One of the top search queries bringing people to my blog is “Overcoming fear of retirement.” Ultimately I don’t think people are really afraid of retirement, but like most of us we are resistant to change. A transition into the unknown can shake us out of our comfort zone and create uncertainty, which can lead to fear and stress.

I remember in late 2004, we had just found out that we were expecting our first child. My wife and I had been trying to have children for eight years. So this was amazing, wonderful, spectacular news. We were overwhelmed with joy, but at the same time for me there was stress associated with transitioning into the unknown. Every morning for the entire week after we found out I’d get a bloody nose while in the shower. While we were both extremely excited and happy, I was also very nervous and fairly stressed about the responsibility of becoming a Dad.

I have learned from working with many pre-retirees and retirees that the prospect of retirement can bring a similar sense of anticipation and joy. It can also also cause stress and fear as people begin to prepare for the transition into the next phase of their life. Many of the people we work with have been leaders in business and in their communities. Oftentimes their identity is associated with what they do, who they’ve become in their career and how much they have accomplished. Transitioning into retirement makes them realize that they are not their job. They also realize that regardless of how much they have saved most people are concerned it may not be enough, and now they need to redefine their identity and focus on what is truly the most important thing in their life.

There are two things I think most people could do to help them overcome the fear and stress of retirement.

The first thing I would recommend doing is sitting down and writing out a purpose statement for this next phase of their life. I went through this process for our firm last year, and it was an incredibly clarifying. The rewards of being intentional about designing your life in a way that is clear concise and meaningful can really provide clarity of purpose and help you decide how you will spend your most valuable asset, your time.  When I sat down to write the purpose statement for our firm I asked myself and my team three things:

#1 Who are we?
#2 What are we going to do?
#3 Why are we going to do it?

You could apply these same questions to your retirement. I’ll warn you this is not an easy exercise. It took me several months to really dial in our firm’s purpose statement and every word has significant meaning. Our purpose statement answers all three of these questions and is only one sentence long so it is easy to memorize. This statement is now the foundation for every decision we make. Imagine what it would be like to wake up every morning in retirement and have that type of clarity.

The second thing you can do to overcome the fear of retirement is to have a written financial plan. I recommend sitting down with an adviser who specializes in working with folks transitioning into and through retirement. Finding an expert to help guide you along this path will do a couple of things: First your adviser is not emotionally involved in the prospect of your retirement so he or she should be able to give you objective advice, and second your adviser may know of techniques or strategies that you have not considered simply because they’ve helped hundreds of others preparing for the same transition

A good retirement plan will look at your budget, cash flow, taxes, income, assets, estate planning and insurance to help paint a picture of what your financial life will look like on a year by year basis as you transition into and through retirement. A good retirement plan can help answer the question of  “have we saved enough?” and alleviate the concern of running out of money in retirement. A good retirement planner should ask you the question, “What is the purpose of this money,” and you should be able to answer that question.

Hiring an expert retirement planner can help you understand the rate of return you need to earn on your money in order to achieve your goals and help you craft an asset allocation, diversification and income strategy to help you achieve that goal with as little volatility and risk as possible. And ultimately a written retirement plan will help provide you with confidence.

When you go through this process of defining your purpose statement for your retirement, and you do the hard work of answering those 3 questions outlined above, then you will discover clarity. With a written financial plan for achieving your retirement lifestyle goals you will achieve confidence. Ultimately once you have clarity of purpose and the confidence to know the numbers are going to work, then my hope is you will experience freedom.  Freedom to do the things you want to do, to be with the people that matter the most to you, to be free from worry, fear and greed; and ultimately freedom to have an impact in this world so that one day you might be greeted with “well done good and faithful servant.”

Click the highlighted link if you would like to read Our Firm’s Purpose Statement.

Also printed in the Kitsap Peninsula Business Journal May 2013 Issue.