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Navigating Your First Year in Retirement

Like most Americans, you’ve probably spent years working to achieve the retirement of your dreams. Then there comes a point when this career milestone changes from a distant goal to an imminent reality. You can make your first year away from work more rewarding and less stressful when you take the time to anticipate potential challenges and prepare for how you will handle this important life change.

Your State of Mind

In your first weeks as a new retiree, it’s normal to feel both excitement and trepidation. You may feel ready to connect with friends and family, and do the activities you love. Stepping away from a career can also reduce stress and free you from the burden of competing priorities. However, saying goodbye to the workplace, business associates, day-to-day responsibilities, and a regular paycheck may trigger anxiety and sadness. This is especially true for those who’ve enjoyed their professional status and fulfilling career. 

For those experiencing mixed feelings, it’s helpful to acknowledge them, both to yourself and a partner or trusted friend. Remind yourself why you chose to retire and remember all that you accomplished to reach this point. 

Your Purpose 

With your calendar clear of work obligations, it’s important to identify a few ways to fill former working time. For example, if you’ve promised distant relatives that you’ll reconnect, organize a reunion. Set a date to fulfill your dream of visiting France’s wine country or find a piano teacher.  Alternatively, you may decide to pursue an encore career, part-time job, or an opportunity to open your own business. 

With all the new possibilities, it’s important to avoid overcommitting yourself. Give yourself breathing room each day and ease into volunteer organizations or activities. Now that you have more freedom, be sure you’re choosing to spend time in ways that are most gratifying to you. 

Your Finances

Adjusting from building a nest egg to spending it can be challenging. To make the initiation to retiree life easier, create a plan for how to pay yourself. Start by tallying income sources before determining which you’ll tap into first. Next, estimate cash flow for year one. Planning this in advance can help ease worries and reduce the risk of overspending. Make sure to have enough cash to cover three years of unexpected expenses. Once in retirement, monitor cash reserves regularly to gauge spending and make adjustments as needed. 

If you’re uneasy or need reassurance that your income and cash flow plans are sufficient, meet with a financial advisor. Together you can look at the impact of taxes, evaluate your portfolio diversification, and prepare for the legacy you’d like to leave your community and family. 

Becoming a retiree means enduring a lot of change. Although you can’t prepare for every challenge and opportunity you might face in your first year, planning for what you can control allows you to move into this new life stage with confidence.

Ellie Tobin Stubbs, BFA, is a Financial Advisor with Ameriprise Financial Services, Inc. in Barre, Vermont. She specializes in fee-based financial planning and asset management strategies and has been in practice for 20 years. To contact her, ameripriseadvisors.com/ellie.stubbs or 802-622-8060.