Retirement is one of the most exciting transitions in life. It seems like a promised land that frees you from the grind of a daily job. You may also have more time with friends and loved ones. Sadly, it’s not all milk and honey. In this article, D. Paterson Cope explores the surprising challenges that may crop up after retirement.

Loss of Purpose

One major challenge is that retirement is a new phase in life and involves reassessing your priorities and how you spend your time. It can be difficult for people who have been in the workforce for many years because they’ve gotten used to having a set schedule and routine every day (even if they don’t like it.)

D. Paterson Cope believes it would help if you found a way to rekindle the joy of living after leaving the workforce.

Strategies such as new hobbies, volunteer work, and joining new clubs can provide a new sense of direction in your life. You don’t have to start from scratch — instead, take the skills and interests that led you toward specific jobs in the first place and apply them to new hobbies or projects. 

Burning Too Much of Your Nest Egg Too Fast

Budgets are a critical part of the retirement planning process. Your budget should include the costs you’ll incur at retirement and how much money that will take out of your nest egg each year. Sadly, factors beyond your control, such as inflation, interest rates, and market risk, can force you to burn through your retirement money too quickly.

Consider hiring a financial advisor who can help with all aspects of planning for retirement — from creating guidelines for spending and saving money to ensuring everything is in order before you retire. Wealth management advisors can also assist you in rebalancing your portfolio.

Health Problems

Health problems are a significant concern for retirees. If you have health issues, treatment costs are likely to be high, which can make retirement less enjoyable. You can consider enlisting private health coverage or Medicare to cover your increasing health costs.

You may also need to plan for your long-term care costs. Specialized nursing caregiving can cost as much as $10,000, quickly draining your cash reserves. Discuss your plans for long-term care with your family and prepare accordingly.

Tax Changes

Taxation remains a thorny issue for most retirees as they transition from active salaries to passive income. You may have deferred taxes owed on your 401k retirement plans that can affect your annual filings once the checks start rolling in.

Minimum distribution plans can force you to liquidate some of your investments even when you don’t need the income. D. Paterson Cope suggests consulting a tax planner to learn the impact of your retirement investments on your taxes.

Challenges in Retirement

No matter how much time you plan your retirement, it’s difficult to determine what to expect accurately. Knowing the challenges, you may face can help in your preparation plans. A Certified Financial Planner (CFP) can help you with financial planning for your retirement.

Who Is D. Paterson Cope?

D. Paterson Cope, CFP®, is the founder and CEO of Cope Private Wealth, a financial planning and wealth management firm specializing in assisting retirees and people who are about to retire.

Mr. Cope has been providing financial advice for more than 30 years. He first earned the designation of Certified Financial Planner in 1997. When he isn’t working, he enjoys spending time with his wife, Jennifer Miree Cope, and the rest of his family in Mountain Brook.