Not as Advertised

Dennis Friedman

I VISUALIZED a retirement far different from the one I’ve experienced. Before I quit the workforce, I thought my retirement would be a carefree life where I could do what I want, when I want. I could work, travel, sleep all day. There would be few limits. Why? I had no money issues and few responsibilities.

Today, that seems like a dream. Since retiring, I realize my retirement is constantly changing. Unexpected events and expenses can derail the best-laid plans. Here are 10 things I’ve learned in the decade since leaving my job:

1. Working in retirement. I retired from Boeing at age 57 with a plan that included working as a part-time contractor until my mid-60s. Instead, I worked just six months at another aerospace company—until I learned my father was seriously ill. I was never able to go back to work, because both my parents’ health declined and they needed my help. The lesson: Never bank on working after retirement for financial reasons. There are too many unknowns.

2. Long-term care. After watching my father struggle for three years with cancer, I know the importance of having some sort of long-term-care plan for your waning years. During the last two years of my father’s life, he needed help with many daily activities, including bathing, eating and dressing himself. Medicare generally doesn’t provide long-term care. Since my parents didn’t have long-term-care insurance, my mother, sister, brother-in-law and I provided the necessary care. If you don’t have insurance, you’ll likely need a family member or friend to be there for you.

3. Lots of free time. Before I retired, I read a lot of blogs about retirees having all this free time to do whatever they wanted. I can assure you that doesn’t describe my retirement. I spend more than half my time as the primary caregiver for my mother. I’m limited in how long I can be away from her.

4. Investment strategy. I found it’s more difficult to manage your investments after you retire. Before, you’re in the accumulation phase. This can be fairly straightforward. Just contribute to a few low-cost broad-based index funds.

But when you retire, you need to come up with a drawdown strategy that’ll provide you with lifetime income, while minimizing taxes. After struggling with this on my own, I decided to hire a fee-based financial advisor.

5.  Taxes. I never really thought about the effect of taxes on my retirement. I knew I’d have to pay taxes on my traditional IRA, rollover IRA and 401(k) accounts. But I never took the time to calculate how my taxable income would affect my Social Security benefit and Medicare premiums.

How much you pay for Medicare Part B and the taxes you pay on your Social Security income are determined by your income level. Result: When I start my required minimum distributions from my retirement accounts at age 70½, my Medicare premiums will increase and I’ll be taxed on 85% of my Social Security benefit. I should have started converting some of my tax-deferred saving accounts to Roth IRAs earlier, so I reduced my future tax liability.

6. Fixed expenses. I can’t tell you how much better it is to retire with very few fixed expenses. Not only is it financially easier, but also it’s less stressful. I don’t have a mortgage payment—and that’s a big relief. It gives me a sense of security to know I can sharply lower my spending if I have a financial emergency.

7. Retiring together. This can be a difficult time for couples. During your working years, you aren’t with your significant other as much. When you retire, you might need to adjust to each other’s habits and idiosyncrasies. I have a retired friend who says he likes it quiet in the morning. But when his wife gets up, she blasts the television. It drove him crazy until they were able to work out their differences.

8. Need for friends. I didn’t appreciate how important friends are until I retired. Without them, I wouldn’t be as socially connected. Hanging out with my friends has become a big part of my retirement life. It makes me feel alive. Don’t assume that, just because you have a large family, you don’t need friends. You tend to do things you enjoy with your friends, while many things you do with family might be out of a sense of obligation.

9. Retirement can be stressful. I thought, when I retired, my life would involve fewer worries. In some ways, that’s true. But taking care of an elderly parent, or losing a loved one or a best friend, can be very stressful. Don’t get me wrong: I enjoy retirement—but it isn’t stress-free.

10. Health care expenses. One thing I wished I had done when I retired was look into getting dental insurance. Medicare doesn’t cover dental expenses and routine eye care. After I retired, I had an out-of-pocket expense of more than $5,000 for two costly dental procedures. When you retire, you need to make sure you have the right health care coverage—or you could face unexpectedly high out-of-pocket expenses.

Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor’s degree in history and an MBA. A self-described “humble investor,” he likes reading historical novels and about personal finance. His previous articles include A Fine ExampleBuilding WealthNot My Priority and Power of Two. Follow Dennis on Twitter @DMFrie.

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