From a very early age, retirement is elevated as a goal that one day we all may achieve and with it will come happiness and contentment in life.  Most clients I advise are very happy in retirement, and there are many benefits to retiring, including no commutes, less stress, more time to work out and eat better, more time to pursue life’s passions and build personal relationships. 

With all the positive that comes with retirement the transition to retirement does come with some significant emotional and psychological challenges that most people do not appreciate before they retire.  One of the best things retirees can do is understand these challenges before they retire so that they can start to prepare.

Working is Part of Your Identity – What most people don’t realize is that whether they love, like or even hate their job it becomes part of their identity and how they view themselves.  When they are working it means they gain a sense of importance and value.  Once you have removed yourself from the system, you have to spend time reinventing yourself and it can take time to determine your new identity.  

40 Years of Saving and then No Paycheck – Old habits are hard to break, especially when they are good ones, and many retirees are so used to receiving a paycheck and saving every month that they really struggle when they stop receiving a paycheck and not only are they not saving but instead they are taking distributions from their portfolio.  Many feel like they are not doing the prudent action by drawing down their portfolio.  It requires constant education from our advisors to remind our clients that the purpose of their investments is to fund their retirement and if they don’t spend it someone else will.

Social Connections – You may not spend much time with your work colleagues outside of work, but it’s doesn’t mean that they don’t provide a social network in your life.  Unless you work in a toxic environment most people have friends at work who add to their social connections.  When you stop working, many of those relationships are tough to continue and many retirees have feelings of isolation and loneliness from not having those connections.

Adjustment to Spousal Relationship – Marriages can be tough to sustain but for many relationships the time spent at work can actually provide some space that makes a marriage successful.  When both spouses are retired, they are together much more frequently and it is common that they still have to find outside activities and engagements that they do on their own to give each other space.  

The Stress of Market Volatility – When individuals are working, volatility in the stock market can be disconcerting but most individuals realize that the market will correct itself and their portfolio will rebound.  They also appreciate that investing in their 401(k) during market volatility can add a great deal of value to their portfolio over time.  When they are retired, the stress levels increase dramatically because they need to provide distributions from their portfolios and the mechanics of actually providing the distribution.  This is a large part of the role our firm plays for our clients, managing their portfolios to provide these distributions and removing this stress responsibility from their plate.     

What am I going to do 24/7/365 – In the first 6-12 months of retirement, individuals receive a high level of satisfaction not doing much of anything.  Whether it is sleeping in, traveling on the spur of the moment or having a glass of wine for lunch, people love the freedom that comes with retirement.  After this transition period, there is a realization that there needs to be something to keep them mentally and physically engaged and not just watching TV all day.I recommend that clients not stress over this but look at it as an opportunity to really determine what is something fun and engaging that they would like to do even if it requires them to learn a new skill.

With all these challenges it is first important to remember that most retirees face these same challenges in some capacity and understanding that you are not alone can help you manage them.  It is also important to appreciate these challenges before you retire and try to develop a plan to handle each one.