March 04, 2024

This may not seem obvious, but there are new, potentially surprising challenges retirees face when they stop working.

Take stock market volatility. While you’re working, market gyrations aren’t noticeable. If they are, it’s not a big deal because you’ll weather the storm and be fine over time. But when you retire, the regular paycheck is gone. So, market downturns can be devastating for current and future income.

You also have more free time. You might check accounts more often and watch more news, which is usually doom and gloom. This can lead to financial overreactions. In the worst cases, you might sell investments at the worst possible time.

Inflation is another potential surprise since your retirement income doesn’t include many raises. Decreased spending power hits harder for those with fixed incomes.

A lack of purpose can startle and sting new retirees too. When we work, we often have other important priorities too, like raising a family. It all gives us something to do, and more importantly, something to care about deeply.

In retirement, those previous priorities may disappear. Combine that with more free time, and it can be a tough situation. I speak with clients a lot about doing things that offer fulfillment and satisfaction. I think it’s a crucial part of a successful retirement.

Another surprise is deteriorating relationships. Divorce for those over 50 (so-called “gray divorce”) doubled from 1990-2010, and the trend remains strong today. Retirement is a gradual process and patience is critical, especially with loved ones.

Similarly, retirement can mean new groups of people. Workplace friends may no longer be there after the daily interactions cease. This puts more emphasis on friendships outside of work, like at church, senior centers, and elsewhere.

Lastly, spending retirement savings can be challenging. We save for decades and then it’s time to spend. Of course, we fear outliving our money and don’t want to burden anyone, so we clutch the purse strings tightly.

A remedy is a solid retirement spending plan with conservative rates of return built in. Without any sort of plan, you’re planning to fail.

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