Retirement is one of the most significant times of change in a person’s life, and not every day or experience will go as expected.
As you’re planning for retirement, you may want to fully understand what to expect and plan for some of the “what if” moments that could throw off your plans. Don’t get caught off guard financially or emotionally.
Consider these 15 things you can expect during your first year of retirement.
Eliminate your late tax debt
Each year, the IRS forgives millions in unpaid taxes. If you have more than $10,000 in tax debt, or have 3+ years of unfiled taxes, you could get forgiveness too. You might be eligible to lower the amount you owe, or eliminate your tax debt completely.
Easy Tax Relief could help you lower or get out of your tax debt for good. They’re well respected in the industry and have been recognized for their ethical standards when dealing with tax debt. While most tax companies just put you on a payment plan and file your taxes for you, Easy Tax Relief talks to the IRS directly. They can help you pay off your tax debt faster while potentially reducing what you owe.
Important: Not everyone will qualify. To take advantage of this special program you must owe more than $10,000 in past-due taxes.
You’ll get to know your spouse in a different way
Suddenly, you’re both home, and there’s usually an adjustment period where you may need to re-learn about each other.
While you were working, you both had separate relationships, conversations with other people, and opinions. Now, figuring out a new routine together will take some change, but one thing that remains the same is making sure you do things to lower your financial stress.
Mostly, try spending time together alternating between things you both enjoy. Learn new skills, pick up new hobbies, or just enjoy talking about things you never had time for.
You’ll have more time on your hands than you think
That’s not to say you’ll suffer memory issues, but after the first week or so of retirement, you’ll have more time on your hands than you know what to do with.
All of those things you said you would tackle when you retire may take a few weeks or even months, and then you’ll be looking for things to occupy your time. If you're used to working 40 hours a week, it can be difficult to transition to having “nothing” to do every day.
You might want to skip the expensive hobbies
Another money drain for many people in their first year of retirement is investing in hobbies.
Refrain from buying woodworking equipment or a full garden center of plants unless you’ve budgeted for it. Hobbies are a good thing, but start slow and keep the initial costs down.
You may quickly become bored and have a lot of extra equipment and supplies to deal with if you try to do too much, too fast.
Earn $200 cash rewards bonus with this incredible card
There's a credit card that's making waves with its amazing bonus and benefits. The Wells Fargo Active Cash® Card(Rates and fees) has no annual fee and you can earn $200 after spending $500 in purchases in the first 3 months.
The Active Cash Card puts cash back into your wallet. Cardholders can earn unlimited 2% cash rewards on purchases — easy! That's one of the best cash rewards options available.
This card also offers an intro APR of 0% for 15 months from account opening on purchases and qualifying balance transfers (then 20.24%, 25.24%, or 29.99% Variable). Which is great for someone who wants a break from high interest rates, while still earning rewards.
The best part? There's no annual fee.
You won’t need to “buy” the fitness equipment or classes
You now have time on your hands to get fit and active. While it’s always a good idea to focus on your health, in retirement it becomes important to avoid doing it the expensive way.
The fitness equipment you buy isn’t likely to get used during retirement if you didn’t use it during your working years. You won’t need to have fitness classes unless you want to do them (and you’re committed to them).
Many find free or low-cost ways to get fit, like walking or joining the local rec center. Most importantly, start getting active and then add in classes and other costly investments if and when you need to later.
You have to psychologically adjust to realistic financial expectations
Lavish dinners at your favorite restaurants, spur-of-the-moment trips to the casino, and weekends spent with friends add up, quickly.
While you may have a budget for retirement, it’s often surprising how fast you’ll blow through that if you don’t make a psychological change. The realization that you need to live frugally and within your means may take some time to get used to, especially that first year.
It’s common to go through a bit of an emotional “why can’t I live like everyone else” period. It can be emotionally draining, but adjusting creates a better path forward.
You’ll be shocked at the healthcare expenses
Even if you put aside a variety of tools to pay for healthcare (Medicare, pensions, and retirement funding), you may still be faced with a financial burden.
A Fidelity Retiree Health Care Cost Estimate survey found that in 2023, those who retired at the age of 65 would need to have an estimated $157,500 put aside just for healthcare costs.
From unexpected medical needs to routine exams, you may be shocked by the cost of just getting the care you need. Even a short hospital stay can derail many financial expectations if you haven’t planned for them.
Your budget will change – and often may be unexpected
You may think you know how much you’ll spend on everything from utilities to gas costs while you’re planning for retirement, but your budget will likely be much different than what you expect.
Sure, you’re no longer commuting to work, but you’re spending a bit more having lunch out each day or taking that trip across the state to see a friend or your kids.
You’ll need to adjust your budget once you retire. Document all of your expenses in the first months of retirement to get a better picture of what you're really spending and set realistic expectations for what you can afford to do.
Medicare is a pain that you’ll need to learn to manage
Understanding Medicare options, limitations, and where to go when you need antibiotics can be a downright difficult process.
There are a lot of components that make up this retirement plan, and getting it just right is essential to keeping your costs down. It doesn’t help that you’ll be inundated by services that “want to help.”
Learn Medicare from a trusted resource. Find out how to use it fully, and don’t be afraid to reach out to the health insurance providers with questions.
The lack of purpose can be painfully obvious
Without having a daily purpose, you can suddenly feel, well, unimportant. That’s a harsh realization, but the reality is no one is dependent on you any longer once you’re in retirement. That could lead to financial problems if you try to fill that empty gap with stuff.
Studies show that depression risks rise as much as 40% during the first few years of retirement. It’s hard to manage this huge change, especially if your life is defined by what you did for a living.
Try to find purpose in a way that’s interesting to you. You may want to volunteer, invest time in your religious beliefs, or commit to local government work.
Take advantage of historically high rates to grow your wealth
Are your savings just sitting around, not earning much interest? It's time to make a change and put your money to work for you! With CloudBank 24/7, you can earn more interest on your money today ... while keeping your cash OUT of the stock market.
Here’s their secret: CloudBank 24/7 amplifies your money by doing what many banks refuse to do … paying you a rare 5.26% APY (annual percentage yield)12 on your cash.
When you deposit your money into this high-yield savings account, you can supercharge your emergency fund, short-term savings, return on cash, and more with interest income generated from their high 5.26% APY payout.
The best part? There are no fees, you can withdraw your money at any time, and opening an account takes as little as 3 minutes. CloudBank 24/7 is FDIC-insured through Third Coast Bank SSB and cybersecurity is a top priority, ensuring your data is kept safe.
Self-reflection is hard to do
You’ll have plenty of time to think during that first year of retirement, and many people spend some time questioning their decisions, developing regrets, and falling into a dark spiral.
Realize that you’re still you, but you need a new path forward. You’ll need some self-reflection, including on your health, savings, spending, and goals.
Your priorities — like eating out every night or buying the latest designer trends — are likely to fade as you put more time and effort into things that now matter to you, like spending time with family or completing projects you hope to leave to your family.
You’ll be terrified of long-term care
Most people don’t want to live in a nursing home, and even if you’re just turning 65 and in good health, you'll often find yourself thinking about your future.
Long-term care insurance is a valuable tool for reducing the financial burden. But the more you see your friends in these situations, the more worried you’ll be about your quality of life.
Put some time into creating a plan to avoid such situations when possible. Perhaps you have family you want to live with as you get older or you may find and make arrangements for assisted living communities that you actually like.
You become very aware that vacations are expensive
Even if you’ve planned significantly for traveling each year, it’s quickly obvious that frequent trips will push your budget.
You may also be more conscious of how much you’re spending while traveling, but there are ways to travel more without spending too much.
You need more to do than shopping
Many people in a retirement plan to fill their days with friends, lunches, hobbies, and grandkids. Yet, the reality is, you won’t have a lot to do, and you could find yourself going to the store frequently just for a reason to get out of the house.
Instead of letting that become a habit, find activities that add value to your day. Volunteer at a school or enjoy conversations with the neighbors on the back porch. You may even find yourself reading more frequently.
You’ll want to talk to a financial advisor
Let’s face it. Retirement is a huge change that puts fear into you about not having enough money to meet your needs.
If you’ve resisted the need to use a financial advisor in the past, the confidence, support, and clarity they can offer during that first year of retirement is eye-opening.
Talk to them and make sure you’re on the right track. You’ll feel emotionally and financially more secure when you do.
It’s hard to tell yourself you don’t have to go back to work
That first year is overwhelming when it comes to spending. Every dollar you have to spend that wasn’t in your pre-designed budget will feel painful to hand over. You’ll likely feel like you need to go back to work.
Instead of a full-time job, if you really feel like you need to work a bit longer, find an option that’s flexible and doesn’t require all of your time such as finding a side hustle.
It could be true that going back to work is good for you (mentally and financially), but before you make that decision, try to focus on altering the way you view money and spend it.
No matter how much you plan for your retirement years, that first year will come with lots of unexpected and even a few worrisome days. Yet, remember that you can often define what’s to come.
If you’re unhappy with life, find a new way forward. You don’t have to spend money to feel valued. The question to ask yourself is, what do you want to do with your time?
Having a clear plan and path forward is half the battle and can be everything if you’ve already found ways to build wealth and are financially prepared for retirement.
FinanceBuzz is not an investment advisor. This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice.