Retirement Is More Than Just Money: 5 Things You Need To Plan For

Getting furloughed during the 2020 pandemic turned out to be a blessing in disguise because it helped me realize my wife and I needed to plan for five specific things before retiring.

At the start of the pandemic, COVID spread like wildfire among our employees. I was tasked with helping with leaves of absence and determining when an employee could come back to work. It was never-ending phone calls with sick employees. I could hear the fear and concern in their voices between the wheezing and coughing. It was a miserable time, and I wanted nothing more than to be furloughed. I just wanted to get away from all of the sickness and uncertainty.

I finally got my wish in March of 2020. Although I was a little worried not knowing how long I’d be furloughed, I figured it would be two, maybe three weeks, tops. I still had my health insurance. Plus, I’d be collecting unemployment. I had never taken a two-week paid vacation before; I was actually excited. I was going to treat it like an early-retirement trial run.

The first two weeks were great. Being stuck indoors the whole time wasn’t fun. But I caught up on Netflix and played some video games. By the third week, I started to get restless. It was the longest I had ever gone without working. I didn’t know what to do with my time. Not being able to see friends was driving me nuts.

And that’s when I realized that before anyone retires, the following five things must be figured out first.

1. HOW WILL YOU GENERATE MONEY IN RETIREMENT?

Having enough money saved is the first thing—sometimes it’s the only thing—people think about for their retirement. But more important is having some way to generate more money in retirement. Counting solely on Social Security and retirement savings is incredibly risky. Social Security alone will cover only about 40% of pre-retirement earnings.

Click here to get an estimate of what your Social Security check could be: https://www.ssa.gov/OACT/quickcalc

Social Security check amounts differ from person to person. Someone who earned a higher salary would potentially receive a bigger Social Security check than someone paid a lower salary. The amount you receive is based on how much you earned during your 35 highest-earning years. And if you didn’t work at least 35 years, every year short counts against you and lowers your payment.

There is also concern about what will happen to Social Security in the future. As people live longer and the population grows older, many worry that Social Security won't be around when they retire. While the likelihood that Social Security disappears is unlikely, a more real possibility is that Social Security checks get smaller or the eligibility age gets pushed back.

Even if nothing changes to Social Security, you’re still responsible for a large part of your living expenses. Relying on money in a savings account is a gamble. As mentioned in previous posts, inflation is devastating to your net worth. If your savings grow a minimum average of 3% a year, then maybe you’ll have enough to last your remaining life. But this assumes you saved the correct amount and you have no unexpected major expenses.

And what’s one unexpected expense that can wipe out your entire savings? Medical expenses.

2. HOW WILL YOU PAY FOR MEDICAL CARE?

Covering medical expenses is equally as vital to plan for. A single health emergency can wipe out your entire savings.

I remember an older coworker who had come out of retirement to work. She and her husband had saved up a lot of money and were originally living off of just the interest. But then her husband became ill and medical bills drained their savings, forcing her back into retirement.

Medicare, which is available to those 65 or older, doesn’t cover 100% of medical expenses. You’re still responsible for premiums, copays, deductibles, and coinsurance, just like the insurance you had through your employer. And if you retire early, you’ll need to buy insurance on the market or get private insurance, both of which can be costly.

In order to keep medical expenses as low as possible, staying healthy becomes an even bigger priority. When employed, you’re forced to be a little more physically active, even in a desk job. In retirement, it’s easy to become sedentary home bodies, which can lead to declining health.

Without a job compelling you to be physically active, it’s all up to you to motivate yourself to move. Don’t expect friends to drag you out of the house because social relationships are going to change as well.

3. HOW WILL YOU MAINTAIN SOCIAL INTERACTIONS?

Contact with other people is important for mental health. As an introvert, I’m comfortable spending time by myself. But even I started to go batshit crazy not being able to see people during the pandemic.

At retirement age, social interactions go down for a variety of reasons. Friends will start to physically slow down or pass away. Grandchildren grow up, and relatives grow apart.

In early retirement, maintaining social interaction with friends is also difficult. People in your age group whom you normally hang out with are likely still working. While you’re completely free, they are still working.

Less social interaction also means more free time by yourself, which brings us to the next thing to plan for.

4. HOW WILL YOU SPEND YOUR TIME EACH DAY?

Before I retired, a friend told me to make sure to have a lot of hobbies lined up because Netflix will get boring very quickly. I experienced that first hand when I was furloughed.

Your job fills up a significant portion of your day. But have you ever actually calculated how many waking hours you spend on work-related activities?

Assume you work 40 hours a week and have a 30-minute commute each way to and from work. Also assume you don’t work on the major federal holidays (New Year’s Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day), and you take an additional 10 days of vacation each year. Let’s also assume you sleep 8 hours a day.

Based on these assumptions, about 37% of your waking hours are spent on work-related activities. Many people dream of traveling the world and doing all sorts of activities with their free time in retirement. That’s easy to do if you’re working and only have 2-3 weeks of vacation each year. Now imagine how to fill every day for the rest of your life.

When I think of my grandma, I remember two separate periods. There was Grandma the textiles worker, and later in retirement, there was Grandma the gardener. But my dad told me her transition from one identity to the next wasn't smooth.

Grandma had spent her entire life working multiple jobs to care for three children as a single mother. When she retired, she didn’t know what to do with her time. Work was the only thing she ever knew, and suddenly she had all this free time. When I wasn’t with her, apparently, she’d spend entire days just staring out the window, which really worried Dad.

Fortunately, she eventually picked up gardening as a hobby. From fruits and vegetables to flowers, she grew everything in her yard. She finally found enjoyment in retirement with the new identity she carved for herself.

And this brings us to the final thing to plan for before retirement.

5. WHAT WILL YOUR NEW IDENTITY BE?

You may not have thought that your identity is something you’d have to plan for, but it is important. Think about what happens when you meet someone for the first time. At some point during the conversation, what you do for a living usually will come up. This is especially so for Americans; we are quick to start talking about our occupations because this is how we identify ourselves.

Job titles signify a sense of purpose and are intertwined with who we are. This is actually reflected in common names. Many American surnames, such as Smith (blacksmith), Miller (operated a mill), or Carpenter (woodworker), have origins in traditional trades and professions. This is how important a person’s job is to their identity.

When you no longer have a job, that identity goes away. Along with that, your sense of purpose will be challenged.

Some of us have multiple identities. If you have children or grandchildren who depend on you, you may be able to fall back on that identity. But what will your new identity be as their dependency on you changes? My grandma, for example, became a gardener to give herself a new identity and sense of purpose.

So what will your identity be? Make it something you could honestly and proudly tell others: this is who you are.

RETIREMENT ISN’T THE END—IT’S THE BEGINNING

Looking at these five things to plan for, you’ll notice a common thread. Each of these holes is normally filled by employment. A job doesn’t just give you an income. It also gives you health insurance, social interactions, a sense of purpose, and an identity.

This doesn’t mean that complete retirement is bad. You just need to figure out how you will fill those holes.

Retirement is less about what you’re leaving behind and more about what you’re stepping into. Answer these five questions before you take the leap, and you won’t just retire—you’ll create a new life for yourself, one that’s full of purpose, connection, and meaning.

See you at the finish line!

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Disclaimer: I’m not a licensed financial professional. This blog shares my personal experiences and opinions around money, investing, and early retirement. It’s for informational and educational purposes only—not financial, legal, or tax advice. Always do your own research or consult with a qualified professional before making any financial decisions.