Over the past couple of months, many investors have become worried about the future of their retirement plans. Between health concerns, the volatility of the stock market and forced isolation, it’s safe to say that there has been both reason and opportunity to question what our future in retirement might look like. If you’re considering retirement in the next few years, it’s important to use this time to your advantage and to learn a few lessons before you “take the plunge.”
In most investment ads, there’s a disclaimer that says something to the effect of, “past performance is not indicative of future results.” While past performance isn’t necessarily a predictor of investment returns, people are pretty predictable. Without substantial intervention, how we have behaved in the past, is a pretty clear indication of how we might behave in the future.
To that end, it’s important to realize that while we have not faced anything quite like the Covid-19 virus before, we have faced health concerns, market volatility and isolation – albeit not at the same time. Everyone has experience that they can lean on to get through the components of this crisis. You can use that experience to view our current situation as an opportunity to learn four key lessons about retirement.
- You have to have a plan. Baseball great Yogi Berra once said, “If you don’t know where you’re going, you might end up someplace else.” People who created a financial plan before the Covid-19 pandemic should have more confidence today than those who did not. Unless your goals change, your plan likely should not. When the current medical uncertainty ends, you will likely have a very clear picture of your priorities – which is essential for planning for the later years of your working life. You may also find out they are very different than you thought they would be.
- You need a to create a schedule. As important as planning your finances are, it’s only one piece of the puzzle. Just like many people who’ve been working from home, many new retirees struggle with what to do during their days. One way you can maintain your sanity is by developing a new schedule that works for your new situation. What things would you want to make sure to continue? Create time blocks for your priorities to make sure that the things that are important to you, still get done. Creating an overall schedule for the days and weeks can prevent you from feeling like Bill Murray’s character in the movie, “Groundhog Day,” who relives the same day over and over again. I know more than one person who, when working from home, has wondered, “What day is it again?”
- You need to have a purpose. During their working lives, many Americans find their purpose and identity in their work. The recent work-from-home period has caused many people to re-evaluate the importance they place on their work identity. When they exit the workforce, many retirees are forced to do a similar evaluation. The most emotionally successful retirees have a greater purpose or passion that guides their activities. Whether it’s teaching younger professionals, volunteering to help one of their favorite causes or helping to raise grandchildren, everyone needs a reason to get out and stay active. Not only will it help us physically but remaining active has been proven to have mental and spiritual benefits as well.
- You need a community. One of the most difficult things about the Covid-19 virus has been the shelter-in-place orders and required social distancing. People are wired to be in community – we are simply better together. This year the number of active users of Zoom, a video conferencing tool, has increased by roughly 20 times! Many of us could talk on the phone, but there’s just something about actually seeing people that helps us feel more connected. When we can’t have that connection, we miss it. Having a robust network that to stay plugged into is essential during retirement too. In fact, maintaining a healthy community can help prevent the onset of depression in retirement (which is more common than you’d think).
There are many ways to “test drive” retirement, but we rarely get a chance to actually see what parts of retirement might feel and look like while we’re actually still working. In fact, for many of us, this might be a once-in-a-lifetime opportunity. Don’t let it go to waste.
This slowdown is not happening to you, it’s happening for you. If you’re intentional about it, you can use the current inconvenience to alter the course of your retirement plan and to develop a lifestyle that you can look forward to, rather than one that you fear.