How Your Money Mentality Should Change in Retirement

Reaching retirement can feel like crossing the finish line at the end of a 30-, 40- or even 50-year-long marathon. Therefore, many of us look forward to the endless vacation days and the rest and relaxation of retirement. Although a life with no alarm clock is something we dream about, the truth is that retirement really throws a wrench in how we view our money, and the switch from receiving structured, employment-driven income to drawing down investment accounts can be harder than we realize.

If you’re retired (or nearing retirement), you’ve worked long enough to see a vastly transformed economy. Factors like offshored workforces and manufacturing, corporate acquisitions, and the transition from a manufacturing-based economy to one of service, information and technology-based has fundamentally changed employment dynamics. 

With some public-sector and rare private business exceptions, defined benefit plans like pensions have gone the way of the dinosaur. This means the burden of saving for retirement has shifted to you. And just as your money mentality has changed over the course of your career, so too should it change when you retire. 

Changing Your Money Mentality in Retirement

You used to ask yourself if you were saving enough money for retirement. Now you’ll have to ask yourself how long you need that money to last for both you and your partner.

You used to set retirement savings goals. Now you look at your money in an entirely different way, and your goal is to set budget goals that make sense for your lifestyle. 

You used to optimize your portfolio to reflect your growth needs and risk capacity. Now that you’re retired, you may look at dips in the market and other risks in an entirely different way. 

You (probably) used to work full-time for your primary source of income. Now, luckily, you have a lot more flexibility. Do you want to work part-time? Consult? Or do you want to pursue a retirement career that reflects one of your passions? 

Retirement Mindset Means More Than Just Money

When you think about it, suddenly moving from working 40 hours a week to zero can be a real shock to your system. Although it may sound great in theory, the truth is that we’re creatures of habit—and we don’t always react well to quick and dramatic changes. Some employers will allow you to ease into retirement by gradually shortening your workweek over a year or a couple of years. This can be a great way to get your toes wet before diving right into full retirement. Use your days off to discover new hobbies, start volunteering, meet with friends and begin developing a new routine you can expand on throughout retirement.

If your current place of employment does not offer a gradual retirement option, you could search for a part-time job, perhaps something that’s more laid back or of interest to you. Easing into retirement not only helps reduce the shock but also can be a great way to continue earning income without committing to a full workweek. 

Everybody Needs a Helping Hand Sometimes

If you’re struggling with your money mentality, there are things you can do to help. For many, this starts with making sure they’re aligned with their passions—friends, family, travel, hobbies, volunteering and so much more. Some look for role models, people like them who are wonderful examples of thriving in retirement. Others get help from their financial professionals to set and meet their retirement goals.

Spiritual Application

Retirement is a topic of conversation financial professionals have with the majority of their clients, myself included. And for good reason - retirement years can be the richest, most rewarding years of an individual's life - reaping the harvest of a life of labor, planning, and dreaming. It's important to frame these years in the proper context to know how to best approach them. When we talk about retirement, many people think their lives will be less full than in earlier years. While a traditional 9-5 job might be eliminated, the fact is, most retirees see their lives become more full with other desires and dreams. It may not be full with the responsibilities of career, but all of the activities, hobbies, family goals, and personal goals from the past 20-30 years suddenly culminate and become available to pursue at once. While one certainly doesn't have to dive into them all at once, many retirees feel a desire to "strike while the iron's hot" and pursue multiple interests at once. 

The Bible talks much about seasons, particularly in the context of our natural life. Ecclesiastes 3:1 states, "To everything there is a season, A time for every purpose under heaven." Retirement is a wonderful season of life that can yield tremendous personal fulfillment and purpose. Taking the time to understand the season of life we're in can help to frame the ultimate goals we want to achieve without being pulled in too many different directions. And ultimately, that clear direction is what will guide one through a happy and healthy season of retirement. 

Evergreen Financial Group is a Fee-Only Financial Planning and Investment Firm located in Billings, MT serving clients in Montana, Wyoming and virtually across the country. Evergreen Financial Group specializes in working with Christian families, including young professionals, Current and Future Retirees and Church Staff Members.