Getting Financially Mentally Prepared For Retirement

Getting Financially (and Mentally) Prepared for Retirement

Updated on Jul 18 2018


Financial expert Stephen Rischall, CFP®, CRPC®, works daily to help clients prepare for retirement and respond to changing financial needs as they age. He provides tips for getting prepared both financially and mentally for retirement.

Time is of the essence when it comes to retirement planning. Financial security doesn’t happen overnight. Diligent retirement planning, goal commitment and conscientious saving are all contributors when it comes to saving the ‘right’ amount of funds for retirement. That being said, mental preparation is also important.

Rischall discusses how he believes finances are not the only challenge in retirement:

“A successful retirement is not merely measured in financial terms. Retirement satisfaction in terms of your health and how you spend your time also plays a big role. Even those who retire with small fortunes can face boredom or depression and the fear of drawing down their savings too fast.”

Rischall points out that as you approach retirement, there are some important things to consider taking to make sure you’re not only financially prepared, but also emotionally and mentally prepared:

Do you have a productive way to spend your time?

People are not necessarily satisfied in retirement as they no longer have their workplace interactions and socialization; they don’t have the same daily rhythm or structure. Rischall discusses how retired households may need to adjust their lifestyles in response to this evolution. “Finances are a very fundamental part of retirement; however, the biggest challenge is having a game plan for what you’re going to do. This is a very scary thought for some people.”

In fact, according to a 2015 Careerbuilder.com survey, 60 percent of workers age 60 and older said they would look for a new job after retiring, up from 57 percent last year, simply to have a purpose in retirement. The Sloan Center on Aging and Families and Work Institute reported that 1 in 5 workers has a post-retirement job and 75 percent of workers expect to transition to a second career at some point after they retire.

Some retirees ease smoothly into retirement, spending more time with hobbies or family and friends. But others, research finds, experience anxiety, depression and debilitating feelings of loss. Rischall discusses:

“Too few people consider the psychological adjustments that accompany this life stage, which can include coping with the loss of your career identity, replacing support networks you had through work, spending more time than ever before with your spouse and finding new and engaging ways to stay active. Retired households may need to adjust their lifestyles in response to this evolution.”

Many retirees decline in health and mental capacity, simply because they don’t have the engagement and mental stimulation, which is why finding productive ways to fill your time is so important, whether that’s a chess or exercise class, regular lunch or golf outings with friends, or a second job.

Do you feel ‘financially ready’ for retirement?

The reality is that people can’t work forever. Seniors are often forced into retirement for a multitude of reasons, including poor health, caregiving or job problems. Women are especially vulnerable to an unexpected early retirement. Even people who have been diligently planning for their retirement may feel uneasy when it comes to such a drastic change. Rischall discusses:

“Practically all retirees have some financial anxiety. It relates to the fact of no longer earning a conventional paycheck. You see it in couples who have $60,000 saved for retirement, and you see it in couples who have $6 million saved for retirement. Their retirement strategies are about to be tested in real time and all that careful planning is ready to come to fruition. The reality is that there are always unknowns.”

When asked whether ‘Americans are saving enough for retirement,’ Rischall notes that people who “have a positive financial force” – like a financial advisor – in their life tend to be better prepared. Getting on top of finances while there’s still time to save is key. Rischall says that the most important thing, from a financial perspective, is to take control of your spending and expenses as there is currently a retirement crisis in America:

“It’s important to ‘get a handle’ on your expenses and be honest about them – and then forecast how they might change in retirement. Keep in mind that there are always costs that will go up, like medical costs or vacation costs. There are also costs that will go down as you age, like the cost for an automobile or gas – since you won’t be going to the office. You just need to be realistic when planning.”

To feel ready for retirement, you need to make sure to track your spending, project your costs and set a budget and retirement savings strategy with inflation and retirement goals in mind.

Are you afraid to spend money in retirement?

Many retirees are afraid to spend in retirement as they are afraid they will run out of money. This is why planning an investment time horizon is so important. Rischall has some food for thought:

“While no retiree wants to squander money, all retirees should realize their retirement savings were accumulated to be spent. Being miserly with retirement money contradicts its purpose.”

An epidemic of loneliness and unhappiness can accompany age unless there is planning to make sure you save enough money for your lifestyle and also fill your days with friends, socialization and engaging activities. The Social Security Administration estimates that the average 65-year-old who retires in 2017 will have a retirement lasting approximately 20 years. Rischall stresses to save wisely to “spend money in retirement to enjoy retired life.”

Strategically Prepare for Your Retirement

The obvious challenge of retirement is financial, but another big challenge is mental. Preparing for both aspects of retirement is crucial. Rischall uses an analogy to discuss the importance of strategic retirement planning:

“If you knew a storm was coming, wouldn’t you stock up on food and water and gas and everything else you need to survive? Call it the ‘retirement storm’ If you have 40 to 50 working years, are you stocking up enough food, water and batteries that you’ll be able to make it through the retirement storm? This storm is going to last longer than most people are initially planning, so make sure to take the necessary steps to prepare from both a mental and financial perspective.”

Preparation foresight and dedication can help you prepare you for a successful retirement. Two pieces of the preparation, according to Rischall, are a gradual retirement transition and some guidance from a financial professional.

About Stephen Rischall, CFP®- Expert Financial Advisor for Entrepreneurs and Young Professionals:

Stephen Rischall, CFP® is an award winning fiduciary financial advisor and public speaker. He has been recognized as a “Top 10 Most Influential Financial Advisor” by Investopedia and an Investment News “40 Under 40” honoree. He has also been featured in the Wall Street Journal, Los Angeles Times and on live radio and television.

Stephen began investing at the age of thirteen and started his financial advice career during college. He earned his bachelor’s degree with Honors in Finance at California State University Northridge and received a special commendation for managing the University Corporation Student Investment Fund.

After college, Stephen worked for a large Wall Street brokerage firm where he began to uncover many conflicts of interest within the industry. He believed there had to be a better way to put clients’ best interest first and decided to start his own fiduciary financial advice company. With help from his business partner, they launched 1080 Financial Group, a modern financial planning and investment management firm in Los Angeles, California.

Stephen enjoys an active lifestyle and giving back to his community, serving on several non-profit boards. In his free time, he is an avid backcountry skier, mountain biker, and golfer.

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