My parents' retired friends live luxuriously thanks to a smart investment move, and I'm planning to follow their lead (2024)

FAQs

What is the hardest part of retirement? ›

A lack of structure can throw you off balance

Being retired means having more free time, and many of us begin to think more deeply about things. It's easy to feel lost and wonder if what you've accomplished so far is all you'll ever do with your life.

Social Changes

Work often provides a social structure, and retirement may lead to changes in regular social interactions. Older adults may need to actively seek out new social connections, whether through community activities, seasonal or part-time jobs, clubs, or other social groups.

You may grieve the loss of your old life, feel stressed about how you're going to fill your days, or worried about the toll that being at home all day is taking on your relationship with your spouse or partner. Some new retirees even experience mental health issues such as clinical depression or anxiety.

Pre-retirement syndrome is the anxiety and stress that people experience in the years leading up to retirement. It's normal to feel a sense of uncertainty when it comes to such a major life change, and for many, they fear the idea of retirement.

To be considered wealthy at age 65 or older, you need a household net worth of $3.2 million, according to finance expert Geoffrey Schmidt, CPA, who used data from the 2019 Survey of Consumer Finances (SCF) to determine the household net worth needed at age 65 or older to determine the various percentiles of wealth in ...

The 3% rule in retirement says you can withdraw 3% of your retirement savings a year and avoid running out of money. Historically, retirement planners recommended withdrawing 4% per year (the 4% rule).

According to their table, for instance, the average remaining lifespan for a 65-year-old woman is 19.66 years, reaching 84.66 years old in total. The remaining lifespan for a 65-year-old man is 16.94 years, reaching 81.94 years in total.

The average retirement age in U.S. is 64 years old, with the average retirement age across all states spanning from 61 to 67 years old. The Social Security Act sets the minimum age to retire at 65 to receive full retirement benefits, although the minimum retirement age will continue to rise.

The average American retires not at 80, or 70, or even 65, but at 62.

77% of pre-retirees anticipate feeling happier on a typical day in retirement compared to 67% of current retirees who say they are happier. 75% of pre-retirees expect to feel less stressed, which matches retirees' experiences.

How does retirement affect the brain? ›

Research shows a connection between the early stages of retirement and cognitive decline, and numerous studies indicate that retirement can exacerbate a slew of mental health challenges, including anxiety and depression.

Even for people who chose to retire, saying goodbye to their career doesn't always bring happiness. Some feel anxious and saddened by the loss of routine and direction in their lives. Almost 1 in 3 retirees say they feel depressed – a rate higher than that of the adult population overall.

Under the Rule of 95, members can retire when their age plus their years of service equal 95 provided that they are at least 62 years old. For example, a member who is 62 years old could retire with 33 years of service rather than waiting until their schedule-based eligibility date (62 + 33 = 95).

The increased social seclusion of retirement can restrict physical activity, impairing mobility, which accelerates the aging process and increases the incidence of chronic disease. All such changes make retirees less adaptable.

“The main problem people face upon retirement is organizing their financial lives and finding new purpose,” says Robert Reilly, a member of the finance faculty at the Providence College School of Business and a financial advisor at PRW Wealth Management in Boston.

1. Paying for Healthcare. You will face sizable out-of-pocket costs for health insurance premiums, copays and uncovered services. According to research from the brokerage firm Fidelity, an individual aged 65 in 2023 could need roughly $157,500 saved after taxes to pay for healthcare expenses in retirement.

As participants entered mid- and late-life, the Harvard Study often asked about retirement. Based on their responses, the No. 1 challenge people faced in retirement was not being able to replace the social connections that had sustained them for so long at work.

Failing to Plan

The biggest single error mistake may be pretending retirement won't ever arrive when, for a large majority of people, it does. About 67.8% of men born in 1980 will live to age 65, according to the Social Security Administration. For women, the figure is 80.9%.