5 Tips for an Easy Transition Into Retirement

When retirement is just around the corner, it can seem exhilarating and liberating. At long last, you don’t have to punch a clock or commute to work every day. 

However, as thrilled as you may be for retirement, are you really ready? Are you ready for the emotional transition? What about your finances? What are you going to do with your time? What does a “successful” retirement look like to you? 

If you don’t have answers to these questions, don’t worry - we’re here to help. Here are the five top tips for an easy transition into retirement. 

Step One: Create a Vision Statement For Your Ideal Retirement

Although retirement marks the end of an era, it’s actually a new beginning. What do you want to achieve in this next phase of your life? You may have been so focused on saving money and counting down the days that you may not have put much thought into how your golden years will unfold. 

A vision statement can help you focus on what matters most in your post-working life. Ideally, this statement is an actual document, not just wishful thinking on your part. Here are some tips on how to make your vision statement work: 

Start With the Practical Elements First

Although a “vision statement” calls to mind something like a dream journal, the term refers to something a bit more concrete. While there is room for lofty ambitions and goals, you want to start with the tangible pieces first. These elements can include: 

• Finances - Will you spend the same amount on expenses during retirement, or will you spend less? What if your monthly budget goes up? Are you prepared for that? 

• Insurance - Health and life insurance are crucial once you retire. Are you ready to sign up for Medicare? What about a life insurance benefit for your loved ones or do you even need life insurance anymore?

• Timelines - One of the most prominent question marks about retirement is how long it will last. Will you be retired for 20 years or 40? What does each option look like? How will your finances or health situations change over time? 

Start Big, Then Narrow Your Vision

Let’s say that one of your primary goals for retirement is to travel the world. While that sounds fun, that vision also sounds pretty vague. Narrowing that goal down to its practical elements will help you understand your limitations during retirement. 

For example, you can write out a list of each place you want to travel to in order of preference. If you create a list of your top 20 destinations, you can start assigning trip details, such as travel costs and dates. Can you bundle multiple trips together? How long do you want to spend in each location? 

Writing your vision statement this way allows you to come up with your lofty ambitions and then hammer out the details. Once you do that, you can determine which goals are most important and which ones may have to go onto the back burner. 

Allow Room for Flexibility 

Since no one knows what the future holds, you don’t want to lock yourself into too many specifics. While it’s nice to plan your first year or two, it’s hard to say where you’ll be after that, both physically and financially. What if you get injured during a trip and have to spend the next six months recovering? How will that impact your plans? 

Overall, it’s best to be conservative with your estimates and allow some breathing room for your vision. For example, don’t plan to spend all of your money since you will need some of it for unforeseen expenses and market fluctuations. 

Step Two: Create a Plan of What You’ll Be Doing on a Daily Basis

While a vision statement gives you some broad goals and ideas, it serves as more of a detailed summary of your retirement. What are you going to do on the other days? 

A daily plan isn’t designed to plot out every single day in retirement. Instead, you want to focus on building habits and hobbies to occupy your time. Although it can feel liberating to not go to work every day, sitting around doing nothing can be even worse. 

When building your day-to-day schedule, keep these elements in mind: 

Hobbies 

What are some projects you can work on over time? While short-term hobbies can be engaging (i.e., golf or reading), it’s better to add something productive. For example, you can work on building a gazebo in your backyard or painting pictures. If you can produce a tangible result, it will help you feel like you’re accomplishing something, and it will keep you motivated to continue. 

Diet and Exercise

As you get older, you have to be much more careful about what you put into your body. When you retire, are you going to eat out more often or cook at home? What kinds of meals will you prepare? How often will you go shopping? 

On the flip side, you should also stay active during retirement. Will you walk around the neighborhood or go to the gym? What about a local swimming pool? Exercise activities can fill up your daily schedule and keep you feeling young. 

Social Plans

Ideally, you’ll have friends who are also approaching retirement. How often will you see them? Will you keep a regular visiting schedule? Can you merge your hobbies or exercise activities with your social group? 

For example, perhaps you play cards once a week or go walking with friends on the weekends. Maintaining these relationships is vital for your emotional health. 

Step Three: Understand How Much Income You’ll Need and Available Resources

The one piece of retirement that everyone worries about is money. Will you have enough to last throughout your retirement? That’s the million-dollar question. 

While you should be saving as much as possible in the years leading up to retirement, you should also be earning or making money once you stop working.

Residual income can mitigate most of your financial worries, provided that your post-retirement earnings can cover most of your daily expenses. When it comes to retirement income, some potential options include: 

• Investment Accounts - Although your IRAs and 401k are tied to the market, you may want to invest in other assets like real estate. Take a portion of your nest egg and put it into something that has a decent return. 

• Social Security - Social Security can cover a lot of your monthly expenses. Be sure to calculate when you can get the most from social security so that you can maximize your earnings. 

• Side Gigs - Just because you’re retired doesn’t mean you can’t work at all. Side hustles can be an excellent way to get some extra cash for anything from eating out to your next vacation. 

Determining your retirement earnings is one piece of the puzzle, but it’s also critical to understand how much you’ll be spending. Ideally, your monthly and annual expenses will be lower, but that’s not always the case. When calculating your budget, consider these factors: 

• Mortgage - How much longer do you have to pay your mortgage? Once it’s paid off, that can be a huge financial relief. 

• Debt - How much are you paying on other debts, such as credit cards, car payments, or other loans? Can you consolidate your debt to lower your monthly bill? 

• Taxes - Even after your mortgage is paid, you still have to pay property taxes. Unfortunately, they go up, so you have to plan accordingly. 

• Bills - Healthcare will only get more expensive as you age, and since you’ll be home more often, your utility bills might go up as well. 

Once you determine your base expenses, you can figure out a budget for other retirement goals like traveling. Then, as long as you stick to that budget, you should be able to maintain financial security. 

Step Four: Make Sure You and Your Spouse are on the Same Page

Assuming that you and your spouse are retiring around the same time, you need to make sure that your goals align. Otherwise, you could be in for a nasty surprise once you stop working. Even if you plan to retire several years before your spouse, the new dynamic can put extra pressure on your relationship. 

Here are some tips to ensure that you’re both ready for retirement as individuals and as a couple: 

Solo vs. Shared Activities

No matter how much you love your spouse, everyone needs their alone time. However, what will that look like once you’re retired? Be sure that you can both budget time to yourselves so that you don’t wind up getting on each other's nerves. 

On the flip side, you should also plan to do some activities together. Whether these involve traveling, charity work, or shared hobbies, they can help you bond and even enhance your relationship. 

Financial Matters

Realistically, you and your spouse will have to share accounts to pay for various expenses. You may have a system already, but will it continue into retirement? For example, perhaps one of your accounts is designated for traveling, while another is earmarked for emergency funds. 

You will need to discuss these financial arrangements with your spouse before retiring so that you both know what to expect. Otherwise, there could be confusion and conflict down the road. 

Vision Statements

As you come up with your vision statement, you should include your spouse and get their input. If your spouse is going to retire soon, too, they should make their own vision statement. Going through this process together ensures that you’re both on the same page and know what the other person wants to get out of retirement. 

For example, maybe you want to travel more while your spouse wants to do more charity work. You can come up with a shared vision statement where you travel to other countries and volunteer at local nonprofits at each location.

Step Five: Make Sure Your Estate Planning Documents are in Order

Since retirement is the last phase of your life, you need to be ready for what happens after. Although estate planning can be difficult to discuss, it’s necessary to get everything in order while you still can. 

Here are some tips on how to create an efficient estate plan: 

• Talk With Your Beneficiaries - Anyone who will receive money or assets after you die should be aware of what they’ll inherit. Talking to your loved ones can avoid any conflicts or confusion once you’re gone. 

• Consider Trusts vs. Wills - Wills are ideal for some assets, while trusts can be better for others. Trusts don’t have to go through probate, which can allow for a smoother transfer of ownership. Talk with your estate planning attorney about the pros and cons of each option. 

• Designate an Executor - When you die, someone has to execute your estate plan. If you name someone ahead of time, the process can go a lot smoother. Again, be sure to talk with your executor about your wishes so that they’re ready when the time comes. 

• Update Your Plan Regularly - Estate planning isn’t a one-time action. You’ll need to adjust your plan based on various elements, such as deaths in the family, marriages, new kids, and amended financial situations. If you don’t make changes, your plan could go awry once you’re gone.