Retirement Planning

In the most general sense, retirement comes at the conclusion of a person’s career or working life. It’s your life after you finish your career. 100 years ago, people worked until they were physically no longer able. More recently, with longer lifespans, people began to work until they had saved enough money to stop working and live a life entirely of their own choosing. It’s different for everyone. Some people want to keep working forever, while others want to stop as soon as they can.

A full 50% of all people are forced to retire before they planned. This astonishingly high number shows that half of all people do not stop working on their own terms, and, by extension, are more likely to have not saved enough money to live the life they hoped for once they did reach the age that they planned to stop working.

From riding off into the sunset, to sudden, forced retirements due to ill health, there are as many different types of retirement as there are people. Some people volunteer, others start companies, others travel the world, and still others play golf or watch television. Just as there is no “one” way to retire, there is no “right” way to retire.

As of February 2020, full retirement age in the U.S. is 66 years and 2 months. This number will gradually rise to age 67 for people born in 1960 or later.

Full retirement age is an age that the Social Security Administration uses to assess, first, whether you are eligible to receive Social Security, and, second, how much you will receive. If you apply earlier than your full retirement age (you must be at least 62), you’ll receive a smaller monthly benefit. If you apply later than your full retirement age, capped at age 70, you’ll receive more.

The best age to retire is different for everyone and there is no widely accepted number. It depends largely on your financial situation and your goals in life. Generally, you want to save enough money to retire at an age where you are still physically and mentally healthy enough to enjoy the fruits of your labor and to constructively and enjoyably fill all the additional free time. Unfortunately, that doesn’t always happen.

Studies show that the highest levels of overall happiness are found in people over the age of 55. People in this age demographic report the most satisfaction with their financial situation, their overall well-being, and their physical appearance. As people are generally happiest after age 55, according to one longitudinal study, the age at which happiness and contentment peaks is 74.

When it comes to money, retirement planning involves the allocation of savings that has been accrued during your lifetime to use during retirement. It is the process of defining income goals and the steps necessary to achieve those goals. It includes identifying and maximizing retirement income sources, assessing risk and investment management, debt management, and more.

Other aspects of retirement planning include deciding how much you can spend, where you want to live, and what you want to do with yourself once you retire.

Either because of health emergencies, job loss, or the declining health of a loved one, with 50% of people forced to retire before they planned, everyone should prepare for an early or involuntary retirement. Whether you are forced to stop working, or whether your goal is to retire young, it’s essential to start saving early and consistently, to stick to a budget, and to set realistic goals. 

Retirement planning is a lifelong process, and people who start early and stick to a plan are generally more ready to retire early whether they do so voluntarily or whether they are forced to stop working due to circumstances beyond their control.  

According to a study by the World Economic Forum, more than half of all people who have saved for retirement still run out of money ten years before they die. Think about it his way: one third of people who are 65-years old today will live past age 90. 20% will make it to age 95. With retirements lasting 25 or 30 years, if you fail to save well, or fail to invest your money in a way that allows you to live off the interest (and not deplete your savings) there’s an excellent chance you could run out of money at some point during your retirement.

This is why financial planning is such a critical part of retirement preparation, and why we recommend working with a professional, credentialed fiduciary to help you assess your retirement outlook.

The secret to a happy retirement is prosperity: the state of being prosperous.

Prosperity isn’t having lots of money. And it isn’t just feeling good. Feeling prosperous is the feeling that your financial situation is solid and under control. That you are free, or, generally free from financial worry.

Other studies on retirement have determined that the keys to happiness in later life revolve around good health, staying social, having optimistic friends, having a positive outlook, and being pain free.

A retirement community is a housing community or complex designed specifically with retirees in mind. Although there are myriad options and potential amenities, depending on one’s budget and preferences, typically, a retirement community is a place where only adults who can generally take care of themselves live. Additionally, some communities may offer social activities ranging from group vacations to exercise to entertainment.