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The 1 Retirement Danger No One Warns You About

The Motley Fool logo The Motley Fool 7/9/2018 Maurie Backman

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Retirement can be a scary prospect if you go in unprepared. But what exactly does being prepared mean? You'll see plenty of articles highlighting the danger of entering retirement without a sufficient nest egg. You'll also hear plenty of dire warnings about the need to plan for the whopping expense that is healthcare, as well as the need to secure long-term care insurance. But here's one major hazard associated with retirement that doesn't tend to get the same level of press: the boredom factor. And if you're not careful, it could hurt you more than you ever imagined.

What will you do with yourself during retirement?

Financial experts across the board agree that in the years leading up to retirement, it's crucial to assess your savings, figure out what your senior living expenses will look like, and make sure those numbers align. But when's the last time someone sat down and talked to you about the emotional impact of retirement?

The reality is that it's difficult to go from a loaded work schedule to an existence devoid of structure, no matter how much you may be looking forward to your escape from the daily grind. The fact of the matter is that retirees are 40% more likely than workers to suffer from clinical depression, and the reason boils down to feeling isolated, restless, and unfulfilled in the absence of a job.

Of course, this isn't to say that you can't work in some capacity during retirement, thereby minimizing that risk. But a desirable means of part-time work can be difficult to come by if you don't take steps to secure one in advance. And while bagging groceries at the supermarket is a solid means of filling some hours during the day, it may not bring you the sense of satisfaction needed to feel good about yourself and your new routine.

That's why in addition to all of the financial planning you'll need to do for retirement, you'll also need to do some logistical planning. That means figuring out how you'll spend your days and whether you'll have the income available to meet those goals. In other words, you might think you'll travel every few weeks and enjoy just the right amount of downtime in between, but if your nest egg won't buy you the option to do so more than a handful of times a year, you're more likely than not to end up disappointed to an unhealthy degree.

Keeping yourself engaged

The challenge of occupying your time in retirement often boils down to a lack of money more so than a lack of options. The average U.S. household aged 56 to 61 has a mere $163,577 set aside for retirement, according to the Economic Policy Institute.

Now, to be fair, this data is several years old, so there's a good chance that average has gone up since being published. But even if we double that figure to, say, $327,000, that's still not a ton of money to work with over what could easily be a 20-year retirement or longer. In fact, at a 4% average annual withdrawal rate, $327,000 translates into just $13,000 of income per year. Throw in the $14,000 the average Social Security recipient collects today, and that's $27,000 a year -- maybe just enough to pay the bills, but most likely not enough to allow for a generous amount of leisure spending.

And that's why boredom -- and its associated mental health impact -- is such a problem for seniors. It's not just that retirees are going in not knowing what to do with their time; it's that their plans are often derailed by a lack of income. Therefore, when you sit down to figure out what you'll do with your days in retirement, you'll need to keep whatever financial limitations you're facing in mind.

Of course, this isn't to say that you can't find low-cost entertainment. Quite the contrary: If you look around, you'll probably find a host of options that don't break the bank, like museum memberships, park programs, and community college classes. There's also the option to volunteer, which can be fulfilling in its own right. And if you're feeling adventurous, you can always start your own business. Adults 65 and over are actually more likely to be self-employed than any other age group, according to the U.S. Bureau of Labor Statistics, and that's a good way to not only occupy your time, but generate some income without having to waste away bagging groceries.

No matter how prepared you think you are for retirement, don't underestimate the importance of going in with a plan for how you'll spend your days. You may need to tweak that plan as you go along, but you're better off having a starting point than diving in without a clue.

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