If you knew that you would soon be fired, would you plan ahead for the huge reduction in your annual earned income? Surprise! That’s exactly how retirement works. Your job ends and now you’re unemployed. What makes planning for retirement especially difficult today is long life. Life expectancies are increasing with better health and medical care and yet, I find more and more people want to retire earlier and earlier.
Planning for your golden years is kind of like planning to get fired from your job, because with most people, they simply don’t want to go back to work. So, retirement turns into years of unemployment; for many, perhaps thirty-five years and even longer, maybe even to the age of one hundred. Some people will argue that their parents died young, so they will too; but they need to be reminded that their parents didn’t live in this century, with all the life extending treatments which we now enjoy.
Some argue that they’ll spend less in the later years of their retirement, when they envision spending more time on the couch and less time traveling the world. But the reality is they spend just as much money, if not more; but on different things, such as healthcare and prescriptions. Those medical advances I discussed earlier, come with a cost.
Older folks are also often surprised by how much they’re spending on other unexpected expenses, like helping their children and grandchildren. At the time they thought that their kids would be financially independent, they find themselves helping their children achieve a better lifestyle, helping with education, family vacation, braces for their grandchildren, things that they thought that their college-educated children would be expected to take care of by themselves. New retirees truly are the sandwich generation, sometimes helping their own elderly parents while still helping their own adult children.
So, before your retirement begins, have a game-plan in-place, because you don’t want to have to look for a new job as a senior citizen just when you had hoped that you were fired for good.