Why We Outgrow Our Own Beliefs — Part 2: The Retirement You Actually Experience

Many people build a vision of retirement early. Sometimes it’s based on accepted norms. Other times, it’s based on beliefs formed during the hardest parts of our careers, when retirement is an oasis offering relief from the daily grind. Often, these beliefs are carried forward right up until retirement. 

In Part 1, we explored why that happens[link to first post] and how those early assumptions show up in a static view across four key areas. Here, we’ll show how taking a dynamic approach in those same areas allows you to adapt your beliefs and update your plan to reflect the reality of an unpredictable life that never stops changing.

Flip How You Reach The Magic Number

Having a magic number – the dollar amount people believe they need to retire – isn't wrong. It's just often determined in the wrong way. 

Many people arrive at their number first, by hearing or reading it somewhere. But everyone’s retirement is different. The factors that feed into that number are individualized – some retire at 62 while others go to 65, cost of living varies by region, and healthcare needs are highly personal. Starting with the number and building a plan around it is working backwards. 

It makes more sense to look at the retirement you want plus all the variables that need to be accounted for, then calculate how much you’ll need. What does it look like if you retire at 63 and work part-time versus retiring at 65 and putting off social security to 70? Scenario-based planning provides clarity on how much you’ll need across a variety of options.

Instead of pinpointing a specific number, identify a magic range that offers leaves wiggle room for changing variables. 

Make Healthcare a Planning Category

This is the area where initial beliefs routinely undermine plans. It can be hard to imagine as a healthy 50-year-old that your healthcare needs will dramatically change. 

But even with Medicare, the typical retiree will face higher healthcare costs than earlier in life. Consider this stat from the Employee Benefit Research Institute: 

“Couples enrolled in a Medigap plan with average premiums, meanwhile, will need to have saved $267,000 to have a 50 percent chance of covering their medical expenditures in retirement and $405,000 to have a 90 percent chance.”

And those numbers don’t include long-term care. Without planning for healthcare, money will need to be diverted from funds earmarked for other needs.

The solution is to shift your thinking from a reactive approach to healthcare that deals with the costs as they arise to a proactive one that incorporates healthcare into your plan well in advance. That means: 

The goal isn’t to have certainty about your future health, but to address the potential of uncertainty sooner rather than later.

Recognize an Owned Home is an Asset

Owning your home is an achievement that provides a sense of security and stability. However, many people view it as the endpoint, when it actually opens the door to more paths in your retirement journey.

A paid-off home is an asset that can be used to free up capital, improve lifestyle, simplify life, and bring families closer. That asset creates a number of options for you, such as:

This approach doesn’t discount the sentimental value of a home; it simply acknowledges the options it makes available. Ultimately, you may opt to stay in a family home, but understand that it’s a resource that can be used as retirement progresses and circumstances change. 

Imagine Your Next Chapter

When asked why they want to retire, many people respond with a version of “to stop working.” While it’s understandable, it’s also another symptom of viewing retirement as a fixed endpoint rather than a continuation. 

There’s nothing wrong with wanting to stop waking to an alarm at 6:00 and being tied to a job 40 hours a week. But open your mind to what life could be once that routine ceases. What does a good retirement look like? What would you do with the time? What would bring purpose or passion?

Those who describe their post-career lives with enthusiasm tend to retire to something, not from something. That something often includes:

Retirement offers the opportunity to pursue things you couldn’t while working. What you choose to do impacts the bigger retirement picture. Continuing to work even a part-time job is a way to stay engaged, but it also adds to retirement income. Classes and travel are expenses that should be accounted for in your plan.