2908: 7 Things I Wish I Knew Before I Retired by Mike Ballew of Egg Stack on A Fulfilling Retirement

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[00:01:06] [SPEAKER_00]: This is Optimal Finance Daily, 7 Things I Wish I Knew Before I Retired by Mike Ballou of Eggstack.com.

[00:01:15] [SPEAKER_00]: And I'm your host and personal finance enthusiast, Diana Merriam.

[00:01:19] [SPEAKER_00]: This is the show where I serenade you with the sweet sounds of personal finance knowledge from some of the best blogs on the planet.

[00:01:28] [SPEAKER_00]: With the author's permission, of course.

[00:01:30] [SPEAKER_00]: And now let's get right to today's post as we optimize your life.

[00:01:38] [SPEAKER_00]: 7 Things I Wish I Knew Before I Retired by Mike Ballou of Eggstack.com.

[00:01:45] [SPEAKER_00]: Life is full of surprises and retirement is no exception.

[00:01:50] [SPEAKER_00]: From the perspective of someone on the other side, here are 7 things I wish I knew before I retired.

[00:01:57] [SPEAKER_00]: Number 1. Unexpected costs can wreak havoc on your finances.

[00:02:03] [SPEAKER_00]: No matter how much you plan, things happen in retirement that you never expected.

[00:02:08] [SPEAKER_00]: A loved one falls ill, inflation rears its ugly head, or Social Security goes bankrupt.

[00:02:14] [SPEAKER_00]: That's why it's so important to prepare for the things you can predict.

[00:02:20] [SPEAKER_00]: Houses and automobiles need repairs and maintenance.

[00:02:23] [SPEAKER_00]: These costs are fairly easy to plan.

[00:02:26] [SPEAKER_00]: It's a matter of estimating the costs and setting aside enough money to deal with them.

[00:02:31] [SPEAKER_00]: Number 2. Family Matters.

[00:02:35] [SPEAKER_00]: Don't work so hard that you lose sight of what you're working for.

[00:02:39] [SPEAKER_00]: It's a scenario that plays out far too often and with disastrous results.

[00:02:45] [SPEAKER_00]: You dive headfirst into your career with good intentions to provide a better life for your family.

[00:02:51] [SPEAKER_00]: Then one day, you look around and your family is nowhere to be found.

[00:02:55] [SPEAKER_00]: They've found other ways to meet their needs for love and attention.

[00:02:59] [SPEAKER_00]: There's a lot of free time in retirement, but it's no fun if you don't have anyone to spend it with.

[00:03:04] [SPEAKER_00]: Make family a priority.

[00:03:07] [SPEAKER_00]: It's not just a bumper sticker.

[00:03:09] [SPEAKER_00]: Putting family first pays better returns than any job or investment ever could.

[00:03:15] [SPEAKER_00]: Number 3. Retirement is Boring.

[00:03:19] [SPEAKER_00]: Did I mention you have a lot of free time in retirement?

[00:03:23] [SPEAKER_00]: Sure, it's a blast at first.

[00:03:25] [SPEAKER_00]: No alarm, no commute, and you can do anything you want.

[00:03:28] [SPEAKER_00]: That wears off in about a month when you're faced with a harsh reality.

[00:03:33] [SPEAKER_00]: What lies before you is a soul-sucking expanse of nothingness that seems to stretch out into eternity.

[00:03:41] [SPEAKER_00]: If you're not prepared for it, your life can quickly devolve into a meaningless existence.

[00:03:47] [SPEAKER_00]: There are not enough television programs and books and podcasts in the world

[00:03:51] [SPEAKER_00]: to fill the gaping hole of a poorly planned retirement.

[00:03:55] [SPEAKER_00]: When you leave your hectic work life behind, you go from being so busy that you can't believe where the time has gone

[00:04:04] [SPEAKER_00]: to wondering if you can make it through another day.

[00:04:07] [SPEAKER_00]: The boredom can become a whirlpool of depression that drags you down into the depths of despair.

[00:04:14] [SPEAKER_00]: You'll find yourself in a dark place where you don't want to go anywhere or do anything,

[00:04:20] [SPEAKER_00]: and you certainly don't have the strength to try anything new.

[00:04:23] [SPEAKER_00]: What you need is a little preparation.

[00:04:27] [SPEAKER_00]: Take the time before you retire to find age-appropriate activities that you enjoy doing.

[00:04:33] [SPEAKER_00]: Depending on how you feel about being around other people,

[00:04:36] [SPEAKER_00]: some of your pastimes should involve interacting with others.

[00:04:39] [SPEAKER_00]: If you can barely tolerate people, then choose at least one activity with one social element

[00:04:46] [SPEAKER_00]: so that you don't become a hermit.

[00:04:48] [SPEAKER_00]: There are any number of things that you can do to keep busy in retirement.

[00:04:53] [SPEAKER_00]: Develop good habits like going for a walk every day.

[00:04:57] [SPEAKER_00]: Number four, healthcare costs can eat you alive.

[00:05:02] [SPEAKER_00]: According to Fidelity, a healthy 65-year-old couple will spend an estimated $300,000

[00:05:08] [SPEAKER_00]: in today's after-tax dollars on healthcare and retirement.

[00:05:13] [SPEAKER_00]: That's more than the average 65-year-old couple's entire nest egg.

[00:05:18] [SPEAKER_00]: Medicare helps, but it doesn't cover everything, and it's not free.

[00:05:22] [SPEAKER_00]: On top of that, it can be very confusing.

[00:05:25] [SPEAKER_00]: You'll have lots of time to figure it out in retirement.

[00:05:29] [SPEAKER_00]: But if you'd like a primer, there's a wealth of information in Medicare Explained.

[00:05:35] [SPEAKER_00]: Five, no one gets out of this alive.

[00:05:38] [SPEAKER_00]: Our secular world makes it easy to go through life without ever pondering life's most basic questions.

[00:05:45] [SPEAKER_00]: Like, why am I here?

[00:05:47] [SPEAKER_00]: Where did I come from?

[00:05:48] [SPEAKER_00]: Where am I going?

[00:05:50] [SPEAKER_00]: Retirement is the last chapter of your life.

[00:05:52] [SPEAKER_00]: If ever there was a time to start thinking about where you're going, this is it.

[00:05:57] [SPEAKER_00]: It's been said that we are one-third mental, one-third physical, and one-third spiritual.

[00:06:03] [SPEAKER_00]: If that's true, is it wise to go through life ignoring one-third of who we are?

[00:06:09] [SPEAKER_00]: Be open to exploring matters of a spiritual nature.

[00:06:13] [SPEAKER_00]: It only gets harder as you age.

[00:06:17] [SPEAKER_00]: Number six, social security is not all it's cracked up to be.

[00:06:21] [SPEAKER_00]: Social security was never meant to be a retiree's sole source of income.

[00:06:26] [SPEAKER_00]: Yet for many, that's the case.

[00:06:28] [SPEAKER_00]: A full 40% of retired Americans have no other income besides social security.

[00:06:34] [SPEAKER_00]: Despite the fact that you pay into it for all of your working life, there's no guarantee

[00:06:39] [SPEAKER_00]: that it will be there when you need it.

[00:06:42] [SPEAKER_00]: At present, the social security fund is in danger of becoming insolvent.

[00:06:47] [SPEAKER_00]: And number seven, you can save too much for retirement.

[00:06:52] [SPEAKER_00]: Finally, we've reached the last in our list of seven things I wish I knew before I retired.

[00:06:57] [SPEAKER_00]: Though it may sound crazy, you can save too much for retirement.

[00:07:01] [SPEAKER_00]: How can anyone save too much?

[00:07:04] [SPEAKER_00]: It's not really a matter of having too much money.

[00:07:07] [SPEAKER_00]: It's more an issue of how you allocate a finite amount of money over the course of a lifetime.

[00:07:13] [SPEAKER_00]: Throughout our working lives, it's up to us to decide how much to save for retirement.

[00:07:18] [SPEAKER_00]: We can save a little or a lot.

[00:07:20] [SPEAKER_00]: If it's a lot, it likely comes at the expense of your pre-retirement lifestyle.

[00:07:26] [SPEAKER_00]: You won't be able to do as much because you're saving so much for retirement.

[00:07:31] [SPEAKER_00]: Come retirement age, you have all this money but nowhere to spend it.

[00:07:35] [SPEAKER_00]: You can go on vacation, but sitting on an airplane becomes less tolerable as you age.

[00:07:40] [SPEAKER_00]: Then there's the hassle of dealing with hotels and rental car companies and finding your way around in unfamiliar places.

[00:07:48] [SPEAKER_00]: It sounds like more trouble than it's worth.

[00:07:50] [SPEAKER_00]: It wasn't always this way.

[00:07:52] [SPEAKER_00]: Back when the kids were little, you used to love to take them on vacation.

[00:07:56] [SPEAKER_00]: Everyone had a blast and you couldn't wait till the next time.

[00:08:00] [SPEAKER_00]: But sadly, there were fewer vacations than you would have wanted

[00:08:03] [SPEAKER_00]: because the monkey of retirement savings was always on your back.

[00:08:08] [SPEAKER_00]: That's what saving too much for retirement looks like.

[00:08:11] [SPEAKER_00]: It's regretting that you didn't do more when you were young enough to enjoy it

[00:08:14] [SPEAKER_00]: because you didn't know how much to save for retirement.

[00:08:18] [SPEAKER_00]: The way to avoid it is to have a real retirement plan.

[00:08:22] [SPEAKER_00]: Don't guess at how much you need to save and hope for the best.

[00:08:26] [SPEAKER_00]: Really look at your anticipated living expenses and save only as much as you need.

[00:08:31] [SPEAKER_00]: The first step is to say no to retirement rules of thumb.

[00:08:36] [SPEAKER_00]: Surely you've seen the Are You On Track chart on your 401k plans website.

[00:08:41] [SPEAKER_00]: Those charts and most every retirement calculator on the internet

[00:08:44] [SPEAKER_00]: is based on retirement rules of thumb.

[00:08:48] [SPEAKER_00]: Those one-size-fits-all solutions don't consider anything about your unique situation.

[00:08:53] [SPEAKER_00]: Do they ask if your home will be paid off by the time you retire?

[00:08:57] [SPEAKER_00]: How about whether your state has income taxes?

[00:09:00] [SPEAKER_00]: Do you have an annuity or whole life insurance?

[00:09:03] [SPEAKER_00]: Are you married or single?

[00:09:06] [SPEAKER_00]: All of those things play an important role

[00:09:08] [SPEAKER_00]: in determining how much retirement savings you need.

[00:09:11] [SPEAKER_00]: Your best bet is to sit down with a financial advisor

[00:09:15] [SPEAKER_00]: or avail yourself to sophisticated retirement planning software

[00:09:19] [SPEAKER_00]: that can tell you how much you really need to save.

[00:09:23] [SPEAKER_00]: It may take a little effort, but isn't it worth it?

[00:09:26] [SPEAKER_00]: We're talking about 20% of your life.

[00:09:29] [SPEAKER_00]: Life is full of regrets.

[00:09:31] [SPEAKER_00]: Don't make one of them failing to properly plan for retirement.

[00:09:39] [SPEAKER_00]: You just listened to the post titled

[00:09:41] [SPEAKER_00]: 7 Things I Wish I Knew Before I Retired

[00:09:45] [SPEAKER_00]: by Mike Ballou of Eggstack.com

[00:09:48] [SPEAKER_00]: and I'll be right back with my commentary.

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[00:10:53] [SPEAKER_00]: This article highlighted for me why the word retirement can be pretty challenging for many

[00:10:59] [SPEAKER_00]: people.

[00:11:00] [SPEAKER_00]: When most of us hear the word retirement, we understand it to mean no longer working.

[00:11:06] [SPEAKER_00]: But my involvement in the FIRE community has led me to reinterpret this word.

[00:11:10] [SPEAKER_00]: To me, retirement is much more about separating your finances from your work, not abandoning

[00:11:17] [SPEAKER_00]: work altogether.

[00:11:19] [SPEAKER_00]: Satisfying work is one of the great joys of life.

[00:11:22] [SPEAKER_00]: And whether you retire at 30 or 65, why would you deprive yourself of that?

[00:11:28] [SPEAKER_00]: The big difference between working during your accumulation years and working during your FIRE

[00:11:34] [SPEAKER_00]: or retirement years is based on financial need.

[00:11:38] [SPEAKER_00]: Before reaching FIRE, you're working to pay the bills, save, and otherwise fund your lifestyle.

[00:11:44] [SPEAKER_00]: After FIRE, you're working if, when, and where you want with no concern for the money.

[00:11:50] [SPEAKER_00]: Oftentimes, hobbies or businesses you create can produce an income, and you'll want them to so that

[00:11:56] [SPEAKER_00]: you can at least cover your costs for the work you're doing.

[00:12:00] [SPEAKER_00]: However, the work you get to do when you no longer need an income to cover your living expenses

[00:12:05] [SPEAKER_00]: can bring a satisfaction you may never have experienced when you were required to work for money.

[00:12:12] [SPEAKER_00]: Many studies have linked retirement with a decline in health, because many people spend their

[00:12:19] [SPEAKER_00]: retirement not doing anything that looks like work and wasting away with nothing to do.

[00:12:25] [SPEAKER_00]: Yes, there will be and should be periods of extended rest and recuperation in retirement.

[00:12:31] [SPEAKER_00]: But if you don't find a useful way to spend your time, you will most likely end up lonely and depressed.

[00:12:39] [SPEAKER_00]: That being said, regardless of your age, if you anticipate your retirement to look like

[00:12:45] [SPEAKER_00]: sitting around and doing nothing all day, I'd encourage you not to retire at all.

[00:12:50] [SPEAKER_00]: And that's a wrap for another Monday show.

[00:12:53] [SPEAKER_00]: Have a great start to your week, and I'll be back tomorrow where your optimal life awaits.