In Hindsight, Here's What Retirees Wish They'd Known

Of all our many financial goals, none takes up more of our time and money than planning for retirement. Many of us spend years, if not decades, thinking about how much we'll need to have saved up, what we'll do, where we'll live, and other factors that will determine how we spend our senior years. In fact, half of all U.S. adults say that having enough money saved for retirement is their number one financial goal, according to a recent poll commissioned by the National Endowment for Financial Education. 

But despite the many hours of planning, the many dollars spent talking to financial advisors, and an abundance of resources available to help would-be-retirees prepare (including Morningstar.com's own Invest for Retirement page), surprises will inevitably crop up. Some of these may be pleasant, but chances are some won't be, and even the most well-prepared retiree can share stories of unanticipated events or consequences that forced some rethinking.

In an effort to help those nearing retirement prepare for some of those unanticipated events, we asked retired Morningstar.com readers on our Investing During Retirement discussion board what they wish they'd known when they first retired. Some of the responses were eye-opening--for example, a few readers said they were surprised to find that some friends and relatives were resentful of their ability to retire--while others were more expected--such as those who cited the financial crisis and other macro-level events that had affected their finances. Others mentioned decisions they'd made that, in hindsight, they wish they hadn't or experiences that didn't turn out as planned.

You can read the full conversation by clicking here. The following are excerpts.

Investing Regrets, They've Had a Few
Investing for retirement (hopefully) means positioning one's portfolio for success regardless of market conditions. But even well-prepared retirees could not have anticipated the timing and extent of the financial crisis that came to a head in late 2008. Not surprisingly, several commenters mentioned this as something they wish they could have known about ahead of time.

For bubbygator, it was a lesson learned.

"I retired at 51 after a goodly paid time in the integrated circuit business," bubbygator wrote. "Everything was fine for 17 years, then I decided to concentrate [my portfolio] into a high-paying REIT [real estate investment trust] in 2006-07. It went bust. Wow, did I take a loss. Now my first mantra is diversification. I limit my amount in any holding to 10%."

For bujia the financial crisis represents a missed opportunity.

"I wish that I had known that when I retired in early 2009 during the depths of the Great Recession that the market was just beginning its current bull run," the poster said. "Much anxiety would have been averted."

Others who have been retired for longer pointed to other chaotic market events of the past as having caused problems from them. Globaltraveler wrote about retiring at age 52 and having no idea what was to come.

"December 1999 unfortunately was my retirement date, just in time for the dot-com bust, 9/11, the 2008-09 financial meltdown, etc.," he said. "We can't foresee the future, but continuing to work would have mitigated some of this damage. ... Also, I had a chance to put everything in long-term bonds at 7.5% in 1999 while my wife and I traveled the world. I've done the math and we would have hundreds of thousands more than we do now with less stress--even with the recent run up in the market."

Not surprisingly, some retirees expressed their disappointment with Federal Reserve policies that have kept interest rates at or near historic lows for years.

"I wish I had known that the Fed would sacrifice savers for the dubious benefits of trying to 'control' the economy," said RTO31607. "Keeping rates low for such a long time has made it very difficult to buy new (and safe) CDs as older, higher-yielding ones [pay] off. What else is there for very conservative retirees?"

Changing Your Money Mentality
Some posters mentioned the challenge of managing their finances now that they no longer work. TinyTuna, for example,said he wish he'd known "how to get past the shock of not getting any more paychecks."

Others said it has been difficult to find the right balance between their new income regimen and their spending habits.

"[I] retired in January at 65 and am coming to grips with withdrawals/distributions vs. a paycheck," said neoflyer. "Have to be careful. Going in it seemed I would treat my retirement funds like a savings account to be withdrawn from. I soon learned the government would punish me if I wanted a large withdrawal to pay off my house, for instance. Nowhere is this more clear than with the way Medicare works with their brackets for parts B and D. When working all of my savings needs were met automatically out of my pay so I had my paycheck pretty much to spend. Now I set my own paycheck and find it very tempting to 'increase' it every time some want or need comes along. Need to increase my self-discipline."

Not everyone found the financial shift into retirement difficult, however. ColonelDan said, "I wish I had known how really simple and easy it was going to be to successfully manage my finances/investments in the retirement 'decumulation' phase of life. It would have saved me a bit of concern during that transition period."

Wcdphr's big regret was not knowing "that I could sit back, relax and trust my calculations. I wasted a year worrying about not having a paycheck every two weeks. Now I regret working that last year. I'm not rich, but I can do what I want when I want to. Or do nothing. It's a whole different mindset."

Another common theme was regret over taking Social Security too early. The longer one waits to begin taking benefits the higher the monthly payout (delaying to age 70 produces the maximum monthly benefit).

Kgalli wrote, "I worked until age 73. In hindsight I wish hadn't taken Social Security at 65 because I could. We didn't need the ... money to live, so I used it to invest and build up our portfolio. We live modestly on my wife's teacher pension and my Social Security check for daily living and have yet to need to tap our retirement funds."

"I never would have believed I would live to see 78," said banker 5358. "Had I known, I would have delayed taking Social Security at 65."

For some it was the impact that converting IRA assets had on their Social Security payout that was bothersome.

"I wish I'd known that conversions from Traditional IRAs to Roth IRAs would make a larger portion of Social Security taxable (because the conversion shows as taxable income for the year)," said Manjeff. "I looked through 20 years of notes and didn't find one mention of the effect that withdrawing a large amount from a Traditional IRA would have on my taxable amount of Social Security. Nor did several so-called financial advisors bring it up. Had I known, I would have started moving small amounts of Traditional IRAs into Roth IRAs several years before retiring and/or taken Social Security at a later date after the conversions were completed."

Consider Health, Not Just Wealth
Some commenters cited lifestyle factors such as their health or health costs as something they wish they'd given more consideration.

"I spent much more time planning the financial side of retirement than I did taking care of myself so I would not need medical care," wrote Bill1234. "Turns out that the biggest risk we all face in retirement and the biggest impediment to a happy retirement is our health." 

Another reader, strek, also mentioned health-care costs as something he wishes he'd planned for better.

"Medical insurance is much higher than anticipated," he said. "Medicine and associated businesses seem to be the primary growth industry in our country. I expected medical costs to increase, but, holy moly, this is getting ridiculous. I should have set that budget item higher, much higher."

Of course, not all retirees stopped working voluntarily. In some cases, the decision was made for them.

Prfesser wrote, "Unfortunately, I didn't have much choice in the matter as I lost my last employment due to disability coupled with a reorganization of the company that left me employable only at a significant loss of salary and benefits. I was 60 at the time and it took two years for me to get the surgeries I needed to become functional again. I ended up with Social Security disability [benefits]. Essentially, I wish I had known retirement would be the only way out for me when it happened."

Then there were those, such as REDDn2, who found retirement to be a jolt to their way of life.

"I was surprised," the poster said. "I thought I would work forever (or at least several more years). I was not prepared for the suddenness of this phase in my life that seemed to have always been so far in my future. I was not prepared for the reality of a 'fixed' income, for the distance of becoming disenfranchised from my working circle of friends. After working steady all my life, I was unprepared for the newfound freedom of not having that daily job to govern me."

​

Lifestyle Choices Loom Large
Another important consideration for some was geography and, just as importantly, who they lived near.

"Where my wife and I wanted to live during retirement has been the biggest adjustment," said dtconroe. "When I first retired, we chose to live where I had been working for the last 14 years. During retirement we realized we would be happier where some lifelong friends and family were living. I wish my wife and I had made that relocation decision much sooner after I retired."

DIYinvestor wrote, "I wish my wife and I had truly known not only where we wanted to live, but more important, how we wanted to live in retirement. We returned to our home state of Connecticut after I retired and in anticipation of my wife's retirement. Big mistake. The family that was nearby when we moved--and which was a major reason for moving back--is now gone. The cost of living is astronomical. The house is now too big. The yard is now too big and requires too much upkeep. The big takeaway in hindsight: I wish we knew we would want to live more uncomplicated, simpler lives in retirement."

For many of those leaving comments, it wasn't so much the financial challenges of retirement that had been difficult but some of the emotional ones.

"I had prepared pretty well for retirement, including non-monetary planning, but leaving at 60 was just a little too soon for me and I soon found myself back in the workforce part-time," recalled RZH123. "The freedom is great, but you can start to drift some if not careful. I also underestimated the loss of social connections I had at work. Finding places to replace that in my area has been difficult."

"I find the emotional aspects of 'retirement' more difficult than the financial aspects," said bmcwjb. "I owned a contracting business for 31 years, and sold it 7 years ago at age 61. I have no regrets selling the business, but my desire to work has never completely evaporated, which greatly surprises me. After selling the business, I worked part-time for two seasons at a major league baseball park for pure enjoyment, then 3-plus years part-time as a well-paid consultant for a large local business. My wife and I enjoy a significant trip each year. I volunteer at a local food pantry, in various capacities at our church, and travel to Haiti once a year as a 'gofer' on a medical humanitarian team. However, the desire to work continues."

In fact, volunteering in retirement was another popular topic of conversation, with some retired readers saying things hadn't turned out as planned.

"The one area I was disappointed with was my plans for volunteer work in retirement," said johnep. "I had met with the director of a non-profit organization several times in the two years prior to retirement. He had plans to use me as a half-time internal consultant, which would enable me to apply my skills and knowledge to their organization. This worked well for a few months but they did a reorganization and he was transferred out. New management used me a lot less and I wasted a lot of time waiting for some meaningful work. In retrospect, I should have had a plan B or sought out alternative volunteer work sooner. Organizations often do not value volunteer work the way they should. That never happened when I was consulting with companies at a high hourly or daily rate."

For jtwhit1, the problem was overcommitting to volunteer work in retirement.

"I should not have become so heavily committed to volunteer activities almost immediately after leaving paid work," Jtwhit1 wrote. "It took me almost two years to finally realize that I really did not enjoy the volunteer activities that I chose. I will have quit both of them by the end of this month. I still intend eventually to find an enjoyable outlet for volunteer service, but I should have waited and enjoyed the unlimited outdoor recreational activities that have been available to me for at least a year before working at a job that paid nothing."

For some readers, it was the road not taken that was their greatest retirement regret.

"I wish we would have done more traveling early on when we were still young," said ARYKEMPLER. "Now it is more difficult to get around, and travelling is out. However, happy that [we are] spending lots and lots of quality time around my family and community. There are still some young people who appreciate that age brings with it the wisdom of experience."

Expect the Unexpected
Finally, there were those readers who lent a good dose of perspective to the question of what they wish they'd known when they first retired.

"I wish I had known that there really wasn't much of anything that I could know about the future," said annoyed. "After we retired in 1996, so many things happened that seemed completely unprecedented. ... The dot-com crash, the incredible inter-relationship of the various world economies ... 'too big to fail' and what that meant to the entire world financial system, artificially low interest rates that simply crush seniors in retirement, worldwide terrorism and 9/11 and how that changed the world forever ... the list just never ends. In fact, it now seems clear that the one thing someone retiring today can depend on is that the future holds many, many challenges that we can't even imagine. ... What conclusion to draw from this? Those of you who are young, those of you with kids or grandchildren, start thinking in terms of preparing for everything you can think of for your retirement and then leave plenty of room for all of the things that you cannot predict. There are going to be plenty."

Sookegary offered a neat summary of what he wishes he knew when he first retired.

He wrote, "1. I wish I had known more about investing. Not some incredible, in-depth, mind-numbing knowledge but the basics of long-term, tax-wise investing. 2. I wish I had known more about making financially sound health insurance choices once I was no longer covered by a corporation's group policy. 3. I wish I had known to start moving money out of IRAs and into Roths and elsewhere. 4. I wish I had known that I could have a structure-less day and not feel any guilt about it. The day was mine (and my spouse's) to do with as I wanted. At the end of the day it only mattered if I was happy with what had I done. Relax, breathe, repeat. 5. I wish I had known how much fun I was going to have as the years passed by. Well, maybe not, because that might have spoiled the fun."

Then there was snowyday, who said he wished he'd known in advance "how well it would work out. We always lived below our means, avoided debt except the house mortgage, and saved 10% of two salaries for retirement in well-researched (at Morningstar) no-load, low-fee mutual funds (at Fidelity and Vanguard). As we tell the kids, 'You can have it all. You just can't have it all right now.'"

Comments have been edited for clarity and brevity.