You may worry about managing financially on a fixed income, coping with declining health, or adapting to a different relationship with your spouse now that you're at home all day. The loss of identity, routine, and goals can impact your sense of self-worth, leave you feeling rudderless, or even lead to depression.
Based on the 80% principle, you can expect to need about $96,000 in annual income after you retire, which is $8,000 per month.
The liberation or honeymoon phase of retirement occurs at the official beginning and can last from one to two years after retirement. The liberation phase includes feelings of excitement, relief, and freedom from the stress and responsibilities of your day-to-day working life.
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.
As a general rule, early retirement leads to a longer and happier life. The optimal age is your mid 50's, when you're still young and healthy enough to enjoy everything. The only caveat is ensuring sufficient savings to support your desired lifestyle.
Many older adults don't feel so optimistic after retirement, though. In fact, retirement can bring about some significant mental health issues, including depression and anxiety. Because so many aspects of your life change when you retire, the transition can feel disruptive.
The hardest part of early retirement, in my experience, was adjusting to a new lifestyle. When you retire early, you suddenly find yourself with an abundance of free time. This may sound exciting at first, but it can also be overwhelming. Without the structure of a regular job, it's easy to feel lost or purposeless.”
Follow the 3% Rule for an Average Retirement
If you are fairly confident you won't run out of money, begin by withdrawing 3% of your portfolio annually. Adjust based on inflation but keep an eye on the market, as well.
Most of us seem to know that the average American lives between 70 and 80 years: 73.5 years for men, and 79.3 for women, to be exact. Fewer of us understand that life expectancy rises with age. An American man who turns 70 today will live to 85, on average. A woman of 70 will live to 87.
It turns out, stress and depression during retirement are pretty normal. It's a major life transition, which is unsettling in itself for people who struggle with change, and it brings with it many challenges that some may not be ready to deal with.
The average American spends $4,345 per month in retirement, according to the Bureau of Labor Statistics. That's $52,141 per year.
Top the amount with 401(k) savings, living on $3,000 a month after taxes is possible for a retiree. For those who only have social security benefits to rely on, there are many places where they can retire on their checks both in the USA and around the world.
The average retirement savings for all families is $333,940 according to the 2022 Survey of Consumer Finances. Taken on their own, those numbers aren't incredibly helpful. There are a variety of decent retirement savings benchmarks out there, but how much money other people have isn't one of them.
Low-income people may retire by cutting their expenses, downsizing their homes, taking Social Security benefits early, and/or applying for financial assistance through government benefit programs.
If you retire with $500k in assets, the 4% rule says that you should be able to withdraw $20,000 per year for a 30-year (or longer) retirement. So, if you retire at 60, the money should ideally last through age 90.
Around the U.S., a $1 million nest egg can cover an average of 18.9 years worth of living expenses, GoBankingRates found. But where you retire can have a profound impact on how far your money goes, ranging from as a little as 10 years in Hawaii to more than than 20 years in more than a dozen states.
Retirees don't miss working, they miss the people
When it comes to retirement, we often stress about things like financial concerns, health problems and caregiving. But people who fare the best in retirement find ways to cultivate connections.
A major way to beat boredom in retirement is by picking up new hobbies. Some people think that reaching retirement age means they're too old to try new things, but this couldn't be further from the truth. Most retirees find that they have a renewed interest in learning new things and exploring their hobbies.
“The main problems people face when they retire are financial insecurity, health issues and social isolation,” says Derek Miser, investment advisor and CEO at Miser Wealth Partners in Knoxville, Tennessee.
Retirement anxiety is an emotion of concern or worry, experienced by people yet to retire, about the prospect of retirement. Examples include concerns about how they'll fill their time, financial worries and feeling a loss of identity.