How are you preparing yourself for retirement?
OPERS has develop retirement education seminars for OPERS members. The overarching goal of these programs is to help you be more prepared to maximize your well-being in retirement.
Think about that for a moment – well-being in retirement. How would you define well-being? What comes to mind? Is it financial? Good health? Being surrounded by friends and family? If you answered all of the above, you are well on your way to retirement readiness.
If you use the traditional definitions of successful retirement planning, you find them to be fairly one-dimensional focusing primarily on the financial. The old rule of thumb being you need to replace somewhere between 70-85% of your pre-retirement income to maintain your current standard of living. So, is that it? Well, for some, maybe it is. What about for those of us who think there is more to retirement than just a dollar figure?
InFRE has developed what they call a Retirement Readiness Model consisting of three essential factors: Happiness, Money and Health. More specifically, we are talking about readiness in the following ways:
This factor in your planning combines the psychological and social aspects of retirement. When you retire, how will you replace the meaning and engagement you get from work, i.e., the social interactions with your colleagues, challenges from work projects, and just basic structure to your day?
The most tangible aspects of retirement planning are financial and geographical. At its most basic, we are talking about how much do you need financially and what are the locationspecific issues facing you in retirement. This includes such things as selling or downsizing your home, regional cost of living, or as simple as will your house accommodate you if your physical capabilities deteriorate (ease of access, stairs, etc.).
The biological aspect of retirement planning includes how long and how healthy might you expect to live based on your family history. The medical aspect considers your medical expenses increasing disproportionately as you age. Does your retirement plan include Medicare, health insurance supplements or other types of insurance to help protect you against the risk of getting sick? Your plan also needs to address end-of-life issues, such as long-term care.
These different aspects of your retirement plan work together to help provide a more detailed approach to your retirement preparations. For example, you may be considering buying a new condo in sunny Florida. Spring training baseball and fresh-squeezed orange juice sounds pretty inviting. This one decision, however, will create a string of new decisions to make. What’s the difference in the cost-of-living by moving to Florida? Are you the type of person who meets people easily to establish a new social network in an unfamiliar place? Have you considered the quality of health care near where you plan to relocate and are you ready to change doctors and insurance carriers? Who will be there to help you if the unexpected happens and your family is still in Oklahoma? Can you afford to pay for someone else to provide that care for you should the need arise?
Retirement can and should be a time of great excitement and provide a sense of reward for years of hard work. So if you’re dreaming of that new life in Florida, keep it alive. Just be sure to ask yourself the right questions as you design your plan. Before you make the leap, think about the different aspects of health (bio-medical), happiness (psychosocial) and money (geo-financial) to determine what kind of life you are retiring to and if you looked beyond just the dollars and cents of taking the retirement plunge.
This article was first published in the Summer 2016 edition of the Retiring Right newsletter. Click here to view other newsletters. Not receiving your newsletter, update your address by completing the Change of Address form.