Retirement: Perception vs. Reality

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Take a look at the words you're reading right now. What color are they?

Somewhere between gray and black, right?

What if I told you that's not true? Would you believe me?

What if I told you the sky isn't blue?

I know -- sounds ridiculous, right? Everyone knows the sky is blue.

Except it isn't.

"Blue" doesn't exist. Nor does red, green, black or any color. Not in the literal sense, anyway.

Light exists. Colors are manufactured by our brains, however. It's all in our heads.

We don't really see the world as it is.

We see the world as we perceive it.

Sometimes we view retirement the same way -- and that can lead to big problems.

When perception bumps up against reality

Many of us have a fixed idea of what retirement will look like. Perhaps we envision a leisurely retirement. Lots of golf. Lots of cultural activities. Something like an extended vacation.

Perhaps we view retirement as an extension of our working life. We'll still work, but in a reduced capacity. And only on things about which we are passionate.

That's the perception.

Here's the reality.

Retirement is often stressful -- particularly if you don't plan correctly. It's a time of great change.

You might be spending much more time with your spouse. You might miss your colleagues, or the satisfaction of your career.

Your free time is going to expand exponentially. You're going to need a new sense of purpose. You have to adapt to living with far less structure.

And just like in your working life, there are two variables that will send stress through the roof.

Money and health.

The two are often related. As we age, our health care needs may spike dramatically. Poor planning can lead to major financial exposure.

Medicare isn't a one-stop solution for retirement health care needs. It doesn't cover long-term nursing care. It doesn't cover hearing aids. It doesn't typically cover nursing homes.

Medicare focuses on acute care and short-term services for conditions that are expected to get better.

If your perception is that "Medicare will take care of it," reality may offer a harsh counterpoint. People dramatically underestimate the amount of out-of-pocket medical costs they'll encounter during retirement.

They can easily run into the hundreds of thousands, even millions of dollars, depending on your circumstances.

Here's another perception -- older people are more easily scammed.

That perception unfortunately often aligns with reality. Retirees are far more likely to be the victim of financial scams.

Some victims suffer from dementia or other illnesses. Yet others are still in sound health, but more apt to take risks they wouldn't have considered before retiring.

In retirement we often look for excitement or companionship. These understandable impulses may expose us to unsavory operators seeking to exploit our vulnerability.

These scams cost older Americans billions of dollars each year. They often have profound consequences.

It's important to stay alert against such threats. And if our health starts to falter, it's key to have a support group of family members or trusted advisors to help protect us.

The working retirement

Retirement is often perceived as a time of idleness. That notion may soon be a thing of the past.

The number of people 65 and older in the workforce has increased from 11 to 18-percent in the last decade.

The U.S. government projects that figure will reach 23-percent by 2022.

That means one in four retirement-age Americans will be in the workforce. That's double the number from two decades ago.

This isn't some temporary trend. The face of modern retirement is changing. The "Gold Watch Era" is long gone.

More Americans now view retirement as a time to start a new business venture or work a part-time job in a field they love.

This "working retirement" can either be a boon or a blessing. If you plan ahead, it offers an extended horizon to reach your financial goals.

Yet if you find yourself working longer just to make up a shortfall, the idea of bonus work years may soon lose its luster.

The reality of retirement doesn't always meet our expectations.

Yet by keeping a close eye on changing trends -- and properly managing our portfolios -- we can make sure reality works for us.

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