Breaking into your second act

second act


Before making your retirement debut, you need to rehearse for the part.

The act of retiring changes everything from what you do every day and who you see to how you spend and manage your money. People work toward and look forward to retiring, yet they often aren’t prepared for how significantly their life will be transformed. A little improvisation in retirement isn’t bad, but there is something to be said for being prepared for the part so when the curtain goes up, you won’t find yourself playing a role in a tragedy.

Our Member Benefit Consultants (MBCs)—Steve Pike, Steve Bader, Jeff Huenink, Tom Gallmann, and Mark Resch—are uniquely qualified to speak to this topic. All enjoyed long teaching careers and have made the transition from public school employee to retiree. Now in (semi) retirement, they spend part of their second act meeting with Wisconsin public school employees to discuss various financial issues and topics, including how to plan for retirement. Here they share insights about the obvious (financial) and the not-so-obvious (emotional and social) factors to be considered before stepping onto the stage and into your new role.

Secure financial backing

Retirement is expensive. Experts estimate you will need between 70% and 90% of your preretirement income to maintain your standard of living when you stop working. “The number one concern on the mind of pre-retirees is running out of money during retirement,” says Tom.

“Knowing how much you’ll need is a bit of a guessing game. So much depends on what kind of lifestyle you want, where you live, what you plan to do, and how long you think you’ll live. You could be in retirement as long or longer than you worked.”

Tom suggests filling out the Ballpark E$timate calculator. It provides a rough idea of what you will need to save annually to fund a comfortable retirement. “It won’t fill in all the blanks, but it’s a good place to start. At some point you’ll need a more detailed plan that accounts for all of your future expenses and tax considerations, and includes a withdrawal strategy. Scheduling a Retirement Income Analysis with one of our financial planners can help you do just that.”

Mark adds, “It’s good to start looking at your financial readiness 10 years out. Hopefully, you’ve been saving throughout your career. If not, take advantage of the time you have left on the job to sock away as much as you can in a 403(b) or IRA, because your savings window pretty much closes when you retire.”

Health insurance: The antagonist

“A big concern is having health care coverage both before and after Medicare,” says Jeff. “Retiring before age 65 means you’ll have to purchase health insurance until the lower cost Medicare insurance begins. The out-of-pocket cost is often much more than you think. A single plan and other health costs can easily run $7,000 to $8,000 annually per person, even for a healthy person.”

Get familiar with your school’s post-retirement plan, if there is one, and make sure you don’t miss the deadlines for Medicare and Medigap enrollment.

Health insurance is a critical piece of your financial picture. Missing a deadline could be costly. See Don't miss these curtain calls and In the spotlight: Medicare and Medigap deadlines for more on this topic and other important deadlines you need to know.

Reversing roles

After years of saving for retirement, many retirees find it hard to draw down those assets in retirement. “Starting early and saving consistently provided me with a comfortable nest-egg to supplement my Wisconsin Retirement System pension. It made an early and financially comfortable ‘second act’ possible,” shares Steve P. “However, once I retired, I found the most difficult aspect to be making the emotional and financial transition from being a saver to retirement accounts, to being a spender from retirement accounts.”

Creating your new role

While financial readiness gets top billing when planning for retirement, think of it as the foundation for other important considerations—like what to do with your time, who you want to spend time with, and how to maintain your physical and emotional health. Being aware of how these roles change and making some plans on how to address them can help you feel more satisfaction during your retirement.

Your social circle will likely change. Many people rely heavily on their work place for social interaction, but that will change. Before you lose that automatic relationship generator (work), make connections and start establishing outlets for your social life in retirement. “I found that when I retired, all of my friends that I had planned to go hunting and fishing with were still working!” says Tom. “I had to go to Plan ‘B,’ which included helping a neighbor farmer. That led to my first career after retirement that I didn’t expect but enjoyed—farming!”

You may have an identity crisis. When you leave the workforce, you are giving up that aspect of your identity. You may feel a sense of loss. This is especially true for professions where a strong sense of purpose is inherent in the career, like being an educator. Not having that sense of purpose may be a new experience. Mark suggests, “Stay active physically and socially. Try new things and find activities that give meaning to every day.”

Your routine will be disrupted. “Teachers are accustomed to a very structured daily and yearly schedule,” says Steve B. “They need to figure out what to do with all the free time. Often it doesn’t hit them until school starts in the fall and they realize they’re not going back.

“It’s good to establish other interests during your teaching career. My happiest retired friends are those who are totally engaged in what interests them. Some enjoy volunteer work. Some enjoy working part-time. I’m a musician, so I enjoy playing in local music groups.”

Also, just as you adjusted to the time away from your family while at work, you will need to adjust to being around your family on a full-time basis...that can take some time.

You’ll need to have a new conversation. Communicate with family and friends about your retirement plans. It’s easy to get drawn into activities that you weren’t planning on because you now have “all this free time.” Allocate your time by fun or passion—not obligation. If you baby sit for your grandchildren or volunteer at church, do it for the right reasons. “Enjoy every day to the fullest and only do things that make you happy. Keep planning and dreaming,” urges Steve B.

Our MBCs followed their own paths in order to make retirement what they wanted it to be. “I enjoyed subbing. It was a good way to ease out of my teaching career,” says Jeff.

“My personal interest in investing led me to the MBC position. One year later, I’m helping other people live the dream,” says Tom.

Steve P. adds, “Aside from some ‘days off’ by choice, my time is full of hobbies, home projects, and my part-time work as an MBC. How I ever found time to teach I do not know! Folks say I look a lot less stressed and tend to smile more.”

Take a short intermission

Are you ready to begin your new act? It’s okay to take a short break before you launch into whatever you want to do. It could be as simple as celebrating with a bottle of wine, reminiscing, and looking toward the future. Maybe a vacation will give you more of a transition from work to retirement. Or do nothing for a while.

But don’t “do nothing” for long. Staying engaged and connected with others is key to making the most of your new part.

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