Some say ‘retirement planning is more than tax planning,’ but is it true?

24/7 Wall St. Key Points:

• The Financial Savings and Tax Mitigation components of retirement planning can often become over-emphasized in the overall retirement picture.
• Many people focus on a time when they can step away from work, and those plans to occupy new free time have numerous factors to consider.
• Quality of life during one’s retirement should be a primary consideration when planning one’s retirement.
• Is your 401(k) optimized for your retirement plans? Try this quiz to see. (Sponsored)

Many Millennials and Gen-Zers have adopted the F.I.R.E. (Financial Independence Retire Early) strategy. The F.I.R.E. philosophy espouses aggressive thrift, savings and investment tactics to accumulate a large enough retirement nest egg to retire comfortably years or even a decade before the average  65-69 retirement age range.  

However, the ubiquity of online information available from Google, YouTube, Reddit and numerous other sites for the exchange of ideas has fostered a DIY mindset that can leave glaring holes in one’s game plan. In particular, a preponderance of tax planning and financial growth strategy emphasis can overshadow several other equally crucial aspects of one’s retirement.

Retirement’s Bigger Picture

Retirement related topics such as long term care, post-retirement emotional issues, and lifestyle decisions are crucial for enjoying retirement with a minimum of stress.

A 68-year-old Baby Boomer retiree and Reddit member posted on this topic. He expressed amazement at the number of posts and comments from younger members that concentrated on fancy tax strategies for retirement at the expense of other issues. Especially given the annual guideline changes issued by the IRS, he concluded that such tax and finance obsession was a proxy anxiety for worries over retirement itself. 

A checklist of other retirement-related topics that are noticeably absent from many of the Millennial and Gen-Z posts are all quality-of-life oriented, and include:

• Medical and Long-Term Care: not only the financial considerations but such decisions that should be arranged early on, such as health care proxies, whether or not one wishes to have a DNR (Do Not Resuscitate)  designation, assisted living, etc.
• Post-Retirement Lifestyle: factors to consider, such as relocation to a different state or even country, friends, family and other social connections, hobbies, personal growth pursuits, etc.
• Emotional Issues; Cessation of a daily routine practiced for decades and leaving the camaraderie of co-workers and the sense of accomplishment and value achieved during one’s employment years can sometimes lead to depression if the new retiree has not emotionally prepared for this step. Sometimes having too much time on one’s hands can interrupt the routine of one’s spouse, causing new friction in the relationship. 

Echoed Sentiments

Some of the pursuits that retirees cited as helping them to find their personal identities included community volunteerism, writing a blog, and learning how to play a musical instrument, such as the guitar.

While a number of the respondents agreed that financial fears were justified, especially given the inflation and higher interest rates depressing fixed-income investments due to Bidenomics, the majority concurred that it was perhaps 4th or 5th on the retirement priority list. The consistent theme echoed by the largest number of respondents was: “identity”. Various responses indicated ways this became manifest by simple to complex practices such as:

• Writing a blog.
• Learning a new language.
• Doing community volunteer work.
• Helping a spouse’s small business to thrive.
• Planting trees to repair deforestation.
• Starting a workout regimen to shed weight. 
• Learning to play a musical instrument.

Many relished their retirement period as the opportunity to find themselves, whether it be by untapped talents for music, earnest pursuit of long-held but unrealized interests, or worthy humanitarian or environmental causes. The clearer definition of one’s self and place in the world as something more than the sum of one’s employment was a universally cherished goal. 

Others shared their own issues with being unprepared for retirement, which included depression, feelings of being adrift and without purpose, and anxieties over the market. However, they acknowledged, for the most part, that quality of life during one’s golden years was the most crucial goal of retirement, something that Millennials and Gen-Zers may wish to bear in mind in their future plans. 

This article is meant to serve solely as an informational reference. Those seeking more comprehensive financial information should discuss their questions with a financial retirement professional.