How Purpose, People, and Planning can help you overcome retirement anxieties
Retirement is often seen as a well-deserved break after decades of hard work. However, for many, it can also be a source of significant anxiety. The transition from a structured work life to a more unstructured retirement can be daunting.
This article delves into the complexities of retirement anxieties, drawing insights from the white paper “Proactive Personality and Social Support with Pre-retirement Anxiety: Mediating Role of Subjective Career Success”1 by various authors.
The Nature of Retirement Anxiety
Retirement anxiety is a complex issue that can come from various sources. According to the referenced white paper, a key phrase caught my attention:
“The anxiety that comes with retirement could be as a result of perceived unpreparedness …”
This statement encapsulates what we see regularly in our financial planning practice: unpreparedness. In this article we will uncover these anxieties and provided some coping strategies to help better prepare for your retirement planning journey.
Anxiety of Being Emotionally Unprepared
Many individuals approaching retirement worry about their health, and how they will spend their time. This lack of emotional readiness can lead to feelings of inadequacy and fear of the unknown.
Additionally, the loss of a professional identity can contribute to feelings of inadequacy. For many, their career is a significant part of their identity, and retiring can feel like losing a part of themselves. This loss can lead to a sense of lack of purpose and anxiety about how to fill the void left by their career.
Being unprepared may cost in terms of quality retirement time, that is retiring later than what may have been possible, if it were not for the anxiety. That could be time lost with enhanced relationships with loved ones, pursuing retirement goals and hobbies, or giving back to ones’ community through service.
Additionally, career success or lack thereof, may lead to compound any emotional distress. Career success refers to an individual’s perception of their career achievements and satisfaction. Those who feel they have had a successful career may experience less anxiety about retirement. They may feel a sense of accomplishment and fulfillment, which can buffer against feelings of anxiety about entering retirement. On the other hand, the success may lead to anxiety about how that success will be manifest during retirement. Will my “successes” in work life cause me to be bored during retirement, and what will I do in retirement are common concerns.
Conversely, individuals who perceive their career as unsuccessful may experience greater anxiety about retirement. They may feel they have not achieved their goals or lived up to their potential, leading to feelings of regret, dissatisfaction, or inadequacy. These feelings may exacerbate anxiety about the future and the transition to retirement.
Coping Strategies for Being Emotionally Unprepared
The aforementioned white paper emphasizes the importance of proactive personality in mitigating pre-retirement anxiety1. A proactive personality involves taking initiative, planning, and actively seeking solutions to potential problems. Individuals with a proactive personality are more likely to engage in retirement planning, seek out information, and take steps to ensure they are prepared for retirement. This proactive approach can significantly reduce feelings of unpreparedness and inadequacy.
Developing that sense of Purpose can establish sense of well being and direction in one’s retirement. That can go a long way to help overcome emotional anxieties. What would you like to accomplish? It could be enhanced relationships, new hobbies, being a mentor to others in your former industry, seeking spiritual awareness, or a whole host of other things. You get to decide what’s important to you!
Reflecting on and celebrating career achievements can also help individuals feel a sense of accomplishment and fulfillment. This can buffer against feelings of inadequacy and loss of identity.
Having a strong support network of family, friends, and colleagues can provide emotional reassurance and practical assistance. Selecting the right People for social support can help you feel more confident and less isolated as you navigate the transition to retirement. It can also provide a sense of belonging and purpose, which can counteract negative feelings, anxiety, lack of purpose, and loss of identity.
Common Financial Anxieties
As a financial services firm, we see some of the aforementioned anxieties and we also see a variety of financial-specific anxieties. The transition from a regular paycheck to a fixed income can be particularly stressful, especially if there are concerns about whether savings and pensions will be sufficient to maintain their desired lifestyle.
I can break these down into the following categories with the most common questions that we get from clients:
INCOME / CASH FLOW
- Will I have enough monthly income to support my expected lifestyle?
- What are my Social Security claiming options?
- What are the portfolio distribution strategies and risks to augment my guaranteed income (Social Security, pensions, etc.)?
- Will I be exposed to Medicare IRMAA (Income-Related Monthly Adjustment Amount)?
PORTFOLIO
- At my expected lifestyle, when will I run out of money? Am I invested and diversified appropriately?
- How much can I withdraw to meet my income requirements?
- What are my Long-Term Care (LTC) self-funding options and what’s the impact to my portfolio?
TAX
- How do I minimize my tax obligations?
- Should I do Roth Conversions and if so, when and how much?
- How do I transfer wealth tax-efficiently at end of life?
RISK
- What are the best retirement possibilities for my personal situation and what are my risks?
- What is Sequence of Returns risk and how does it impact the timing of my retirement?
- What is the impact of increased inflation or higher taxes on my retirement projections?
Retirement Planning as a Coping Strategy for Financial Anxiety
Financial Planning (prior to retirement) and Retirement Planning (near or in retirement), is taking a proactive approach and may help you feel more in control. This can involve setting goals, seeking information, and taking steps to prepare for retirement. A proactive approach can reduce feelings of unpreparedness and increase confidence.
Seek out a financial advisor that can help by performing financial analysis, compare various retirement scenarios, and develop solution strategies in your best interest. A “Planning First” advisor will charge you a fee up front but may save you in the long-term and provide the peace of mind that you will get into the solutions and products that are in your best interest.
If you prepare and seek the advice of a financial professional, many of the negative perceptions can be minimized and possibly eliminated. You can get a better view into what your retirement might look like! Then perhaps we can help you alleviate some of your per-retirement anxieties.
Conclusion
Retirement anxiety is a common but complex issue that can stem from various sources, including perceived unpreparedness, adequacy, and lack of purpose. However, a proactive personality, social support, a defined purpose, relationships, and professional Retirement Planning from a professional Advisor can significantly mitigate these anxieties. It boils down to the 3P’s: Purpose, People, and Planning.
By understanding the underlying causes and implementing effective coping strategies, individuals can navigate the transition to retirement with greater confidence and peace of mind.
What are some retirement anxieties that you are facing? Contact us to share some of your concerns and maybe we can assist you through the retirement decision making journey.
There are literally dozens of areas we can help with. As we mention throughout our website, Income Planning, Tax Planning, and Investment Planning are the 3 key pillars to our 7 Pillars Retirement Planning® approach. Not to mention Health, Long-Term Care, Risk Mitigation, and Estate Planning rounding out the 7 pillars you should be preparing for a comprehensive retirement plan.
Mike Kastler
I have been performing financial planning and retirement planning since 2015 with a Master of Science in Finance and the prestigious designation Retirement Income Certified Professional®. As an Fee-Only, Fiduciary, I do not sell commissionable products and only provide Assets Under Management (AUM) services as a flat-fee service, not a % of AUM.
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