A long, happy retirement is the great American dream. Perhaps you’ve watched with jealousy as friends and family have entered retirement. They’ve traded in the daily grind for senior living on their own terms. At least, that’s the impression you get.
However, there is a lot more to retirement than meets the eye. Without careful planning, you might be in for some big surprises. Here are three secrets about retiring that no one wants to talk about but that you need to hear. Knowing these facts can help you boost your chances for an enjoyable retirement.
1. Retirement might last longer than expected
Retirement planning would be a lot easier if you had a crystal ball that could tell you how long you will live. Then, you would know how many years you will need to support yourself without income from a job.
Unfortunately, many people don’t even think about life expectancy when it comes to retirement planning. “We’re all talking about the fact that we need to plan for a longer life,” said Nancy Doyle, a chartered financial analyst and author of “Manage Your Financial Life.” “People often forget that means we need to plan for a longer retirement.”
On average, a man who reaches 65 today will live until age 84.3, and a woman who reaches 65 can expect to live until age 86.6, according to the Social Security Administration. That can mean 20 years — or more — in retirement.
For some people, retirement can be 30 years or longer. Among 65-year-olds, 1 in 4 can expect to live past 90, according to the SSA. One out of 10 will live past 95.
As you plan for retirement, consider that it might last a few decades. Take care of your health so you can enjoy retirement, Ms. Doyle said. Make sure you have enough saved to live comfortably, or have a plan to continue working in retirement to generate income to cover costs.
2. You need a plan to stay busy
You might be dreaming of a life of leisure in retirement. But you quickly can become bored if you don’t have a good idea of how you’ll spend your days.
“You should have a game plan to keep yourself busy and thoughtfully engaged,” said Dean Hedeker, an estate planning and tax attorney and owner of Hedeker Wealth in Lincolnshire, Ill. Without a plan, your health and spirit might decline, he said.
“Based on my experiences serving clients, the people who are 90 years old and keeping busy doing something are young and have spirit,” Mr. Hedeker said. “They are not home just watching TV; they are thoughtfully engaged.”
Plan to stay physically active in retirement by exercising regularly. Continue to work in a paid or volunteer position to stay mentally engaged, Mr. Hedeker said. Also, pick up new hobbies. Take courses online, at a community center or at a local university or community college. You can even move to one of many retirement communities that offer a variety of activities to keep you busy.
“The retirees who have a plan to stay active and engaged live the fullest lives in retirement,” Mr. Hedeker said.
3. Timing of Social Security claim affects how much you get
It’s no secret that you can start collecting Social Security retirement benefits as early as age 62. In fact, the most popular age for claiming benefits is 62, according to the Center for Retirement Research at Boston College.
But people often are surprised by how much their benefits are reduced by claiming Social Security early, Ms. Doyle said. “If you start to take benefits at 62, you could receive 30 percent less for your payout,” she said.
Your Social Security check also can be reduced if you claim benefits before full retirement age, continue to work and earn more than the yearly income limit. If you earn more than $16,920 in 2017, you’ll lose $1 in benefits for every $2 you earn above the limit.
To get your full benefit, you have to wait until your full retirement age to claim it. The full retirement age is 66 for people born between 1943 and 1954, and it increases by two months up to age 67 for every birth year after 1954 up to 1960. For those born in 1960 or later, the full retirement age is 67.
However, you’ll be better off waiting past your full retirement age to start collecting Social Security. “If you wait until 70, your benefits increase 8 percent a year,” Ms. Doyle said. Don’t make a Social Security mistake. Social Security checks are small to begin with — the average is $1,360 — so people should delay claiming benefits to get a bigger payout, she said.