5 Things I Wish I Knew Before Retiring

I recently retired after a 40-year career as a financial executive and accounting professor. My wife retired from being a busy pathologist at a regional hospital in Pennsylvania.

While we are still in the throes of trying to figure this “retirement” concept out, we are traveling a bit more, making plans to see family more often, and getting situated in a new condominium in a new city.

It has not been too difficult, but we could have had a much softer landing with a little guidance. Here are five things I wish I had known in the years leading up to my retirement.

1. Pay down ALL debt before retirement!

One thing you don’t want to carry into retirement is a lot of debt and, ideally, NONE!

Generally, you are on a fixed income in retirement. Siphoning off some of it to pay high-interest credit card debt, for example, is not a burden worth cramping your retirement lifestyle for, especially as credit card interest rates rose to record levels during 2022.

Per Lending Tree, the average interest rate on credit cards was 21% at the end of 2023, which increased by four percentage points since the beginning of 2022. This was the largest increase we have ever seen in a two-year span.

To be fair, we did pay off our credit card debt before we retired, but that is because I was very self-motivated. I did not get a lot of guidance from family members, but I knew I had better clean up our debt before the full-time paychecks stopped coming.

Hopefully, as you get older, your assets will grow while your liabilities decline to the state of nirvana with no debt. Through saving efforts and tracking our monthly budget, my wife and I were able to achieve this debt-free nirvana in 2017, or 4 years before I retired.

While many retirees wish they had saved more money for retirement or started earlier, 33 percent of retirees in a recent survey had no financial regrets. The survey indicated that 20 percent of retirees are still working because they find part-time work or volunteering rewarding (discussed below).

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2. Borrowing from your 401(k) plan is never a good idea.

IRS rules indicate that you can borrow up to $50,000, or 50 percent of the vested amount in the account, and it must be paid back within five years. My poor excuse when I borrowed $50,000 from my 401(k) account was that retirement took a back seat as it seemed so far off back in 2005.

YES…I made this poor financial decision when I was in my forties as my wife and I decided to purchase a vacation home near the pristine beautiful beaches of Outer Banks, NC (OBX). After several years of mulling over the purchase of a vacation home, we decided in 2005 to take the plunge.

After finding our dream vacation home in a quiet, gated golfing community in Corolla, North Carolina, we moved forward with the financing and other buying costs required to buy this large 4,500-square-foot home.

We were able to pull together the 20 percent down payment (using the $50k from our 401(k) plan) and finance the remainder through some creative financing tools.

Since it was at the peak of the real estate market for beach properties, our best option was a jumbo mortgage, which is a loan where homeowners must undergo more rigorous credit requirements than those applying for a conventional loan.

During the loose credit policy period of 2005, banks offered multiple option payments for these types of nonconventional mortgage loans. We chose the ability to pay interest only for up to five years, which felt very risky to me as a conservative accountant.

Why is it a bad idea?

Unless you aggressively pay back the loan, that’s $50,000 less sitting in your retirement portfolio, which means $50,000 less earning healthy investment returns for possibly up to 5 years. 

While not an ideal financial situation, I knew we had some sizable bonuses coming from our jobs over the next several years. These bonuses would allow us to pay down the principal on our mortgage and the 401(k) loan, which we did by 2009.

3. Consider a health savings account (HSA)

Unfortunately, by the time I fully understood how powerful a health savings account (HSA) could be in retirement, it was too late for me to build one to a substantial amount. Maybe it is not too late for you.

You can open an HSA if you have a high-deductible health plan and no other coverage. While you are working, you can contribute on a tax-free basis, and unlike a flexible spending account (FSA) — earnings you set aside for medical costs but must use or lose annually — HSAs can be built up and carried over, year-to-year into retirement.

Boost your retirement savings with a health savings account (HSA). An HSA allows you to put money aside to pay for unexpected medical expenses. Contributions are tax-deductible if you spend the money on qualified medical expenses not covered by private insurance or Medicare, including deductibles and copays.

These expenses include payments to doctors and other medical practitioners, prescriptions and insulin, X-rays and laboratory tests, eyeglasses and contact lenses, and nursing help and hospital care. Any unused funds could continue growing indefinitely, particularly when invested wisely. My wife and I have our Health Savings Account invested in low-risk, low-fee stock funds.

4. You might still need or DESIRE to work in retirement.

According to a recent survey, more than two-thirds of workers ages 45-plus say they plan to work in retirement, and about half say a primary reason is to stay busy or keep active. That could mean keeping a hand in the same field, like many of the POF readers have previously responded; it could mean starting a business or pursuing an encore career. 25% of workers surveyed by the Transamerica Center said they dream of volunteering for their retirement years.  

On the volunteer front, my wife began volunteering her time in 2022 at the Broad Street Ministry, which has offered “radical hospitality” to the growing homeless population in Philadelphia for almost 20 years.

Recently, she was asked to work on a part-time basis to help with the busy mailroom operation, which serves over 5,000 people. She loves the purposeful mission they provide and has included me to help sort the mail periodically.

In addition to volunteering one day a week with my wife and writing articles for POF, one of my retirement bucket list items was to author a book that would share some of my knowledge with others learned during my over 60 years on this earth. While it was hard work, I genuinely believe sharing my life lessons with others is the most rewarding accomplishment of my life, as evidenced by my impactful reviews.

I have found that working in retirement because you want to instead of needing to is a great pressure valve for what could be perceived as the potential “boredom” of retirement. We are not used to having so much time on our hands, away from the 40 to 50-hour grind of our careers.

5. Do NOT assume everyone has free time to spend with you in retirement.

About three in five, or 60%, of respondents list spending time with family and friends among their top “retirement dreams,” according to the Transamerica Center study. Only traveling ranked (slightly) higher.

That is fine. But not everyone is going to jump to your new freedom of schedule. Those old friends you have not seen in a while might already have retirement routines that are important to them.

The kids have jobs and families and are locked into the same rituals you went through when you were working and raising them. It is amazing how quickly we forget this in retirement.

My wife and I have realized that our friends and relatives are quite busy in their lives during the weekdays. Thus, we needed to fill our weekdays with other activities (e.g., volunteering, going to the gym together, taking walks) while being more accessible to our closest friends and relatives when their schedule allows for more flexibility.

The lesson?  Other peoples’ plans and schedules do not disappear when you retire. Factor that into your retirement goal of spending more time with the ones you love.

Final Thoughts

Retirement planning is a multi-faceted journey that demands diligence and a proactive mindset. In addition, being in good health and having a partner are also critical factors in retiree satisfaction. The best way to retire without regrets is to follow these steps: save early and consistently, live frugally, and pay off debts.

Take these lessons to heart, and you will be better equipped to navigate the road to a wonderful retirement confidently.