How to Rehearse Your Perfect Retirement Early
Jonathan M. Gardey, MBA, CFA®, CFP®
President and Chief Executive Officer
While the financial aspects of retirement are important and are at the forefront of everyone's mind, in many ways, the non-financial aspects can be more important. The following is a great discussion of one of these non-financial aspects.
Have you considered what retirement will actually be like? You may be financially prepared, but have you thought about how you will spend your time?
Retirement is a major life change that requires careful planning, not just in terms of finances but also in terms of your life. It’s not just the dollars you need to think about when it comes to retirement. It’s also the extra hours in the day you have free to do with as you please.
While working, you’re likely to spend around 10 hours a day, 5 days a week away at your job and commuting to and from home. Once you retire, that’s 10 more hours per day you now have free to do as you please. And you’ll likely spend 20-30 years in retirement.
Some folks find this intimidating, especially if their spouse plans to continue working. How will they fill their time? What will make their days feel fulfilling? Where will they find a space to be social outside of the workplace?
What if you could take a month-long retirement rehearsal to see what it might feel like to be retired? Or perhaps even just two weeks? Let’s take a peek into what a retirement rehearsal could mean and do for you.
How to Take a Retirement Rehearsal
During a retirement rehearsal, you take an extended period off work and spend it doing what you would expect to do when you're retired. This can help you determine if you are financially and emotionally prepared for retirement.
How?
The first thing you might be wondering is: why would I waste my money taking time off? Shouldn’t I save it for retirement? Sure, in theory this is correct. It’s more important to prioritize future benefits over present enjoyment.
But a lot of folks find they can use vacation pay or paid time off to make it happen. In fact, according to the Wall Street Journal, Americans are losing $54.2 billion of vacation pay each year. This includes employees having more unused vacation time than their employers allow to be carried over each year and retirees not being paid out their full unused vacation benefits. So why not use these benefits and get a taste of what your future retirement might be like?
No paid time off or vacation pay accrued? Where there is a will there is a way. Maybe you simply use vacation time you would have otherwise used to leave town, to stay put and give your retirement rehearsal a try.
When to Take Your Retirement Rehearsal and What to Plan
We typically recommend taking yours when you are within 2-5 years of your anticipated retirement date. During this week, plan to do nothing. That’s right. Don’t make any plans to leave town or take a trip. Don’t take on a major home improvement project. Just plan to live what you think a typical day in retirement might look like.
The reason behind this is simple. Even if you have big dreams for traveling, golfing, or leisure activities in retirement, those things aren’t going to take up the bulk of your time. The big things are fun to think about and easier to plan for, but what about your day-to-day? Will you wake up early or sleep in late? Visit the gym? Have coffee with a friend? The idea is to see what it feels like when those extra 10 hours a day are free to use as you please. Remember, there are only so many trips you can take in a year and so many rounds of golf you can play before you say, “Ok, what’s next?”
What to Look for During Your Retirement Rehearsal
There are two main things to pay attention to during this retirement rehearsal: (1) your spending and (2) your attitude.
- Spending: During a regular week where you're not doing anything out of the ordinary, how are you spending your money? It's important to keep in mind that the majority of your retirement will consist of downtime. By paying attention to your spending habits during these periods, you can make informed adjustments to your retirement budget. Maybe you will even find that you spend less in retirement than you thought. In that case, you may be able to plan for more high-dollar items or even retire earlier. Wouldn’t it be nice to use this rehearsal to find out you can retire 6 (or even 12) months earlier?
- Attitude: Take note of how you feel once the novelty of “being free” wears off. Now, to be fair, it might not become clear during this brief rehearsal period but as you probably know all too well, it’s easy to see if you’re feeling discontented. Do you find yourself looking for the next thing to do? Antsy to get out and do something? It’s in these times that we tend to spend more to entertain ourselves, so this is important data to collect.
Once the rehearsal period is over, you may have some new insight that can help you better understand your personal and financial retirement needs
Retirement is More Than Just a Financial Event
Retirement is more than just a financial event. It's important to consider how you will spend your time in retirement and to plan accordingly. Taking the time to prepare for retirement can give you peace of mind and a new outlook on your next chapter. With proper planning, you can ensure that your retirement years are fulfilling and enjoyable.
At Gardey Financial Advisors, we know that major money decisions are rarely made in the absence of our personal feelings about them, which is why we are dedicated to supporting the entire person, couple, and family around this major life change. If you are in need of a financial ally who understands how money decisions are made and who takes your full personal and financial pictures into account when creating your financial plan, we encourage you to take a look at our services and see if we could be a good match. We best serve clients looking for exceptional client service, who value a long-term partnership, and have a minimum of $500,000 in investable assets.
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