Finance: Examining the emotional transition of retirement

By Pete Alepra, senior vice president and financial advisor, RBC Wealth Management, Cedar Rapids

Most people focus on preparing financially for retirement. But the emotional aspect of retirement should not be overlooked.

The average person spends more than 90,000 hours working in their lifetime. Work doesn't simply satisfy financial responsibilities --  it also creates structure, a routine schedule, a sense of purpose and camaraderie.

The more purpose and meaning people have in their lives, the easier they find retirement. Unless you put some purpose into daily activities, you may end up constantly questioning the meaning of life and forgo the many fulfilling opportunities retirement has to offer.

A well-thought-out financial plan that allows you to focus on your passions and interests in life is a prerequisite to your actual retirement date. This will help alleviate the emotional hurdle of going from W-2 income (regular paycheck) to 1099 income (investments/pensions)

It also will allow you to focus on the important things in your life - family, friends, hobbies, traveling and volunteering, in addition to life's to do list.

Start by implementing a plan that fulfills your financial needs, preparing for transitions by developing your goals and aspirations for retirement, outlining your day-to-day activities and strengthening your social connections.

FINANCIAL PLAN

A realistic plan that encompasses your financial needs, realistic expectations and risk/return profile is the foundation to enjoying your retirement. Ideally this is done before retirement.

SETTING GOALS

While the movies may paint the picture of retirement as daily golf and luxury cruises, this may or may not be the reality of many, depending on their financial resources. Therefore, it is important to create a practical vision of retirement by involving yourself in an area of interest and passion that allows fulfillment in your life.

More retirees are seeking part-time employment in their areas of interest to maintain a small amount of income as well as to continue a sense of purpose in their lives. Most employers are excited at the prospect of hiring experienced, responsible people.

If continued income isn't of importance, you may want to consider volunteering your time to the community. Contacting local groups and volunteer organizations before retirement to find something that suits your interests and personality will give you a head start.

Others find retirement as an opportunity to pursue their hobbies. Hobbies that involve others who share similar interests also will provide opportunities to interact with others.

In addition, many colleges offer courses for a reduced fee or even free for people over 65. Learning something new is a great way to keep your brain active and interact with new and interesting people with similar interests.

CREATE A DAILY SCHEDULE

Freedom from the daily structure of work may initially sound appealing to many people, but the problem is that most people have come to rely on routine. Society sets routine in our lives from the time we are children, creating structure and comfort throughout the day.

“LIFE'S TO-DO LIST”

Many refer to this as their bucket list. It is an important part of retirement.

Many people are hesitant to pursue these outside-the-box interests for many reasons, some may not have the financial means, but more often than not people feel guilty spending money on themselves beyond life's necessities.

I always ask my clients, “What have you always wanted to do, or where would you like to travel, but have not done so because on the surface it appears impractical?”

The answers I have received over the years are interesting, exciting and gratifying when they become reality. It is always good to have something to look forward to, and constructing life's to-do list will allow you to do so.

It makes my day when I hear a client say they are busier and happier now in retirement than while they were working. While you may be approaching retirement with mixed feelings of excitement and trepidation, it's helpful to remember the next chapter is a time to embrace your passions and freedom to work and play without the daily grind of a full-time job.

By creating a life plan that encompasses your financial needs along with your goals and interests in life, it will allow you to clear the emotional hurdle of retirement.