How do we decide what percentage of our income to earmark for retirement? Undoubtedly we think about the bills we have to pay, the medical expenses we might incur, the food and personal care items we need to purchase. This is a solid start -- putting any amount of money aside for retirement is smart and necessary. But how many of us are thinking about the lifestyle we hope to have and the unpredictable realities that we may face during our retirement?
It is easy -- and expected -- to take a numeric approach to retirement planning by deciding on a figure based on our fundamental needs, but numbers don't tell the whole story. It's just as important to take a closer look at the human side of retirement by bringing quality of life factors into the equation and truly visualizing the life you want to lead. Effective planning is about more than financial security and should adopt an integrated and holistic approach to preparing to live longer and better lives. According to Dr. Joe Coughlin, Director of the MIT AgeLab, it starts by asking three questions that can predict future quality of life in retirement:
1. Who will change my light bulbs?
In our retirement age, we might not have the same energy levels or physical capabilities that we had when we were younger, making it more arduous to clean, repair and modify our homes. It may become necessary to hire professionals to take over regular domestic tasks, creating a new expense that may not have been accounted for ahead of time. In addition, the need might arise to install amenities such as ramps or handrails, which are not easy fixes. In order to live and age independently, our retirement plans need to allow for changing home maintenance costs.
2. How will I get an ice cream cone?
Whether we want to satisfy a sweet tooth craving or just need to run a basic errand, the fact is that we might have to rethink the way in which we travel from point A to point B. To live independently, we have to be able to leave the house and get around, but the monetary requirements associated with accessing activities outside of the home are sure to change as our mobility needs alter. As such, our retirement plans need to take location and transportation costs into account.
3. Who will I have lunch with?
Loneliness has negative repercussions on both our mental and physical well-being, so it is imperative that we think about how to maintain our social circles as we age. When we retire, we leave our workplaces and colleagues. Our children become adults, our friends get older and undergo life changes, and unavoidably some loved ones perish. As a result, we may have to take measures when we're retired to revive our social networks, such as joining a gym, traveling with a group or taking a class -- all of which costs money. Socializing is integral to our quality of life, but socializing is also not free, making it an important factor to consider as we save for retirement.
At first blush, these three questions seemingly have nothing to do with financial planning, but in reality, they help us see past the numbers and figures to plan for a better, more enjoyable retirement. While any amount of retirement savings is smart, these key considerations can make our golden years happier, easier and more fulfilling.
Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC. The MIT AgeLab is not an affiliate or subsidiary of Hartford Funds.