Your Road to Retirement

Do you know what your retirement looks like? When you want to buy a house or a car or even a special vacation, you probably can actually “see” the goal you have in mind, and that helps you plan and save enough to achieve the goal.

The same should be true for your retirement. If you can’t visualize where you’re heading, it’s hard to plan and save enough money to make sure that you get there.

Retirement is the most important financial goal you’ll ever have. If you can’t afford a car, there’s always the bus. If you can’t put enough money together to buy a house, you can always rent. And while it may be disappointing, you don’t have to take that trip you wanted. But what if you can’t afford retirement? The consequences are a lot more serious.

Planning for retirement now is more complicated than it used to be. Most of us can’t count on a pension from our employer, and many of us are thinking about continuing to work, at least part-time, after retiring from our main job. That makes saving for retirement a lot different than saving for a thing. In fact, it’s not enough to just save money, you need to plot your road to retirement.

First, create your own retirement road map, so you know where you want to go and how to get there. Second, calculate the cost of your retirement lifestyle so you can make sure you have enough money to pay for it. AARP has developed two tools to help you accomplish both steps—the Retirement Roadmap and the Retirement Calculator.

The AARP Retirement Roadmap

Start by using the AARP Retirement Roadmap at www.aarp.org/finance to figure out what you want in retirement. The results can help you think about the options available to you, and set your retirement priorities.

The Roadmap asks you 12 questions about your desired lifestyle, personal priorities and general financial status. It reflects the many ideas people have about their retirement and may help you come up with some of your own. Some people dream of leaving work behind to spend more time pursuing a hobby, volunteering in the community, or traveling. Others dream of starting their own business or embarking on a new career. Some people are in excellent health and don’t expect to spend much retirement income on medical care. Others realize that they will have ongoing medical expenses, and may need to budget for insurance to help with the bills.

Answering the questions about these types of issues will help you start to “see” your retirement, and the results will give you a sense of what it might take to get you there.

The AARP Retirement Planning Calculator

Once you have a better idea of the retirement lifestyle you want, you’ll need to figure out how much it will cost. You can estimate how much you need to save by using the AARP Retirement Planning Calculator at www.aarp.org/finance. The calculator contains three sections: an estimate of your retirement income needs, an estimate of the sources of money to fund your retirement, and your prospects and alternatives for meeting your income needs.

Retirement Income Needs

To come up with an estimate of your income needs, here are some things you need to do:

• Estimate how long your retirement will last. There’s no sure way to predict how long you’ll live. But you can make a good guess based on average life expectancy rates, your current health status, and how long your parents or grandparents lived. With this guess, go out on a limb. If you think you’ll live to 85 after taking these things into account, plan for enough money to support you at least to age 90. Don’t underestimate how long you think you will live—otherwise, you may not save enough to make your money last.

• Set a financial goal. Do you expect your retirement to cost you more, less, or about the same as life before retirement? Some expenses may go down a lot. You may have paid off your mortgage, commuting costs will go away if you stop working, you’ll stop contributing to retirement savings, and you’ll probably pay lower income taxes. Other expenses, for health care (Medicare by no means covers it all), traveling, or pursuing other interests, will probably go up.

The calculator asks you to set a goal as a percentage of your pre-retirement income. If you click on the “estimate” button for retirement income, you can come up with a figure by listing your expected retirement expenses for items such as housing, insurance and taxes. Most people need somewhere between 70% and 100% of their pre-retirement income to cover expenses when they stop working. So if you earn $30,000 and you think you’ll need 80% of that in retirement, your financial goal will be to have enough income to pay you $24,000 a year for each year in
retirement. (Check to make sure calculator includes inflation.)

Retirement Funding

This section of the calculator can help you identify all of your savings and other sources of retirement income, including retirement accounts such as a 401(k) or IRA, Social Security, real estate and investments. To figure out how much money you might actually have on your chosen retirement date, the calculator starts with your current savings and investments, then makes estimates based on your plans for future savings and investment returns.

Calculate Results

The last section of the calculator shows how close you can come to your retirement income goal, based on the choices and assumptions you made earlier about retirement spending needs, resources and investment returns. The easy-to-read colored charts as well as numbers make it very clear whether your current roadmap will lead you to your retirement goal.

If your chart shows you falling short of your goal, you can change some assumptions—such as the age you plan to retire or the amount you’ll save every month—to figure out how to create the path you need to take to arrive at your goal.

Marriage After Retirement

Christine A. Price, State Gerontology Specialist, Ohio State University Extension

For many couples, retirement is a long-awaited and exciting event that will result in more time for travel, hobbies, and family visits. Sometimes, however, a couple does not expect that retirement may change their relationship, as well as their marriage. A lot of information is available to help people plan financially for retirement, yet very little attention is paid to how relationships and personal well-being may be changed as a result of it. Despite a common belief that retirement is “easy,” research shows that it can sometimes be challenging and frustrating. For example, leaving the workforce can have long-lasting effects on how we feel about ourselves and how we relate to others, especially our spouse.

For the most part, retiring couples adjust to this new life stage with few problems or difficulties. Patterns of communication and interaction in the marriage prior to retirement are important. For example, couples who get along and are able to talk openly with each other before retirement are likely to have an easier adjustment experience and report high marital satisfaction in retirement. On the other hand, couples who have always had marital problems or feel dissatisfied with their marriage before retirement, are likely to continue having these feelings after they retire. In fact, spending so much time together in retirement may cause unhappy couples to finally change aspects of their marriage with which they have not been comfortable. Even couples who have a relatively happy marriage can experience “bumps” on the road to retirement bliss. In fact, research has shown a number of different factors that can affect marital quality for retired couples.

Here are a few examples:

Timing of Retirement: The decision about when to retire and who retires first can have important consequences for married couples. Research shows that one spouse retiring too early can lead to feelings of resentment and regret, especially if he or she feels pressure to retire. Marital quality suffers the most when wives continue working after a husband retires. Often wives continue their homemaking responsibilities, in addition to work, which causes conflict. When the wife retires before the husband, husbands usually aren’t affected. Wives, however, are not as satisfied with this arrangement. Finally, couples who retire at the same time appear to adjust to retirement the most smoothly. However, these couples do have to get used to spending so much time together.

Retirement Goals: Couples who have different plans for retirement often experience more disagreements than those who share the same retirement goals. For example, if one spouse wants to spend his or her retirement crossing the country in an RV but the other spouse prefers to garden at home, negotiation or compromise will be necessary.

Household Chores: Research shows that deciding who does what household tasks in retirement can be very important to a couple’s happiness. Overall, retired husbands do not do an equal share of the housework no matter if their wife is still working or if she’s retired. For many women, especially those who have worked outside the home, retirement means household chores can now be shared with a retired husband. When husbands fail to do their share of the housework, wives often feel resentment and disappointment. Other retired women resent their retired husbands invading their “territory.” These women report feeling “smothered” when their husbands are at home all the time. The “underfoot syndrome” occurs when a husband interferes in his wife’s household routine. All of these situations can lead to marital conflict in retirement.

Suggestions for Preparing Your Marriage for Retirement

• Communicate Openly. Communication is essential to the preparation of a marriage for retirement. It is important that couples discuss their expectations for retirement both from a personal perspective (personal goals, interests, dreams) but also from a couple perspective (joint activities, mutual goals, issues of sexual and emotional intimacy). By talking openly about retirement expectations, couples can avoid future conflict. Communication will also enable couples to work together to plan a mutually satisfying and fulfilling retirement experience.

• Set Boundaries. Setting boundaries in retirement is necessary to protect personal time and “couple” time, and can also provide a sense of structure and control. A critical issue in retirement for many couples is establishing a balance between “separateness” (personal privacy, pursuing individual hobbies, spending time with friends) and “togetherness” (participating in joint activities, maintaining intimacy, and socializing as a couple). In addition, it is critical that couples agree on how much time they want to spend with family and friends, engaged in community activities, and responding to the needs of others (i.e., caregiving tasks). Mutually agreeing on how to balance individuality and togetherness is important to maintaining marital satisfaction in retirement.

• Prepare for the loss of the work role. Preparing for the loss of the work role may be necessary for spouses who were considerably invested in their professional careers. The loss of the work role can lead to feelings of depression, a sense of having no purpose, and a loss of identity in one or both spouses. These emotions frequently impact the marital relationship and can lead to decreased marital quality. Couples who recognize the significance of this loss and the importance of replacing this source of fulfillment with alternative roles and activities are likely to avoid negative emotions associated with this loss.

• Designate household tasks. Deciding on who does what household chores in retirement is more important than many couples realize. Research shows a common source of conflict for retired couples surrounds the division of labor in the home. Couples who have previously practiced a traditional division of household chores (wife doing cleaning, cooking; husband doing household maintenance and yard duties) may either choose to continue this pattern or may decide that a more equitable approach is more appropriate for retirement. Couples need to discuss and mutually agree on how they will manage household responsibilities rather than assume old patterns will continue or that new changes will take place.

Conclusion

Couples who are transitioning from full or part-time employment to retirement frequently do not realize the impact this life transition will have on their marital relationship. Due to increased longevity and early retirement patterns, couples can expect to spend a significant portion of their marriage in retirement. Despite this demographic reality, few couples work to prepare their marriage for this new life stage and are surprised by the changes and challenges they experience in their marriage as a result of retirement. Just as couples financially prepare for the retirement transition, couples need to prepare psychologically to ensure their marital security in retirement.

References
Szinovacz, M.E. & Schaffer, A.M. (2000). Effects of retirement on marital conflict tactics. Journal of Family Issues, 21(3), 367-389.
Szinovacz, M.E. & DeViney, S. (2000). Marital characteristics
and retirement decisions. Research on Aging, 22(5), 470-498.
Szinovacz, M.E. & Harpster, P. (1994). Couples’ employment/retirement status and the division of household tasks. Journal of Gerontology: SOCIAL SCIENCES, 49(3), S125-S136.
Yogev, S. (2002). For better or worse: But not for lunch. NY: Contemporary Books.