This is a question on the minds of a lot of us “women of a certain age.” It is clearly an important issue to consider. However, I think the question needs to be reframed– you have to ask yourself two questions:
1. When will you retire? and
Let’s start with How? Because you have a lot more control over the answer to this question.
There are so many possible answers to this question. I propose that you start by thinking about the people and activities that are really important to you. Then takes steps to make them the center of your life after your stop working. Is it friends and loved ones, a favorite hobby and/or sport? Making the world a better place? Doing something you always wanted to do, like playing music or running a marathon? The list goes on. Pick at least one, maybe two or three. And start to think and plan your retirement around your best friends, and/or favorite activities and projects. Your days should be filled with the activities and people that give you the most joy and pleasure.
When you ask yourself How? you also have to think about that thing we call “Life Style.” Many of us enjoy a life filled with beautiful homes, lots of travel, restaurant dinners with friends, expensive cars, etc. While you have a paycheck coming in (probably the biggest paycheck you had all your life), you can afford this. After the paychecks stop, however, you probably know you may have to do what most retirees do, ratchet it down a notch or two. This is hard for a lot of us to do. But it is key to that next phase of life called “retirement” (or as we might want to rephrase it, that long period of time after the paychecks stop).
If you figure out what is really important to you and make those projects and loved ones the center of your life, this gets easier. If friends are really important, invite them over for coffee or go for walks and talks. You don’t have to meet at expensive restaurants. If “making the world a better place” is your goal, sell your house, put that money in a safe account that will help it grow, then join the Peace Corps. When you live in other countries, your perspective will really change. As an anthropologist conducting field work on Latin America, I realized that family, friends and trust brought the greatest joy. The act of sharing their love and stories over daily meals was so gratifying. There were other things I found to be basic necessities, like a daily shower, running water, especially having hot water and a washing machine. But the other “stuff,” was largely discretionary expenditures. They were nice, but really not necessary. Your “life style” can become a lot simpler, certainly less expensive, and a lot more gratifying when you sit with friends and laugh really hard.
The next answer to How? entails developing a Life Style that is “Sustainable.” That is what the Boston College Center for Retirement Research calls it (check out their great interactive tools.) Strip out the stuff that is really too expensive, and substitute the people and activities that make your heart warm, and reward you with smiles. Indulge yourself in personally gratifying experiences that you will appreciate for a long time. And while you are at it, save a lot of that money you spend on discretionary “stuff” that you will likely throw away in a few years. Start to practice having a sustainable life style before it is thrust upon you. Ratchet it down. While you are practicing, take the money you save and put it to work for you in an investment account. That will add to the pile of money you will use to fund your retirement.
The decision to shift toward a more sustainable life style is totally within your control. Try it. Simplify your life. Reduce the stress of managing and paying for so many things. And save the money in an account, so you will have less money stress after you retire.
The answer to this question may not be entirely in your control. You can decide to retire at 65, 66 or 70. Maybe you can work a few years longer. But if you do not own your own business, you may not be in a position to choose. So you have to start to develop an exit strategy while you are comfortable and have a lot of choices. Develop a strategy that allows you to have dignity, and enough money to be secure.
No, don’t stop reading now!!!
You have the luxury of time and the ability to plan. That is what you can control. You also may have the luxury of good health. That gives you more time, and the ability to execute it. So, if your retirement won’t look like the world on the commercials, develop a plan.
Start to develop strategies for deploying the money you have saved so far. And develop a careful plan for the precious dollars you earn now, while your pay checks are still big. Make some careful decisions about spending, as you work toward developing a sustainable life style. You may need to consult a professional for help (especially if you have a partner, and one of you likes to spend a lot.) Don’t hesitate.
Also develop a plan for starting social security. You can decide how old you will be when you receive your first benefit. The longer you wait, the higher the monthly benefit. If you are married, there are some clever strategies to consider. And, if you are divorced, but were married at least 10 years, you have a right to social security benefits through your ex. (He does not need to know, nor does he sacrifice a dollar of benefits. You, on the other hand, might have access to a larger monthly benefit than you might expect [based on your own work history].)
So please, consider your options. They are probably better than you think. Develop a plan so that you know how you will spend the next stage of your life and when it will start.