Retirement affects everything you do. It’s the biggest change in your lifestyle since you moved out on your own in your teens or twenties. Even bigger than getting married, having kids, sending them through college. You’ve worked hard for years. And now you’re supposed to be able to take it a little easier. But the truth is that most of us are not nearly prepared for retirement. The late Dr. Covey stated, “If you want to make minor, incremental changes and improvements, work on practices, behavior or attitude. But if you want to make significant, quantum improvement, work on paradigms.”
Let’s look at the paradigms of highly successful retirees to see what we can learn from them.
7 Habits of Highly Successful Retirees
1. Successful retirees track their expenses
Successful retirees know that you can spend your way into trouble. They recognize that their income has limits. So expenses need to have limits, too.
They also know that you don’t have to keep track of every single dime. There’s no need to drive yourself crazy keeping track of the small stuff. This isn’t about squeezing every last cent out of life.
You can keep track of your expenses by reviewing your monthly credit card statements and ATM or cash withdrawals.
You know that you need to make sure that your annual expenses don’t exceed your income. And, if you’re running close to your income (like most of us), you’ll want to make sure your income is enough to cover expenses on a monthly basis.
2. Successful retirees know how much income they’ll have and where it’s coming from
Successful retirees don’t make guesses about their income. They know how much they’ll have each year and the source of that income.
Your retirement income will likely include some of the following:
- Social Security
- Retirement accounts (401K, IRA, etc.)
- Savings and investments
- Part-time work or hobby income
Take the time to estimate how much income you’ll receive from each on a monthly and annual basis.
Some may vary a little. But you should be able to get a close estimation of what your monthly and annual income will be.
3. Successful retirees don’t retire too soon
Many people feel that they’re forced into retirement too soon because of a job loss in their late 50’s or early 60’s. They have trouble finding a job with similar pay and begin to take Social Security as soon as it’s available to them. That can be a critical mistake.
Working at even a lower paying job will provide more income than Social Security. And every year you delay taking Social Security increases your monthly check by about 8% when you finally do start to collect.
If you really can’t find work, need immediate income and want to delay Social Security, consider a reverse mortgage. You can borrow against the equity of your home, using that for current expenses while delaying the start of Social Security income.
4. Successful retirees pay attention to their health
Successful retirees know that Medicare doesn’t pay for everything. According to a survey by Fidelity, the average couple will need $280k for uncovered medical costs.
Paying attention to your health can reduce your medical costs. A balanced diet and regular check-ups are just two things that you can do to maintain good health.
5. Successful retirees stay active both mentally and physically.
Successful retirees know that if you don’t use it, you’ll lose it. It may be tempting to just chill out and relax, but you’ll be doing yourself a favor if you stay active.
According to a retirement study, “Keeping the brain active can keep mental deterioration at bay and even stave off depression, researchers found.”
One way to keep your mind active is to spend time reading each day. Whether you read your daily paper, a novel or an informative email newsletter, you’ll be forcing your brain to process new material.
There are a variety of ways to stay active physically, too. You may choose to get a senior discount at your local gym. Or you might take up a physical activity like gardening.
6. Successful retirees choose a place to live that best meets their needs and desires
Successful retirees know that where they live affects virtually every aspect of their life. Your decision not only needs to be appropriate today but needs to work with your needs 5, 10 and even 20 years from now.
For most retirees, the most important considerations are affordability, accessibility, and nearness to shopping/doctors/family.
There’s a wide variety of options available to you. Some retirees choose to ‘age in place’ in the home where they’ve lived for years. Others choose to buy or rent a condo or apartment to minimize maintenance. Still, others choose a retirement community or even move into an RV and take up a nomadic lifestyle.
Each option has different benefits and costs. Choose carefully. This will be one of the most important retirement decisions you’ll make.
7. Successful retirees make appropriate end of life and estate planning arrangements
Successful Retirees know that we can’t live forever. And they prepare for the future. Those preparations are more complicated than they were for our parents or grandparents. The time when you could hand-write a will and that was all you needed are over.
Today you’ll not only need a will but possibly a power of attorney, healthcare directives, lists of investments and passwords/pins for various accounts.
Can you rework your own paradigm, as Dr. Covey suggested, to become a more successful retiree?
Author Bio: Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters. Gary is also a regular contributor to Talking Cents blog.