You may be familiar with the term “regression path” as it relates to investing. Refers to the way asset allocation becomes more conservative as you get closer to your goal. But you can also set up a slippery path to take you into retirement, especially if you’re preparing for retirement but don’t want to make all the drastic changes associated with leaving the workforce at once. Sliding into retirement may involve making gradual changes to your workload, social networks, and outside interests.
In investment terminology, a “regression path” describes how the mix of investments changes over time. Typically, the mix becomes more conservative — with fewer stocks and bonds, for example — as an investor approaches a goal like retirement.
You can also create a sliding path into retirement by making gradual changes in your work and personal life in the months or years before you plan to leave. Retirement can be a stark transition, especially if you don’t prepare for ways to replace the structure, sense of purpose, and social networking opportunities that work can bring, says financial coach Saundra Davis, CEO of Sage Financial Solutions, a nonprofit and financial education firm. San Francisco Planning Organization.
“People are excited to leave (the job), but once they leave, they feel the pressure of ‘How do I define myself?'” says Davis. “Do I matter now that I am no longer in the workforce?”
What do you want your life to look like?
Davis suggests that people start thinking about what they want out of retirement. This might mean imagining your ideal day: where you live, what you do, and who you spend time with. Davis says free tools like YearCompass and Unravel Your Year can help you determine what “makes you happy” and what you want most in life. These tools allow you to reflect on your recent past and plan for the future.
“What are the things that call you? What gives you energy?” Davis asks.
Your ideal retirement could run into obstacles: lack of money, ill health, or the need to provide for someone else’s care, for example. But understanding what you really want from this stage in your life can help you discover ways to get what matters most, she says.
“Just because you may have some limitations, whether they be physical, emotional, or financial, don’t assume that excludes you,” says Davis.
Discuss your vision for retirement with your spouse or partner to “see if you’re on the same page,” suggests David John, senior strategic policy advisor for the AARP Public Policy Institute in Washington, D.C. Your significant other may have different ideas about when to retire, where to live and what they want to be. They do with their time, and this should be discussed before either of you leaves the business, John notes.
“We tend to assume that people agree with us, when we don’t have a formal discussion about something, and that can be wrong,” John says.
What role will work into your retirement?
Some employers have phased retirement programs that allow people to cut back on part-time work while still keeping their paycheck and benefits. Other companies don’t have formal plans but may be willing to accommodate an employee who asks, especially if the worker is a high performer, says Joe Casey, a retirement coach and CEO in Princeton, New Jersey, and author of Win the Retirement Game: How to Beat 9 forces trying to steal your joy.
Phased plans give employers time to search for a successor while allowing workers to ease into retirement stress, says Melissa Shaw, a wealth management advisor for financial services firm TIAA in Palo Alto, Calif.
“They still have more freedom to start having fun and plan for the next one,” Shaw says. “It’s a good way to transition.”
If gradual retirement isn’t an option, part-time or consulting work can help people stay in the working world while shaping their lives after work, Shaw adds.
How will you stay connected and sharp?
Not only does loneliness reduce the quality of your days — it can also reduce the quantity of them. Social isolation and loneliness significantly increase a person’s odds of premature death and are associated with a 50% increased risk of dementia as well as higher rates of depression, anxiety and suicide, according to the Centers for Disease Control and Prevention.
Many people underestimate the importance of the social connections that work provides, Davis says. They also may not anticipate how much their social circles will shrink over time when people move away or die. Davis recommends making friends from different generations to counter this trend. Hobbies and volunteer work are among the ways to find potential friendships, she says.
It can also help find friends or mentors among retired people, Shaw says. Senior centers and social networking sites like Meetup and AARP’s Connect2Affect service are other ways to find potential social contacts. Shaw says one of Shaw’s clients connected with a group of retirees at a gym before his retirement, where he combined his desire to stay active and healthy with an informal support group.
“Having others around you who have been through retirement who can offer support, advice, and share ideas is crucial,” Shaw says.
Liz Weston is a columnist for NerdWallet, a certified financial planner, and author of “Your Credit Score.” Email: firstname.lastname@example.org. Twitter: @lizweston.