As their retirement approaches, most people tend to focus heavily on the financial element of their planning. This attention makes sense based on the rampant advertising around “the number” people need to retire. In my experience, however, financial capacity to retire is merely one area of several critical elements involved in effective retirement planning.

Research on retirement conducted by Savant Wealth Management and Absolute Engagement found that almost 20% of those surveyed said they had returned to work after an attempt at retirement. The top reason for returning? Respondents found they were financially ready, but not personally ready. The second most-cited reason was, “I just couldn’t move on from working full-time.”

Far too often, individuals get to a point where they feel like retirement is a means to get away from something they do not enjoy: a boss who does not appreciate their efforts, a team that grates on their nerves, a job that has started to feel banal or repetitive. When the “hassle factor” of a job starts to outpace an employee’s satisfaction, retirement may feel like the answer – an option to get away from what is difficult.

A retirement “pre-mortem” a couple of years in advance of retirement can be both enlightening and perception changing. The goal of this kind of meeting is to visualize the elements of a successful retirement that may not come immediately to mind.

Retirees tend to have fewer regrets and anxieties in their transition to retirement when they are retiring to something, not from something. Here are some of the important topics of a retirement pre-mortem:

How do I want to spend my time when I am no longer working?

One of the most substantial changes of retirement is simply the massive amount of time that opens on an individual’s schedule. Those 40 to 60 hours of additional time each week need to be spent in some way. Without careful advance planning, this time may be used for watching television, sleeping, focusing on daily investment market movement, and worrying about adult children and other family members.

The retirement pre-mortems I host include an “Ideal Day/Year” exercise, where individuals envision how they would spend their time if there were no limitations or restrictions. Identifying possible hobbies, volunteering opportunities, part-time work, or other interests that could fill one’s time can build confidence in a positive retirement.  In the years leading up to retirement, you can practice building connections and skills and getting clearer on what your time in retirement will look like.

In their pre-retirement years, some people engage with non-profits in their community that they want to spend more time with later. They meet new people and determine whether the work is satisfying. Others pick up hobbies like cycling, knitting, softball, woodworking, or furniture restoration. The goal of the exercise in advance of retirement is to strategically plan future time so the actual retirement transition is less jarring and stressful.

Where do I want to live?

Many envision moving to a new place in retirement – someplace warmer, someplace closer to family, someplace with a lower cost of living. This kind of step needs to be planned well in advance. Selling a home is one of the most expensive financial transactions we enter into. Moving to the wrong place can prove costly and emotionally draining.

An effective pre-mortem will help individuals and couples identify where they are looking to move and why. Time can then be spent in the pre-retirement years evaluating whether the desired location is a good fit. In today’s age, a home can be rented in or close to the desired neighborhood, and pre-retirees can practice living in that location as a retiree (not as a tourist). Mistakes made on paper are far superior to mistakes made in real life!

Some people who thought they wanted to move to a nearby state for tax reasons determine that grandchildren’s activities would be too far to reach conveniently – and decide to stay where they are. Others visit a location a number of times to “practice” retirement before deciding the location is a great fit. They already have new friends in the desired location, making the transition easier.

How much will my activities cost in retirement?

While many think their expenses will fall in retirement, the first two questions of the retirement pre-mortem can help establish whether expenses may rise. Taking up hobbies like travel or golf, for example, can change retirement spending substantially.

Eliminating a mortgage is one of the main reductions in expenses that can happen close to retirement. However, many individuals cannot eliminate the mortgage for various reasons (such as a period of unemployment, high medical expenses, or divorce). A retirement pre-mortem can offer a great opportunity to restructure expenses as needed for a successful retirement.

Are you concerned that you will need to keep working until your mortgage is paid off?  By having a retirement pre-mortem, you could work out a restructuring of debt to be able to afford your home with projected retirement income. Those who wish to travel in retirement may decide to continue working for an additional two to three years to be able to afford the desired additional expenses.

What are my “stakes in the ground” for a good retirement?

An effective retirement pre-mortem helps individuals see what matters to them most in retirement, allowing them to properly build everything else around it. Everyone has priorities, proverbial stakes in the ground, around which everything else can be structured. Based on Savant’s research, fewer than half of retirees (and fewer than 30% of women) feel “very clear” about how they will spend their time in retirement.

When you identify competing priorities, either for yourself or for you and your spouse, you can take time to work out solutions that prioritize the most important expenses (whether that’s where you want to live, activities, social connections, or planned giving). This last stage is where the “rubber meets the road” on effective retirement pre-mortems. Working out what matters most and making sacrifices as needed can help pre-retirees feel a great deal more confident about the approaching changes in their lives.

Without proper planning, the prospect of retirement can seem overwhelming and fear-inducing. An exercise like a retirement pre-mortem can help you focus on what’s needed to make your eventual transition to retirement less jarring. The goal is to be able to look back several years into retirement and feel your transition was successful and meaningful.

Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the U.S., which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

Author Joel Cundick Financial Advisor / Team Lead

Joel is frequently quoted in local and national media and has been a repeat guest on Federal News Radio. He teaches retirement preparation seminars to Federal employees through the National Institute of Transition Planning.

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