Retirement: Lessons From the First Year

Here are five battle-tested rules for surviving that dreaded "now what?" stage of retirement.

By Ellen Florian Kratz

July 20, 2007

Jim Down's 85-year old mother wasn't happy for him when he retired. In fact, she cried. The former vice chairman of Mercer Management Consulting was only 50 when he stepped down in 2002—far too young, as far as Mom was concerned, to cross the finish line.

Jim's father, a Travelers insurance manager, retired at age 70 and had never been happy with all the free time on his hands. "To her, retirement is the end of the road," says Down. "I had to convince her it was a new beginning."

First he had to convince himself. "It was scary," he says. "I thought, will I feel productive?" Sure, he kicks back. Each summer he chooses a country and spends two weeks playing as much golf there as he can. Last fall he picked grapes in a Portuguese vineyard and stomped them with his feet.

But he also has a sense of purpose—such as bringing business know-how to nonprofits like Oxfam America. "Retirement is better than I thought it was going to be," he says. That is a big relief to his mother.

But not every retiree in Down's position is as lucky as he is. "I meet people who are struggling," he says. "I know people who made money at an early age who don't have much to do and don't seem very happy."

People with money who aren't happy in retirement? Nice problem if you can get it. We're not going to kid you: Money, and plenty of it, is still one of the backbones of a long and contented rest of your life.

But as much as you've dreamed of the moment when you can finally tell your boss to take this job and —how to put this?—allow somebody else the opportunity to bring a new vision and skill set to the position, retiring with a nice mound of money doesn't mean instant bliss.

"The first year after retirement is a quirky time," says retirement guru Ken Dychtwald. "It's a time of feeling enthusiastic and liberated. It's also a time of turmoil."

And it's gonna be great—once you get over the hump and start to create the life you've always wanted. To help you get there, we've put together some rules for making it through the first 12 months.

Take a Deep Breath

Remember, vegging has its benefits. Suddenly having a lot of free time can lead to regrettable choices—like starting ill-conceived businesses or making iffy stock investments just to fill the void.

"If you rush off immediately to a gated community in Florida, you could miss out on the next big part of your life," says Dave Corbett of New Directions, a firm that coaches senior execs through major life changes.

How much time should you take? As much as you need.

For Louise Levine, 62, a former medical advisor for Eli Lilly, a 10-day ski trip to Whistler, B.C., last January was enough before taking a gig at another pharmaceutical company. "I'm happy I didn't take more time off," she says. "My enjoyment in life is to work."

Gail MacDonald, a 50-year-old former section head of quality assurance for Procter & Gamble, took a year after she retired in 2004 to decompress. During that time she stayed in Cincinnati and took advantage of the attractions she had always been meaning to try. She golfed the local courses Majestic Springs and Legendary Run and dined at Boca and Pigall's. She planted flowers.

"I had all 24 hours in the day," she says. "I could go grocery shopping on a Tuesday afternoon instead of eight o'clock at night after work." Three years later she's now happily ensconced on North Carolina's Outer Banks. "In that first year, I didn't make any big changes," she says. "I allowed fate to take me, and it was delicious."

Free time isn't free, so don't assume you'll be spending less money

You know the rule of thumb—you'll need 70% to 80% of your preretirement income to maintain the standard of living you had when you were working. After all, you'll no longer be wasting money on professional-looking duds and carting yourself to and from the office.

Best of all, you won't be saving for retirement anymore. Even with increased health-care costs, who needs the extra money?

You might. That retirement calculation is not a magic number. According to the latest retirement study from McKinsey, well over half of retirees with more than $1 million in assets were spending 100% or more of what they spent while they were working.

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