Worried about retirement? 8 ways to change your perspective
Changing your perspective allows you to see things in a new and different way. This new approach can change your attitude and help you find creative ways to approach a problem, even if it’s something like how to retire or being worried about it.
Your attitude toward anything in life depends on perspective. If you’re worried about retirement, maybe you just need to change your approach. By taking a different perspective, you can change and greatly improve how you feel about your future and even how you prepare for it.
Keep reading to discover eight ways to change your perspective on retirement:
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1/ Time, not money
The currency our society values most is money. In an article published in the journal Social Psychological and Personality Science, researchers found that 64% of 4,415 people surveyed valued money more than time.
However, the researchers found that people who chose time were – on average – statistically happier and more satisfied with life than people who chose money, even after accounting for existing levels of available time and money.
Another study found that people who were extremely concerned about their retirement finances were much happier once they retired, in large part because they had greater control over their time. In fact, the ability to control one’s time is how many people define retirement today.
You may be less worried about retirement if you focus a little less on money and more on how you spend your time. Is this why a gold watch is the symbol of retirement?
2/ Should 75 or even 85 be the “new 65”?
If you were a contestant on the game show “The Family Feud” and the question was, “At what age are you supposed to retire?” the vast majority of respondents would say 65 – or younger.
However, retiring at 60 is a relatively new phenomenon. For most of our history, people have worked either until they died or until they could no longer physically work. And, today, people live a very long time – up to 80 years and beyond. It doesn’t matter that age 65 is a healthier and more robust age today than it was 10 or 20 years ago. Lifespans are getting longer and older people are more active than ever. Just look at the amazing achievements of people in their 80s and 90s.
Maybe 75 or even 85 should be the “new 65”!
3/ Perhaps you should have retired in your 40s or earlier?
On the opposite end of the spectrum from the “85 is the new 65” perspective, there are many people who practice what is called “extreme retirement” or financial independence, early retirement (FIRE). They retire in their 30s or 40s.
These people decide that financial freedom is more important to them than the money they want to spend. While working – often two jobs – they live extremely frugally and save as much money as possible. When they retire, they continue to be careful with their money, but they are released from work at a very young age. Many continue to earn money doing things they love, but they don’t feel the stress of having to earn money today to pay for things tomorrow.
Other people enjoy a few years of retirement in their prime, before they even start working. Think of all the young people who took a gap year or joined the Peace Corps.
Have you outgrown all that? In mid-life, people often take sabbaticals – essentially a temporary mini retirement.
4/ Is your current lifestyle suitable for retirement?
Most financial advisors assume that we should maintain our lifetime spending habits when we retire. While this is true for most of us, many people redefine themselves in retirement and can significantly reduce their spending.
We don’t need to maintain the status quo when we retire.
What you have to spend to be comfortable while working and raising your children may be very different from what you have to spend once you retire. And if you retire in a less expensive place than where you live now, the amount you need to have saved could be very different.
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5/ Retirement is not the end, it’s a new beginning
Boomers embrace the idea that retirement is a new beginning – a time to try new things and live the life they want.
Second careers are gaining popularity, and today’s retirees are taking up new hobbies, seeking out volunteer opportunities, and more.
In fact, you may have several new retirements.
Retirement is not a single phase. Most of us will actually experience several different transitions after we stop working.
6/ Don’t set a date – Transition to retirement
Once upon a time, a very long time ago… you would set a date and have a big retirement party. You would go to work one day and then never again.
Today, more and more of us have a different view of our retirement date. Today’s retirees are transitioning into retirement either by working part-time for a few years or by finding a retirement job.
7/ Spending money, not saving it
You’ve spent your whole life working and saving money – paying off your mortgage and putting some away for retirement.
Retirement IS the time to spend it. This is a HUGE shift in perspective that people find problematic.
The research firm Hearts & Wallets found that 28% of people 65 and older with at least $100,000 in savings withdrew less than 1% from their accounts in 2014 – well below the 4% withdrawal rate that many financial planners consider safe.
Many people worry that if they spend their money, they may run out of money. If this is your situation, then you may benefit from one of these strategies:
Spread your savings:
You can divide your savings into different categories. You might have accounts for:
Your needs – money used to make ends meet – conservatively invested.
Your wants – money to spend on fun and recreation – also invested with less risk.
Money for future needs, emergencies and the like – invested for longer term growth.
Create a detailed budget for all your future expensesNewRetirement’s PlannerPlus
PlannerPlus allows you to create a detailed budget for all future expenses in 75 different categories – and you can add your own. You can define what you need to spend as well as what you would like to spend. In addition, the system allows you to vary your expenses over different time periods, set tax treatment, etc.
By detailing your spending, you can gain the confidence you need to allow yourself to spend money.
Lifetime annuities
Studies show that people worry less about retirement if they have adequate guaranteed income for life. You can turn some of your savings into a lifetime income with an annuity.
When you buy an annuity, you are exchanging money for a guaranteed income for life – an income that lasts as long as you do, however long that may be.
8/ Plan ahead!
Of course, we all should have had a detailed financial plan all our lives. However, most of us managed to live month to month or year to year, and that was fine as long as we were working and making money.
In retirement, we have to learn to manage for a very long time with many unknowns on a relatively fixed set of resources. That’s why a fresh perspective on financial planning is so important. A personalized and comprehensive retirement plan is necessary at this stage of your life.
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