your life was so structured and ordered by outside forces.
Christine: How about negative feelings of during retirement? I've sometimes heard from retirees where they've said--and I think I'll feel like this--"My working career has been a big part of my personal identity. When I'm out in the world no one will know what I did during my career." Does anyone feel like that?
Jim: It's almost a feeling of vulnerability because you don't have that office, that title, the regular income coming in. It's not to the point of going home at night and counting my pocket change to make sure it's all there, but the physical vulnerability, the financial vulnerability, and trying to reprogram a new cellphone.
Bill S.: I mean, it's what we have children for.
Bill R.: I think one of the negative things that I found in the short time that I've been retired is the people I miss in the office place. There was a lot of relationships that I've built over the years and not having that day-to-day interaction with them is something I miss and I kind of clamor for. I keep in touch, but I don't do it--I don't want to be pest, call in everyday, but it's one of the things I missed.
Christine: Does anyone miss that collegial environment?
Tom: For us, we moved to the Chicago area from Michigan so we left a whole lot of history back there. We're closer to our daughter. We're starting over. It's kind of a big step.
Christine: Is it harder to make friends in retirement than it was during your working career?
Marty: I don't think so. No. We live in 55-and-over community. There are lots of activities and you can choose to be as busy or not as you want.
Christine: A little bit of a built-in social network there?
Christine: How about for those of you who don't live in a community like that, do you feel that it's hard to connect with people, meet new people?
Bill S.: I think you have to put yourself in the way of people. Many of us might be active in a church or the health club. Going to the health club in the morning you meet other old guys hanging around the health club. Don't get a lot done, you just talk a lot. If you put yourself in the pathways of meeting people, it will happen. You have to be accessible to people.
Bill R.: The location I go to, one of the things I find is that when people start to recognize your face they're going to come up and talk to you more. You don't have that, "Well, I can't get in the conversation because I've got something to do." You can have that conversation, you can still get your working and you met new friend. It's easy because of the recognition. I'm a creature of habit. I get my coffee from this spot I have, if I go out for breakfast, I like this restaurant. People see me more regularly now, so I get to know a lot of people, a little bit more intimately.
Jim: It's a new skill in retirement because when you were working you were put into situations where you met people, you have people calling for appointment and staff meetings and that. Now all of a sudden you're the one who has to be out there. I don't think it's hard, it's just very different. I think most of us never had that, unless of course you had a stint as an outside salesman. But that's kind of like what you do, but it is just different.
Mary Kay: I agree. I think it's much more different. Working, there was a social structure that was automatically provided by the office. I tend to be a more private person so it is more difficult for me to meet people. I just don't go to a health club and I don't go to a lot of organizational things. It's more difficult because the people that I tend to meet are still working or they're in different situations, so they don't have the same time schedule that I do. It doesn't take away from retirement, it's just different.
Christine: I want to spend more time on retirement readiness, but, first, in the realm of lifestyle considerations, Tom and Marty, I know that you've relocated and we were talking a little bit before about people's potential ideas about relocating, maybe getting somewhere warmer. Let's talk about that issue, whether relocation and/or downsizing is on anyone's radar.
Marty: We did that. We downsized from the big house to a condo, and we moved also at the same. Yeah. It was a big adjustment. It was a new adventure. I mean, we enjoyed it, but it was a lot of consideration, but we wanted to be closer to our daughter.
Bill S.: That's really why you relocate. I think it's to be closer to family. I have one daughter here, but I've one daughter in California with our three grandchildren. That is torture to have your grandchildren 1,700 miles away. We try to get out there a couple of times a year, they come in, but it's still difficult. When you relocate-- and Tom had mentioned about losing a lot of your background, your history when you move in--that would be difficult for me to move because my entire social network is here, not only people I had worked with before, but the social group I've built in different venues around. That would be hard to start all over again.
Christine: It's difficult for you, on one hand, you want to be closer to your kids, but on the other hand, your whole life is here.
Bill S.: That's right. Is that the approach-avoidance situation? It is difficult, but in a way it's--I do have a daughter here, so we say that we think she'll need us more in the future. I don't know if that's true or not, or we're just deceiving ourselves.
You had mentioned downsizing too. We still live in a four bedroom, three-and-a-half bath house. I haven't been in some of the rooms yet. My wife says, "I love this house. I'm comfortable. I'm not ready to downsize." There's the practical part of we really should, and then there's the emotional part of, again, giving up something very familiar and something very comfortable.
Christine: There's this saying out there in the retirement planning community that retirees have these three major phases of retirement: the go-go years, the slow-go years, and then no-go years. I'm wondering if you think that that will hold true for you. What's your expectation about what your glide path in your retirement would be like? Do you have a sense of the trajectory for yourselves? Have you thought about it?
Bill S.: Yeah. My wife and I are traveling very actively now. We've been to Spain and Portugal, going to Greece in May. I told her, these next three or four years we better get our traveling done. Because I can already see that it's not going to be getting any easier to do those sorts of things, adjusting to the jet lag, and getting on and off of buses and things.
That description is based in fact, I think, just based on the way I feel and where we might be going. I'm all right with that. We're going to do as much as we can in the short term and then become a little more sedentary perhaps in five years from now, four years from now.
Bill R.: That's what I plan, too. Got several trips planned already, New Orleans and cruise and stuff like that. Yeah. That's what keeps you motivated.
Christine: Seize the day kind of mentality.
Bill R.: Yeah. I got these places that I want to see and things I want to do. I could see down the road slowing it down a little bit. Then at some point, I'm too exhausted, I can't do that.
Jim: I think that description about the three stages is very accurate. However, I think I'm like many younger people, they're looking on what they should be doing in terms of their investment planning in their lives. I don't want to accept that. I'm in a go-go mode right now. I think I'm going to be in it, like, forever. When you say that, I'm like, maybe that will happen, but I don't think it's going to happen in the near future.
Mary Kay: Exactly. I think the same way. I don't even want to think about being three periods or phases, I'm just going to stay in the phase that I'm in right now as long as I can.
Christine: Got to stay in the moment.
Mary Kay: Exactly.
Christine: Let's talk about the decision to retire. I want to know from each of you actually, at what age did you start to think seriously about retirement--like, maybe we can do this and when can we do this? When did you start to think seriously about it, talk seriously about it?
Jim: I started at about 62 and it took me five years to adjust to the thought of leaving work full time. There was a good deal of planning and, being in finance, I scheduled out what our investments might do and how much money we would have, etc. It just reached a point where, for a whole bunch of reasons, nothing in particular, not the bad job, etc., I felt it's time. I want to do something else. Maybe there were some boredom at work that I'd climbed all the mountains I could climb and if I carried on it would be nothing more than just hiking. I thought, let's do it.
Mary Kay: I don't think I started thinking about retirement till I was probably 65 or so. Because I just pictured working for as long as I could. Because it was convenient for me, I worked in the same town that I live in and so it was easy to go to work everyday and provided that social structure, that provided that daily routine, I enjoyed the work, and so I thought--and I also had contact with people who were still active in working till they were in their 80s and I thought, Oh, maybe that's what keeps them that way, thato they're working till they're 85. I thought, well, I should prolong that as long as possible. But then, like you, it just all of a sudden, I thought, I just want to retire. I'm done with this. I just don't want to work anymore, and so then I stopped.
Tom: I started bringing more work home, not to do, but just to think about. Issues that before I would say, well, I'll deal with that tomorrow, and then we'd go off for dinner. I was coming home and I was going to deal with that tomorrow but I was still thinking about it the whole night. I said things are bothering me more than they should. I wanted to leave on high note that they still wanted me, didn't want to get rid of me. That kind of was the turning of the tide when it wasn't as enjoyable anymore.
Bill S.: I really loved what I was doing. I never thought I would retire either because there were a lot of models for me if I looked around and people doing my job who are older than me and still going on and on. Then I got my required minimum distribution, 70 1/2. It was really an eye-opener. I asked myself, what am I trying to prove? Am I trying to die at my desk in the office someday? I think it's a certain point the urge to look at the next phase of your life overcomes the comfort of the status quo. The comfort of knowing what you're going to do everyday and enjoying it, then you're ...
This was the second career for me. I made a career change at 45. I remember standing in a hall at 45 at my old position and looking around saying, "There's got to be more to life than doing this for another 15, 20 years," and there was. You just have to take the step.
Bill R.: I started planning about four years ago. I was planning as anticipation to the next step. It wasn't like I didn't like my profession. I thought I was pretty good at it, but I knew it was going to come to an end at some point. I needed to research and get all the information I can so that I can transition smoothly. I've got to know what's in my hand, what type of resources I got. I was asking the right question, I was talking to the right groups to find out about the various sources of income that I had available to me so that I can make that decision and be comfortable and know that I did my due diligence to make it a smooth transition.
I didn't think I was going to work forever. That wasn't my plan because as a young kid, in college, I worked in a company where guys worked till forever and they got forced out at some age, and then two or three months down the road you're reading this company newspaper, "John passed away." I'm like, this guy worked forever and never got to enjoy the fruits of his labor. I don't want to be that guy. I want to make sure I enjoy and can spend time with my grandkids, because I got grandkids all over. I've got grandkids in Houston, in northern Mississippi, in Memphis area. I've got to be able to travel to see them and make sure they know who they're Pop Pop is.
Christine: A question is whether you sought advice from a financial adviser or some other entity when trying to figure out can I retire? Did you get another opinion on that or did you sort it out yourselves?
Tom: I used Morningstar. Looked at their models. Read research, read articles, kind of here's the allocation, it should be--just kind of did it on my own with literature search.
Christine: I know some of you used advisors, so let's talk about that decision to get another opinion.
Mary Kay: I would not have even begun to figure out how to retire without the help of financial advisor. I did not know that much about finances in order to retire comfortably or know that I could retire comfortably or within what framework. Having a financial advisor was absolutely essential for me.
Bill S.: Maybe it's ignorance or maybe it's a bit of arrogance, but like Tom, I subscribed to enumerable magazines, I read books, I watched television shows, I listened to financial advisors on the radio, and I really felt I had a good grasp of things to the extent that I guess I didn't want to give up 1% of my portfolio a year to get financial advice. How much advice can get? It seems like I have exhausted all of the resources. I'm pleased with the way things turned out. I too wanted some affirmation, so I talked to other people who, talked about diversification, and it all seemed to come together pretty nicely. I'd like to think I saved myself that advisement fee. Again, maybe it's ignorance. Maybe there's something I should have sought advice on, but right now, I'm satisfied.
Christine: In retirement budgets, do you find that your expense profile has really changed in retirement versus what you spent while you were still working. Does anyone see any big variation there?
Mary Kay: I would agree that my budget hasn't really change and my lifestyle hasn't really changed. I think because my goal was to maintain pretty much the same level of lifestyle that I had when I was working. I wasn't going too gaud and do anything radically different, just be able to do more of the things that I enjoyed. But I wasn't going to--my goal was to not greatly increase my spending, but I also wanted to be able to spend as much as I had been spending.
Christine: One thing I heard from retirees is that, with more time, there's just an opportunity to spend more money, there's more opportunities to go out to lunch, more opportunities to go here and there, more opportunities to shop. Has anyone found that?
Marty: Yep, there's always that opportunity.
Bill R.: Two things that I see a big savings. I'm not in the car as much everyday making that commute, and I don't eat out everyday. If I want a salad, I'd go to the grocery store and buy the fixings for a salad I go into a restaurant and get a salad because I'm nowhere near the house. That's a big change. I think over time I'd probably see that savings, but right now, I just noticed I'm not filling the tank up as much and I'm not eating out as much.
Tom: When we go out we may go out for a nice lunch as opposed to a nice dinner. Portions are a little bit smaller, but ...
Christine: No wine usually, right?
Marty: It's nice to go out in the afternoon for lunch instead of going out when it's real busy in the evening. That is a plus.
Bill S.: We go to afternoon the movies at the theater, you're home in plenty of time and go to a bed. Doing things during the day is really a great opportunity. For many people, we've always lived beneath our means anyway. We're cheap about things, but if you're making X amount of dollars, you spent X minus, so you have that margin to save. It hasn't required us to gear down from a lifestyle of the rich and famous living. Pretty much what we have always have been.
Jim: I agree completely with that. Having been an accountant, I still chart our expenses on a program. What I see is not either an increase or a decrease, but a reallocation. We're taking money that I usually used for commuting, daily lunches, and we're going to use that for something else. They projected in retirement that you would spend somewhere between 60 and 75 percent of what you did preretirement, I don't find that at all. I see the same amount of money being spent, but just on different things.
Christine: Last question, I'm wondering if you could each give some piece of advice whether lifestyle, financial advice to people getting close to retirement.
Bill R.: Because I'm the newest one to this, I think the most important thing is once you set a date, get it started right away. That means talk to Social Security, talk to your pension, talk to your 401(k) administrator so that you can go into retirement, that phase in your life as smoothly as going to work the next day. If you don't, you're going to have a month or two lag, and it's going to be a little apprehensive. But if you start, set a date, and get the ball rolling right away. Don't put it off, get it rolling right away so that you can move into that date really smoothly. That would be my biggest suggestion.
Christine: Great advice.
Mary Kay: I would agree with that, but I would say even if you don't set the date, that once you think about, start thinking about retirement, then you go to the seminars and you educate yourself on Social Security and Medicare and health insurance and all of that because it is so complicated. I'm a great proponent of a financial adviser to get all of your finances in line.
I would also say that I thought that I needed to know what I was going to do when I retired. I didn't retire for a long time because I thought, oh, I have to have a plan. What I am going to do? Then all of a sudden I thought, no, I can just figure it out when I retire, and that's what happens. I think that day-to-day wise, you figure it out as you go along. You do have to have all of those other things in advance. You have to have those prepared, in terms of Social Security and Medicare and health insurance and financial planning. Those are just critical.
Jim: I've had a number of people ask me about retiring and what do you do, and how is it, do you still like it, etc. I tell them that talking about retirement is talking about leaving a job and going to a new employer. You need to do your homework. You need to look at it. When you get there on that first day, you have to have some idea of the responsibilities that this job holds and you've got to set some goals for yourself.
If you think in terms of that pie-in-the-sky attitude that you just kind of into retirement and it's so nice and puffy clouds and so forth, you're going to be in for a terrible, terrible shock. I do think it's a job that has tremendous benefits and that's reminded every morning when I hear the cars outside. It doesn't come without some responsibility on your part.
Bill S.: I think I read some place where 43 percent of adults don't have any retirement funds saved at all. And that a certain percentage of those who have some, have very little. You can talk about strategy but you need to have enough money to even use to fulfill a strategy. Don't spend what you make, spend less than you make, be careful about where you buy your house, be careful about what kind of cars you buy, and how you buy them.
Tom: Plan for it, save for it, enjoy the ride.