How Do I Retire?
I relate this question to when I first moved to town. I had no idea where I was going because it was new territory. I used my phone each time I had to go somewhere new to help me find the best route and navigate where I was going. Now that I have been living here for several years getting around is pretty simple.
Often when I’m talking with clients, especially those getting close to retirement, there’s a lot of anxiety and stress around how they should go about retiring. They ask questions like, “How do I do that?” “How do I make that transition?” Sometimes there are several questions within that question. When I think about how to answer the question of how to retire, these are the things I believe are essential to answer.
1) Are you able to retire?
The first thing to consider is whether you are able to retire. Have you run the numbers? Do you understand the implications, taxes, inflation, income, etc.? From a financial standpoint, these are the first things you need to consider based on what you want to accomplish and your bare minimum necessities. I go into more detail on this step here if you want more information.
2) What are the retirement policies and processes of the company you work for?
The second step is from a logistical standpoint. If you’re working for a company or organization, you need to know the steps and policies to retire. Many larger companies will have specific steps they want you to follow to go through the retirement process.
I work with many Disney cast members on retirement planning with their Disney 401(k), pension, etc. Disney HR has very specific things they would like to see as you plan to retire. Things like what to do with your pension if you have one. Health care and 401(k) decisions are also necessary. There is also a timing aspect to consider. Depending on your role, you may be required to give the company a certain amount of notice to be able to retire. It may be 30 days, 60 days, or longer. Other companies may or may not have the same policies, but it’s always good to check. You don’t want anything to prevent a successful retirement plan.
3) What are your plans for retirement?
Another thing to consider is what your plans will be once you retire. This is often overlooked when considering retirement, so much of the anxiety that comes with thinking about how you retire is centered around this question.
What are your plans from a financial standpoint? Consider the following:
- What are your expenses going to be?
- What are the taxes going to be?
- What’s the impact of inflation and health care costs?
Finances are necessary but now consider lifestyle. What will you do with your time if you no longer have to work, be in meetings, or be on Zoom? It’s a big question that can cause a lot of anxiety when you don’t necessarily know what you will be doing. Some ideas to get you started are:
- Do you have some sort of passion project?
- Is there a hobby you’d like to spend time on?
- What about spending time with family?
- How about charity work or another type of work?
- Is it a combination of all of the above?
You can see why it’s important to think through what your plans will be in retirement. A loss of purpose or fulfillment can derail your retirement as quickly as financial issues can.
4) Decide when to retire and take action toward making it happen.
Ultimately, it comes down to deciding when you will retire and taking action toward that goal. Some people know the specific date and time they want to retire. Others go through more of a process as they work on getting comfortable with the idea of retirement finances and plans.
The best thing to do is often to say, “Okay, in a perfect world, what is the date of my retirement.” When you decide, you can begin to work your way into figuring out your plans.
Maybe you need to save a little bit more or make changes to your portfolio. You may need an understanding of what the income expenses are going to be, so you feel comfortable in that position. Maybe you need to figure out what sort of charitable organizations you want to work for or how to spend your time once work is no longer part of your daily routine.
Some final thoughts
Thinking about the question of how to retire reminds me of a man I was meeting with a few years ago. He was a few years from retirement but starting to think about how to make it happen. We went through details and financial plans and ran an analysis. He was in his early 60s then, and we planned to age 95 for him and his wife. Walking through the detailed financial plans, we saw that he had access to a pension, 401k, IRAs, mutual funds, and some stocks. He realized that he was financially able to retire.
What he hadn’t figured out was how he would spend his time. Because much of his life had been spent working, he began to think about what his greater purpose and fulfillment would be once he retired. He found that he needed to focus on answering that question. He spent time praying about it and talking with his family and friends. He also looked at some other resources we had discussed to finally feel comfortable with the idea of walking away from work and stepping into the next phase of life. He determined that having more family time and more time to travel was key. He also enjoyed hosting and entertaining his friends and would now have the time to do more of that. Lastly, he saw an opportunity to help in charitable endeavors as well. There is no right or wrong answer to how to retire. It depends on you as an individual. I am happy to be there side by side with you to partner with you and help you think through this and many other questions as you transition into retirement. We can meet virtually or in person if you are in the Central FL area. Please email me at kyle.newell@newellwm.com, call/text at 407.337.7128 or schedule a meeting at Schedule – Newell Wealth Management (newellwm.com)
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