Close to four million Americans retire each year, and while they may have prepared by saving and investing money in IRAs, 401(k)s, and other accounts, they're likely unprepared in other ways. For example, while you might prepare for retirement, you might not have given much thought to how life will be in retirement. To remedy that, here are 11 facts about retirement every retiree should know.
You may not enjoy retirement as much as you expected.
For starters, despite that fact that many of us count the months and years left until we retire, retirement won't be as much fun for some of us as we expected. You may be tired of working, but the routine of having a place to go and things to do every day may have been serving you very well. Don't be surprised if you miss your workplace and find yourself restless in retirement. Be prepared to make some adjustments.
Your retirement may be longer than you expected.
You may be figuring on a 20-year or 25-year retirement, perhaps from age 65 to 85 or 90. But know that more and more Americans are living well beyond that, sometimes even to 100 and beyond. Be sure to consider the possibility that your retirement might last for 35 years or more -- especially if you retire early. That's a long time.
It can be hard to spend the money you've saved.
Retirees have spent decades building up a nest egg for retirement, but when the time comes to start spending that money, they sometimes balk. You'll need a new mind-set in retirement, that spending that money is OK. You don't want to blow it all in your first few years, of course, and you should have a spending plan, but stick to the plan and spend.
You can live on less, if you're having trouble making ends meet.
If you don't seem to have enough saved to carry you through retirement, know that you can make your situation better by cutting back on your spending if you have to. A little Googling will turn up lots of suggestions, such as making extra money via part-time tutoring, relocating to a less expensive home or region, and seeking senior discounts -- which may not only give you a break going to the movies, but might also reduce your property taxes.
It's not crazy to keep investing in stocks.
It's true that as we approach and enter retirement, it's smart to think about shifting some assets from stocks to bonds or more stable securities. But that doesn't mean retirees can't keep a significant portion of their portfolio in the stock market, where it's likely to grow the fastest over many years. Remember that if you have 20 years of retirement ahead of you, a big chunk of your money that you won't need for at least 10 years might remain in stocks.
You can protect your last years with a deferred annuity.
It's natural to worry about running out of money before you run out of breath, so consider investing in a deferred annuity (sometimes called longevity insurance). It's a fixed annuity, but one that doesn't start paying immediately. Instead, the insurer agrees to start paying at a future point, such as when you turn a certain age. For example, a 70-year-old man might spend $50,000 for an annuity that will start paying him $1,600 per month for the rest of his life beginning at age 85.
A Medicare Advantage plan may be your best bet.
Be sure to enroll in Medicare on time -- in your 65th birthday month or the three months before or after it -- or you may face higher premiums for the rest of your life. Look beyond the traditional Part A and Part B coverage (which many people augment with Part D prescription coverage and Medigap supplemental coverage). There are now Medicare Advantage plans (sometimes referred to as Part C) that are offered by private insurance companies and are regulated by the federal government. They are required to offer at least as much coverage as original Medicare and they often offer more, such as dental, vision, and/or prescription coverage. They may cost you less out of pocket, too. Look into them and run the numbers.
- You should stay active -- and social.
When in retirement, be sure to stay active and social. Retirees and seniors watch more television than anyone else, but that can be isolating and dangerous for their health. It's important to stay active for your physical health, as that can keep your bones and heart strong. Being social has been shown to pay big dividends, too, such as keeping you mentally and physically healthier and possibly keeping dementia at bay.
You can meet people online.
Many retirees find themselves lonely and wish to make new friends, and possibly even a life partner. It's easy to think those are pipe dreams, but there are online resources that can help a lot. At Meetup.com, for example, you can find and join groups of people with shared interests, such as gardening, theater, hiking, or playing board games. Online dating sites, meanwhile, can serve older singles as well as young ones.
You will need help.
No matter how independent you've been for many decades, you'll probably eventually find yourself needing help in retirement. Brace yourself for that, because it can sometimes be hard. Know to expect it and perhaps practice asking for help now and then.
You need to plan for it.
Finally, be sure to have a plan for your retirement. Think of how your health and circumstances may change over time, and how you will respond. Think about how long your income will likely support you, and see whether you need to take any steps to improve your financial condition. Remember that over time, you may experience a decreased interest in or ability to manage your investments. An annuity can help there, delivering regular checks. Or a trusted loved one might be able to help.
Retirement can be a long and wonderful phase of life, and you can make the most of it by being prepared and making some smart decisions.