Going through a pre-retirement checklist to prepare for post-pandemic life is a smart move. Like packing for a long trip, it’s easy to forget something you may end up regretting not bringing without such a checklist.
Retiring from a job after years or decades of work is a scary proposition. This fear is one of the reasons why retirement researchers who feel confident about their safe withdrawal rate assumptions still won’t retire. It is much easier to pontificate about retirement when you are still gainfully employed.
One of the top 10 worst times to retire is during a pandemic. With so many things shut down, spending all your days at home doesn’t sound like a great retirement at all. There are only so many books you can read, Netflix shows to watch, and meals to have with your family before a deep sense of dissatisfaction begins to seep through your veins.
The decline in mental health is a HUGE issue that is currently being underreported. The rise of clinical depression is no joke. Please be more empathetic to everyone during this time.
People who have little-to-no money worries are getting divorced. Normally peaceful retirees have taken to social media to wage jihad against others they don’t know. When there are few release outlets, there is a tendency for people to manifest the worst version of themselves. Prolonged isolation can be dangerous.
The Importance Of A Pre-Retirement Checklist
With global economies fully opening up, massive pent-up demand will be released by people who want to change their lives for the better. Some will try to smartly negotiate a severance and find a more meaningful job. Others may decide to take a long-deserved break. While others might want to retire, hence, my pre-retirement checklist.
A pre-retirement checklist is there to help you minimize regret and maximize happiness. Regret is probably one of the most annoying things a person can experience. And, if you later realize you could have eliminated your regret by just listening to someone, your regret will grow even more!
I’ve tried to address some of my regret in the post, If I Could Retire All Over Again, These Are The Things I’d Do Differently. I clearly understand I cannot force anybody to listen to me, so I do not try. Experience is the best teacher of all things. Most people need to figure things out for themselves.
When you’ve been online since 2009, it is fascinating to see how some former doubters have come around. In 2009, they may have been know-it-all 28-year-olds. Today, they are seasoned 40-year-olds with more perspective.
A pre-retirement checklist helps counteract against the following regrets:
- An unfulfilling career / not achieving your career potential
- Not making as much as you could have
- Feeling like a loser
- Not properly planning for what’s next in life
- Embarrassment and having to go back to work with your tail between your legs
- Losing your health
My Intense Desire To Re-Retire
With travel discouraged and a new baby born in December 2019, I decided to really “go back to work” once the pandemic hit in 2020. I figured, if our freedom was going to be restricted for an indefinite time period, I might as well make more money online to support my family.
I went from spending on average a leisurely 20 hours a week writing on Financial Samurai in 2018, to 30 hours in 2019, to 40 hours in 2020. The additional time was spent updating old content, writing more articles, publishing more newsletters, writing guest posts, and negotiating business development deals.
The work was kind of rewarding for the first six months. Over 1,000 posts had not been updated in years so it felt satisfying to revisit them all. Further, there was a lot of low-hanging monetization fruit. However, as time went on, my dissatisfaction with work grew.
I slowly became resentful of our politicians who seemed to live by different rules. I became angry at the virus for taking away people’s lives too soon. It became annoying to have to compete with other bloggers and media sites with a huge writing staff for search traffic. Further, I noticed a rage grow online as social media became a main way to vent.
I just wanted to write.
The time I spent updating Financial Samurai in 2019-2021 should be enough to last at least five years with periodic light maintenance. The relationships I’ve built with new and old business partners should hopefully last for another decade. Therefore, I’m anxious to review my pre-retirement checklist and move on to a new stage of life.
Things To Do Before You Retire Post-Pandemic
Like many of you, I’m excited to return to normal life. Therefore, let me share with you my pre-retirement checklist I’m going through to be ready for the next stage.
1) Make Sure You Have The Proper Asset Allocation
In early April 2021, I realized something was very off with my asset allocation of stocks and bonds. For at least three months until then, all I could think about was retiring again. However, roughly 85% of my net worth was invested in risk assets like stocks, real estate, venture capital, and venture debt.
If I was truly going to retire and give up a steady amount of active income, it would be unwise to have such an aggressive net worth composition. Therefore, once the S&P 500 breached 4,100 and the 10-year bond yield breached 1.7%, I decided to rebalance.
My original maximum exposure to equities as part of my net worth was 30%. But I had let equities grow to ~35% after a huge 2020 and a strong 2021 YTD. Therefore, I sold some stock in my tax-advantageous accounts to reduce equites to roughly 32% of my net worth. I plan to continue selling if the stock market keeps going up until equities account for no more than 25% of my net worth.
Your age matters less than the stage you are at in your financial journey. Despite being 44, I should be investing closer to someone in his 60s. I have enough money, which is why I want to re-retire. If I didn’t have enough money, I would keep on going!
The best free tool to track your net worth and calculate your retirement cash flow needs is by Personal Capital. I’ve used Personal Capital since 2012 to help optimize my finances and couldn’t be happier.
2) Make Sure You Have Done Everything You’ve Wanted To Do
To minimize regret, use your remaining time at work to try and do everything professionally you’ve wanted to do. Maybe you’ve always wanted to work in a satellite office. Or maybe you always wanted to propose and lead a new initiative. Now is the time to do it.
If you don’t do everything you’ve wanted to do, you will be forever left wondering what could have been. In my case, I always wanted to work in Asia. I spent 13 years growing up in various Asian countries. But I never got to experience working life in Asia. As a result, I regret not pushing for a reassignment.
Another thing I regret is not taking a sabbatical. I was allowed a two-month paid sabbatical every five years of work and I worked at my old firm for 11 years. What a waste of an opportunity to recharge the batteries!
My final regret was not having a nice retirement send-off. I had bungled my last week of work by accidentally sending a 5-year-old e-mail containing client data to my personal e-mail account. As a result, I wasn’t able to say goodbye on my last day of work until HR decided my punishment. Not having a nice closure felt off. Thankfully, HR came to their senses given I was leaving the industry for good.
3) Live Off Your Passive Investment Income
Having enough passive income is key to living a comfortable retirement life. If you don’t have enough after-tax passive income to cover your desired living expenses, you won’t be able to rest easy post-work.
You could make your spouse work longer so you can relax more. But not having a companion who is equally as free during retirement is not as fun. Alternatively, you might try and do everything possible to make money in different ways.
There are some folks who try to retire early with less than $1 million or have no lifetime pension. As a result, they seem to have more anxiety. Their anxiety manifests itself by always sharing how great their lives are online to help ease their worries. Any astute observer of the human condition can notice these habits. Further, anxiety can often lead to anger and jealousy.
It’s important to test-drive living off your after-tax passive income for at least 3-6 months. During this period, make sure you are keenly aware of how you are feeling. The income you earn from your day job should be 100% saved or invested so you can’t cheat.
Passive income has various levels of reliability. For example, quarterly dividend stock income and monthly rental income are usually very reliable. However, private equity income is much harder to calculate. Therefore, you should ideally be able to have your basic needs covered by reliable passive income. The less reliable income can be used to cover your wants.
In our case, we’ve lived off between 70% – 95% of our after-tax passive income since 2012. Therefore, we should be good to go with this item of the pre-retirement checklist.
4) Have A Specific Retirement Date Or Month
It’s harder to get motivated to retire if you don’t have a specific retirement date in mind. Your retirement date doesn’t have to be set in stone as things always come up. However, having a specific retirement date will force you to appreciate your remaining work time left and take action.
The ideal retirement date is likely 1-2 years away. This way, you have enough time to plan, experiment, and really test things out.
Do you remember getting accepted into college during high school senior year? The time between getting the acceptance letter and graduating high school was amazing. Suddenly, all your stress went away. Grades didn’t matter anymore. That’s what having a retirement date is like.
In my case, I only had about three months to plan for retirement. I had come up with negotiating a severance in October 2011 and I negotiated my severance package at the beginning of February 2012. From there, I was gone by May 1, 2012. It felt a little bit rushed by about three months.
I would have loved to have stayed for three more months. During this time, I would have taken out all my SF colleagues for a meal, flown to NYC to say goodbye to other colleagues, and spent more time with all the clients I had gotten to know since 1999.
My original retirement date had been the summer of 2017, just after I had turned 40. However, the Global Financial Crisis disrupted my plans. Therefore, maybe I was more prepared than I thought.
5) Make Sure You Know What You Plan To Do After Retiring
Out of all the items on the pre-retirement checklist, having something to do might be the most neglected item of them all. Before retiring, you must really think things through. You can’t just say you will be traveling the world, writing the next great novel, or playing golf every day. Specific dates and deadlines should be made.
Take for example my friend Bob. He retired after 20-years in the money management business. The money management business is where a lot of rich men work and pretend to be middle class. Because we had discussed for at least a year what he planned to do post-retirement, he was prepared. This is what he did.
- He rented out an office with four of his close buddies. He would walk to the office which is close by every morning to manage his family’s money. The office gave him purpose as well as friends he could hang out with. He still does this.
- Bob took up golf to be closer to his son who loves golf. Now he gets to spend a good 4-5 hours of quality time with his son every other weekend. Further, when they go on vacation, they share a common bond of finding spots with great golf courses.
- He still plays tennis with me and other friends. Once a week, he has a doubles lesson with three of his friends. This provides camaraderie, fun, and learning.
Bob has a great setup. Going in on a small office with his buddies has been key for his mental health and happiness.
If you don’t have a specific plan for what you will do post-retirement, I promise you will feel lost. You will also increase your chances of getting depressed. Finally, you may start frequently wondering what’s the meaning of life.
6) Refinance All Your Debt Before Leaving Your Day Job
Once you lose your W2 income, you become dead to banks. It takes at least two years of freelance income that’s at least 20% higher than your previous salary for banks to give you a chance again. Therefore, please refinance your primary residence and rental properties before leaving your job.
If you unfortunately have credit card and auto loans, see if you can get your interest rate down as well. Currently, there is still a student loan moratorium. Student loan borrowers are waiting to see if President Biden will forgive $10,000+ in student loan debt. Therefore, it’s best to sit tight.
I’m good to go with all my refinances. After taking out a sizable mortgage in 2020 at 2.125% for a 7/1 ARM, I don’t plan to take on more debt. Although, I encourage everyone to take a look at a 15-year mortgage. The average 15-year mortgage rate is significantly below the average 5/1 ARM.
Check the latest mortgage rates online with Credible, my favorite mortgage lending marketplace. You can get free, no-obligation quotes in minutes. The more lenders compete for your business, the lower the rate you tend to get.
7) Make Sure You Pay All Outstanding Corporate Debt
If you so happen to have a corporate card, make sure you utilize all the rewards points before your company shuts it off. I had thousands of dollars worth of rewards points that I forgot to use before leaving. Thankfully, I called in time before they shut my card down.
Further, make sure you pay all outstanding corporate card balances and any other debt to your employer. You don’t want to have some random outstanding debt come to haunt you years from now in retirement. Expense reimbursements must be submitted and paid before you leave.
8) Find Closure With All Your Outstanding Issues
Whenever you move on to the next stage of you life, you want to have good closure. After so many years of working, you will undoubtedly have made some enemies with colleagues, clients, and competitors. If you retire without proper closure, you may forever feel unsettled.
Therefore, make a list of people you want to make amends with. In industries like big law, management consulting, banking, and big tech, much of the conflict usually arises from hyper-competition.
Everyone is jockeying to work endless hours to get that raise and almighty promotion. If folks compete hard enough, maybe they will one day achieve a top 1% income! Too bad it won’t make them any happier.
Once you’ve decided to exit the battlefield, make amends. Your soul will thank you as you focus on doing something more meaningful.
9) Make Sure You And Your Partner Are On The Same Page
If you are fortunate enough to have a life partner, it’s important to share you post-retirement plans. Ideally, both of you are on board with retiring. And both of you share with each other specific activities you want to do once work ends. The last thing you want is to force your post-work activities onto your partner.
You don’t have to have all your activities and desires line up perfectly. But you do need to communicate clearly about your respective plans. Going from spending 3-4 hours a day with each other to 12 hours a day can be too much to handle for some couples.
I try to get out of the house as much as possible tennis, exercise, and hikes. It’s much harder for me to stay inside for long periods of time. The desire for fresh air and sunshine is one of the reasons why I bought a house with decks. I love to be able to step outside and take a break every day.
Divorce is not unusual for people who achieve FIRE. I spoke to a couple bloggers who decided to “upgrade” or “break free” from their wives once they had enough money. Communication, appreciation, and empathy are key!
10) Understand Your Social Security benefits.
If you haven’t logged into the ssa.gov website to figure out your Social Security benefits, do so before you retire. The earliest you’re able to collect Social Security benefits is 62. For the average person in average-to-good health, I believe the best age to take Social Security is at age 66, considered the full retirement age.
If you are retiring well before you are eligible to take Social Security, then consider creating a Social Security Bridge fund to hold you over until you are eligible to collect. The fund should consist of conservative investments from which to draw from. But if you have a sizable 401k or IRA plan or have passive income, a bridge fund isn’t necessary.
Ideally, after reading Financial Samurai for so long, you will have never relied on Social Security to live a comfortable retirement life. Instead, you will see Social Security as a bonus.
11) Investigate The Best States for Retirement
Finally, given you are going to retire, you might as well do research on the states with the lowest tax rates and the highest quality of living. Without a job tethering you down, you are free to relocate anywhere in America or even the world.
In my best states for retirement analysis, I ranked the states with the most millionaires and the most favorable tax rates. The idea is that millionaires (and billionaires) want the best lifestyles and have the ability to relocate. The rankings are below. However, I still think Hawaii is the best state to retire to.
12) Make Sure Your Life Insurance Needs Are Squared Away
The final item on my pre-retirement checklist is to make sure you have the appropriate amount of life insurance. Many employers offer employer-sponsored life insurance plans for free based on a multiple of your salary. I had free life insurance equal to 3X my salary, but I paid extra to receive 5X my salary in coverage.
Once you retire, your employer-sponsored life insurance benefit goes away. Therefore, it’s important to make sure your life insurance coverage is still appropriate post retirement. This is especially true if you still have debt and dependents.
My favorite place to check for tailored, no-obligation life insurance quotes is PolicyGenius. PolicyGenius helped my wife double her life insurance coverage to match mine for less money during the pandemic.
Before the pandemic, it never occurred to us to get the same amount of coverage. But as parents with equal responsibility for both childcare and our online business, it only made sense.
Here’s how my wife doubled her life insurance coverage for less.
My Plans Post-Pandemic Retirement Plans
My retirement date is once there is herd immunity in America (70%+ vaccinated plus infected) or once income taxes goes up, whichever comes first. Currently, President Biden is targeting raising the capital gains tax rate, the top marginal income tax rate, and eliminating the stepped-up basis to fund his American Families Plan.
I’m assuming one or both of these things will happen within 12 months. With California set to fully open up on June 15, 2021, I’m excited to get most of my freedom back. Thank goodness we made it!
In retirement, I still plan to write, but not as often. Perhaps I will go from three posts a week to two posts or one post a week. Instead of publishing a newsletter every week, maybe I’ll go to a bi-weekly cadence. Back in 2018, I was publishing more like once a month.
My primary goal is to get back down to an enjoyable 20 hours of writing on Financial Samurai a week. I believe 2-3 hours of creative work a day is the ideal amount for my happiness. 1-2 hours in the morning and 1-2 hours in the evening. Perfect. Therefore, I may hire a staff writer who can also act as an editorial manager.
A Similar, Less Stressful Life
The reality is, nothing much will change for me in retirement. As a parent of two young children, we won’t be traveling internationally for at least a couple more years. Kids don’t remember much under 5 anyway. I’m still going to be playing tennis 3X a week and softball once a week on average.
What I’m excited about is getting more involved in my son’s education when he attends Mandarin immersion school this Fall. My goal is to re-learn Mandarin from the beginning with him. It’ll be fun! Let’s hope he’s a good student and gets motivated by his dad wanting to learn as well.
I also plan to work on my mental and physical health by getting a trainer. My mental and physical health has probably deteriorated by 10% during the pandemic.
I’m hopeful that by reducing my time spent on Financial Samurai by 20 hours a week, my mental health will improve. Surely, herd immunity and returning to normalcy should improve all of our mental health as well. Finally, I’m confident I can lose 5-7 pounds and get down to my fighting weight of 163-165 pounds.
A strong mind-body connection is integral for living a happy and fulfilling life. May we all find that balance once again!
Recapping My Target Retirement Dates
June 15, 2021 – California fully opens. We made it! I now plan to take things down by at least 25% and go on a two-month sabbatical starting on July 1, 2021. Between writing and childcare, I have not taken a real break since April 2017. So far, the sabbatical has been nice. But it has taken my two weeks to get used to downshifting.
August 25, 2021 – When my son goes to preschool. With six more hours a day, my wife and I can relax more. That said, we can’t relax too much since we still have a daughter to care for! But it will be nice to spend more quality time with her at the science museum and at various parks like we did with our son. Yay! He’s safely in preschool now and loving it.
February 1, 2022 – I’m hopeful we will reach a 70% vaccination + previously infected rate in our country by this date. As of August 1, 2021, 80%+ of eligible San Franciscans are vaccinated. Although, the rising delta variant is throwing us a monkey wrench. In 2020, I will spend 80% of my time on fun and 20% on business versus 60% fun / 40% business currently.
Readers, what is on your pre-retirement checklist? Anybody decide to come out of retirement during the pandemic like me? How do you plan to retire properly again? A Pre-Retirement Checklist For Post-Pandemic Life is a Financial Samurai original post.