I often pose the question, “What do you imagine your dream retirement to look like?”  What I hope to hear is a list of goals, or perhaps a description of a relaxed lifestyle, or maybe some time committed to hobbies or volunteering.  As a CFP®, I usually use this conversation as a way to start identifying targets that we should work towards over time. Occasionally, the answers aren’t always about positive outcomes, but rather what unhappy endings they want to avoid.  I hear things like “I just don’t want to end up eating cat food,” or “I don’t want to have to take shifts at the grocery store.” People want to get retired and stay retired.  

I have seen people fail to make it to retirement.  I have seen people forced to go back to work after they thought they were done.  The most common causes of these outcomes has nothing to do with portfolio returns, costs, or taxes.  The most common causes can’t be found in rows and columns of any spreadsheet, but rather in the space between our ears.  Perhaps the most common landmine I’ve seen blow up retirement dreams is failing to have a “Second Act.”

People often fail to recognize how many intangible benefits they receive from their work.  I am not talking about your dental plan or your vision benefits. I am talking about things like social interaction, a sense of identity, or even a reason to get out of bed in the morning.  Several studies, including a 2016 Oregon State University study even show that retiring early may measurably increase a person’s mortality risk. 

This is where your ''Second Act '' comes into play.  Consider some of our surviving past United States Presidents.  George W. Bush has taken up painting in his post-presidential life.  Bill Clinton started his non-profit Clinton Global Initiative. Even 95 year old Jimmy Carter is still building houses for Habitat for Humanity!  There is something to be said for simply having something to do.  

While it is never too late to start thinking about your second act, sooner is better.  In one extreme example, I witnessed a person’s retirement plan get derailed as a direct consequence of a lack of socialization and identity beyond the workplace.  Ironically, part of his business was to help people prepare for retirement!

This is a common trap where a small business owner can become inseparable from their business.  In this particular case, the owner was seldom seen outside the four walls of his office. He lived in a small community for decades, yet never went out to grab a cup of coffee or a bite to eat with a friend.  Beyond the lack of any meaningful social connections, he also struggled with a common internal issue. He never really thought about who he was, outside of his profession. Picture a judge unable to recognize himself without the robe or a surgeon who doesn’t truly know herself without her scrubs on.  This man had no answer to the question “Who am I if I am no longer this?”

This cautionary tale ends with the small business owner sabotaging his established “exit plan” from his business to the detriment of his longer-term physical and mental health.  In the end, he was forced to “fire sale” the enterprise for a drastically reduced price costing his family somewhere around a million dollars!

Here are a few things that you can do to avoid stepping on this retirement landmine.  

Define Your “Second Act”

What will you do when this career is a part of your past?  For some people this may mean another business venture or some work that is more in-line with your passions.  Your second act may involve volunteering or working with charities. You could choose to recommit yourself to a life-long hobby like painting, sculpting, carpentry or gardening.  Please choose carefully and perhaps choose multiple activities. Many retirees have learned by experience that you can only play so much golf.  

Get to Know Yourself

Now that you have a picture of your Second Act, work to understand the attributes of the main character (You!).  Explore the many answers to the everyday question we all get wrong…”who are you?” It is never too late to connect (or reconnect) with friends outside of the workplace.  Take opportunities to deepen relationships inside your family. Enjoying a long retirement may require making sure that you will not be transitioning into a lonely place.  Make an effort to be a significant positive presence in the lives of those around you.

Take Your Time Transitioning

If you need to take a little more time to know you are ready, and have the option to work a little longer, there is no shame in waiting.  Perhaps you have the option to transition to part-time or per diem work. Even if you have a set retirement date, you may benefit from scheduling a post-retirement “intermission” between your First and Second Acts.  Perhaps some extended travel, or simply some committed “down time” are in order. Schedule this intermission and consider it to be a non-negotiable reward to yourself for your past hard work.  You’ve earned it. Now you can be fully recharged and refreshed as you move into your future.

It can be difficult to move away from what has become familiar and comfortable.  These steps are intended to help someone realize that retirement is not about leaving something behind, but rather moving towards a life that can be every bit as fulfilling.