What does retirement mean to you? When I was in my 20s, this is what I thought a typical day for a retiree would be like.
5 a.m. – Wake up to a leisurely breakfast and a cup of coffee. Read the paper and do the crossword puzzle.
7 a.m. – Go for a walk or swim in the pool, then take it easy.
9 a.m. – Watch some TV and read a magazine or a book.
11 a.m. - Have lunch.
Afternoon – Go shopping, walk the dog, work on the house, and catch up with friends.
5 p.m. – Have an early bird dinner and kick back the rest of the day.
9 p.m. – Time to hit the hay.
This sounds like the easy life, but it also seems quite boring. This vision fits a sedate retirement home more than the current active retirements in which many retirees actually engage. Now that I’m older and know more retirees, I know this is not what people do in retirement. Many people stay quite active when they first retire from their careers and put off the relaxed retirement until when they are much older.
Active retirement. My dad retired about five years ago from running a restaurant, but a relaxed retirement isn’t for him. He is always restless and hated not working. So he started a new micro business and is working part time. It’s a hobby-based business and he is having a lot of fun. My father-in-law retired with a full pension and he is working (ok, volunteering) at a friend’s liquor store for free. One of my friends is financially independent, but he still actively manages his portfolio every day. I suspect most people would rather continue to be active after they retire from their career than relaxing around the pool all day.
Retirement can be a difficult transition. Retirement can be a difficult transition if you are not prepared for it. Many people who were near retirement age were forced to retire during the recent downturn. The loss of income coupled with the large losses in their retirement account caused a lot of heartburn. In this case, it is more conservative to take up part-time work to bring in some extra income. Even a little income will greatly reduce the withdrawal rate from your retirement accounts. If a retiree had been forced to withdraw from his or her retirement account during the recent downturn, that portion of the retirement fund would have missed out on the recovery. Taking up a part-time job or freelance work could help delay the withdrawal until the stock market recovers.
Have a fun retirement. An active retirement can mean part-time work, volunteering, freelancing, coaching, and many other activities. Doing part-time work and generating a small income after retiring is a viable way to reduce or delay withdrawal from your retirement accounts. Retiring from a full-time job is a big change and many retirees often miss the structured routine of work. Keeping an active retirement can be a bridge to a relaxed retirement later on. An active retirement would be a lot more fun than a sedated retirement home living that I envisioned when I was young.
Joe Udo is planning an exit strategy from his corporate job by reducing expenses and increasing passive income. He blogs about his journey to early retirement at Retire by 40.