I'm probably not telling you anything don't already know by saying that you won't experience retirement like your parents or grandparents. That's no surprise for anyone in the Skydiving Over 60 Club.
You may have thought a lot about what you want to do in retirement, but you may not have thought as much about how your personal plans have an effect on your retirement financial planning. Even if you're building a rock-solid retirement nest egg, you may have to tweak the rules of thumb a little so you can live the retirement you want.
Transition
To start with, you might not have a traditional transition into retirement. It was once assumed you would slip into leisure at age 65, having raised the children, paid off the mortgage, and accepted a nice watch as a token of your workplace contributions.
That traditional pattern has changed a lot in the past generation, making the picture more complicated for some people nearing retirement age. Blended families and late-in-life children may mean you still have kids at home or college costs to consider. Frequent moves or remodeling projects may mean you still have a mortgage or other housing payments to make.
You may not even want to stop working cold turkey. Perhaps a part-time job, consulting, or even a new business lies in your future.
Your first task in retirement planning is to figure out how to finance this transition, when you may still have expenses from your working life but you also may still have some income from work. You may lose some of your workplace benefits, particularly health insurance. You'll need to decide whether it will be necessary supplement any income from work with withdrawals from your retirement coffers, or whether it's time to start drawing on your Social Security benefits.
Honeymoon
If you're the type who wants to be really retired, with no job strings at all to tie you down, think about what you want to do while you're a young retiree with 24 hours a day of free time all to yourself (finally)!
This may be the time you finally tackle everything on your lifelong to-do list, and that can be expensive. If you want to travel, return to school, or take up expensive hobbies, you'll need to factor that into your financial planning. You may even find that your expenses rise in early retirement because you actually have time to do everything on the list!
This phase may last your entire retirement, and you'll leave the young folks in the dust when you're scuba diving at age 88. For others, it may be a temporary phase that lasts only as long as your joints hold up. Either way, you'll want to make sure not to draw your retirement funds too quickly in the early years, lessening the chances that your nest egg lasts as long as you do. Factor your extra costs into your plan, or make sure your costs don't exceed a prudent withdrawal rate.
Downshifting
For many people, retirement means relaxation and shedding the responsibilities and stress of daily life. You may want to sell your house and downsize to something smaller and more manageable. Maybe you want to move to a beach house or a mountain shack, just to get away from it all.
Factoring this kind of relocation plan into your retirement early can help you make it a reality when the time comes. Figure out whether you can afford your dream home, what your housing expenses will be, and whether you'll be saving or spending more compared with your current living arrangements.
If this stage follows a more active period of travel and hobbies, you may see your expenses drop. But the deeper you get into retirement, the more you could see your health care costs rise.
Late life
Inevitably, old age happens to us all, and many people have to answer the ultimate question of how to grow old gracefully. Live to a ripe enough age, and you may have to face the need for help. Nursing homes, assisted living facilities, or even help at home can be expensive propositions. You may never need this kind of intensive help, but it might be prudent to plan for it.
Seniors have a lot of options when it comes to care in their older years, and long-term care insurance may be worth investigating. If you talk about this with your family while you still have time to plan, then you won't be forced to make a decision on the spur of the moment in the event of an emergency.
Foolish conclusion
Many articles about preparing for retirement offer valuable rules of thumb, and for many people those generalities will help them fully prepare for a secure retirement. However, your retirement may not be so average. Although I've barely scratched the surface, I've hopefully sparked a little brainstorming to help you design the retirement you want and build the financial plan to make it a reality.
Related Foolishness:
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Fool contributor Mary Dalrymple welcomes your feedback. The Motley Fool's disclosure policy will never retire.
