When Retirement Has Its Downsides

For many people, having a happy retirement is one of life's most important goals. After decades of working--often for someone else--retirement is supposed to be a time to do what we want to do, whether it's traveling, volunteering, relaxing, or even continuing to work if we so choose. But like so much else in life, our retirements don't always turn out as planned.

Last week, Morningstar.com readers shared some of their happiest surprises of retirement. Some said major bonuses were the reduced stress and the ability to do as they please, while others cited the market's recent strong performance.

This week, we look at the flip side: readers' biggest negative surprises of retirement. Once again users on our Investing During Retirement discussion board cited financial conditions--low interest rates, in particular--as well as lifestyle changes among their unforeseen circumstances. The full conversation can be found here, and what follows are excerpts.

'More Stressful Financially Than We Had Ever Contemplated'
Perhaps it's no secret that one of the biggest negative surprises mentioned by retirees was the financial turmoil of 2008-09 and the toll it took on their portfolios.

Retiredgary's comment was typical. "Our biggest negative surprise was the financial crisis and bear market of 2008-09 right after we retired," he wrote. "That was no fun at all, but we took our beating, didn't bail out, and have since recovered nicely."

Alice2 looked back a little further, saying her biggest negative surprise was "that we could go through two recessions of major magnitude in the first 10 years [of retirement], both losing budgeted income from investments and requiring selling assets in a down market, thereby forever reducing the capital available to recover with the market. So that home we thought we'd move to in a pricier area that would require adding a lot to the proceeds from our house--well, we're staying put and taking vacations instead while rebuilding our assets. It's like not planning for a 100-year flood every five years. We're OK, just not where we thought we would be. You adjust."

Davidmckee also mentioned traveling a rockier-than-anticipated road in retirement. "I have been retired for 18 years, and I have gone through two episodes of very large IRA losses that I had to overcome or go back to work!" he said. "The first in the 1990s was bad, and I made a good recovery over several years. The 2007-08 loss was devastating! We took what was 30% of our pre-2007 total IRA and invested it in severely depressed corporate bonds. We achieved a 1,000% return and established an annual dividend return equal to my corporate pension. We had white knuckles all through the process. Retirement has been more stressful financially than we had ever contemplated!"

Then there were those posters who retired involuntarily, or at least sooner than they'd anticipated. FingerlakesGuy was one. "My biggest negative surprise in retirement was the retirement itself," he said. "I hadn't planned on retiring for almost three years in order to get my full pension at age 55. Long story about how it happened, but bottom line, I'll be making about $10,000 per year less than I had planned on."

Others mentioned specific investing disappointments. "My biggest was that a REIT could drop 83% in three months [in 2007]," said bubbygator. "I was able to get out at about $15, but it still was a big loss because I was so concentrated. Lesson learned!"

Another important theme mentioned by our readers concerned their own behaviors as investors and how they sometimes found themselves acting in their own worst interests.

"My biggest negative surprise is that I keep messing with my portfolio trying to capture market movements when I had planned to set it and forget it in retirement," wrote jomil. "I am seriously thinking about using a wealth management firm to save me from myself."

'Never Dreamed That Money Market Funds Would Yield 0%'
Several posters lamented the negative surprise of having to deal with record-low interest rates and the toll it's taken on their saving and spending plans.

"I never dreamed that money market funds would one day yield 0%," said retired at 48. "Further, I never dreamed that if they did, investors would keep money in them. Yet they do."

"My biggest surprise is the incredibly low interest rate that fixed-income investments pay today," wrote MPodracky. "When I bought my first house, I paid 16% interest (1981) and also had a zero-coupon bond that paid the same. That one bond paid for two kids' college educations. Just four to five years ago, I thought I could put my nest egg into a certificate of deposit paying 5%-6% and not have to tinker with any investments. Of course now I am using a total-return approach to generate my annual living expenses."

A few posters mentioned the negative surprise of having trouble getting a mortgage because they couldn't provide proof of income.

Fpajerski shared the following story: "Several years ago when getting a new mortgage, the broker insisted that I show a certain income level despite there being funds easily/quickly available [for] much more than the mortgage amount in investments. So I did auto-transfer from these investment funds for several months to my local checking account [to establish income] until the mortgage was approved." ​

Naturally, some of our retired readers mentioned the issue of health, and the high cost of health care in particular.

"My biggest surprise was how much health insurance actually goes up," said festus. "We started out paying $257 a month with a $5,000 deductible and 100% coverage after that 12 years ago. Now the cost is $1,000 per month and $10,000 deductible with 100% coverage after that."

Yakers, for one, had a different take on the subject: "Biggest negative surprise is that my health is running out much faster than my financial resources."

A few readers mentioned the negative surprise of continuing to provide financial support to their adult children even though the readers themselves had stopped working. Ggold1146's comment simply said, "Two grown, adult (40s) children still financially dependent on daddy! They're killin' me!!! I keep telling them a job might work, but they don't seem to get the picture. Something I never expected in retirement."

'A Less Stimulating Social Environment'
Aside from the financial surprises, many retirees wrote about how transitioning out of the working world was harder than they'd expected.

"My biggest negative surprise was realizing, after I sold my business, that I actually enjoy working," said dprice.

"I have struggled with a less stimulating social environment, compared with a work environment with a built-in social interaction system and daily decision-making role," said dtconroe. "With that work environment role gone, I have not created a replacement system, where there is a feeling of 'meaningfulness.' I have many options to improve on this, but I am struggling at this point, more than I expected, with this aspect of retirement."

"During my working years, work could provide a sanctuary from issues at home, just as home could provide a sanctuary from issues at work," wrote DIYinvestor. "With no workplace to retreat to from the issues at home, the learning curve was steep in how to cope. I've learned that a noncommittal shrug helps."

Retiredgary cited the loss of prestige that can come with leaving the workforce. "A big negative surprise for many people who have been executives is that, while you are just as wise and clever as ever, people don't take your advice and wisdom as seriously as those who worked with you did when you had the big title. The discovery that lots of people were listening to the title and not to you can be daunting for those who had not already figured it out," he said.

Yogiman offered a similar, if somewhat more light-hearted, take on the issue, writing, "My biggest disappointment is that now that I think I know most of the answers nobody's asking!"

'More Than a Little Bored'
One common theme among those discussing the downsides of retirement could be described as the time-management challenge. Some simply struggled with how to fill their newfound free time.

"When I worked, I felt productive. In retirement, the feeling is just not there," said plskmn. "It has only been about four months, and in a pretty busy career I have generally felt it took about two years to feel mastery in a new job or role. So maybe it gets better if I give it some time. In the meantime, however, I'm more than a little bored."

Then there were those who saw things just the opposite. For them, the negative surprise is that there still isn't enough time to do all they'd like to get done.

SlowMoe's negative surprise was "how fast time goes by. As we get older time seems to compress and a week goes by like a day did 10 years ago, a month goes by like a week and a year goes by like a month. Seven years after retiring it seems like only two, maybe three years. "

"My biggest surprise is how fast the day goes by," wrote Trixie. "I thought I would have so much time and have a superorganized home, contact old friends, volunteer or work part time, host dinner parties, and so on. I've found that the things you procrastinate about while you are working, you still procrastinate about when you are retired."

Said lwp00, "I agree with Trixie that all the extra time is not used for organizing, filing, cleaning. All the things I hated doing before, I still hate doing and so procrastinate about them. I also didn't realize how much work life provided a structure to my day. It took months into my retirement before I could stop wasting time thinking about what to do next, and that's even with being a part-time consultant. Once I settled into a new retirement 'routine,' like reading emails over breakfast and then exercising, it was more comfortable."