How to Navigate Cannonballs and Curveballs in Retirement

Recent research conducted by Age Wave and Edward Jones explores the challenges individuals face during retirement, referred to as “cannonballs” Recent research conducted by Age Wave and Edward Jones explores the challenges individuals face during retirement, referred to as “cannonballs” and “curveballs.” While retirement planning may involve envisioning newfound free time and activities, unexpected events and setbacks are inevitable. The study emphasizes the importance of managing and overcoming these challenges to lead an active and purposeful retired life.

Lena Haas, head of wealth management advice and solutions at Edward Jones, emphasizes the significance of making course corrections to navigate retirement successfully. The research report titled “Resilient Choices: Trade-offs, Adjustments, and Course Corrections to Thrive in Retirement,” co-authored by Haas sheds light on effective strategies to deal with retirement obstacles.

Based on surveys conducted from January to March 2023, the study encompassed over 12,000 participants, including retirees and those approaching retirement age. It revealed that 75% of retirees had encountered major setbacks, known as cannonball events, with women being more affected. Common cannonball events include the loss of loved ones, personal health issues, partner/spouse health challenges, and significant financial setbacks. Additionally, approximately one-third of respondents retired unexpectedly due to job loss or health problems.

According to another study by the National Council on Aging, 80% of individuals aged 60 and older do not have the financial resources to cover long-term care or unforeseen financial emergencies. Considering these findings, it is crucial to acknowledge and prepare for these unexpected events during retirement planning.

To avoid unhappiness during retirement, the Edward Jones/Age Wave report suggests avoiding toxic relationships and prioritizing spending time with loved ones who bring joy and fulfillment. Widowhood and divorce were identified as the retirement cannonballs with the most significant impact. Divorce increases retirement financial risk, according to research from Boston College’s Center for Retirement Research.

Terry Savage, a personal-finance columnist, and author, highlights the COVID-19 pandemic as a major cannonball for pre-retirees and retirees. She emphasizes integrating potential setbacks, such as market downturns, into financial planning and considering appropriate reactions.

The study reveals effective financial course corrections by retirees and pre-retirees, including reducing debt, cutting expenses, and adopting a frugal mindset focused on deliberate and intelligent choices. Haas advises individuals to evaluate their retirement budgets, practice living on a reduced budget beforehand, and, if possible, work longer and save more to avoid running out of funds during retirement.

The survey shows that retired women tend to make fewer proactive financial adjustments than men. Seeking guidance from a financial advisor is recommended to avoid financial setbacks and make necessary adjustments during retirement.

Volunteering during retirement can serve as a valuable course correction for individuals seeking purpose and meaning. Research indicates that volunteering a few hours per week promotes happiness, resilience, and overall well-being. Finding the right volunteering opportunity may present a challenge for some retirees.

The survey also explores millennials’ concerns about their parent’s retirement. Two-thirds of millennials surveyed expressed worries about their parents’ financial security during retirement, with 61% fearing potential financial dependence. Furthermore, 83% of the millennial respondents stated that they prioritize their parents’ financial security over receiving an inheritance.

Millennials advise their parents on the importance of saving for the future, maintaining physical activity, staying mentally sharp, exploring new hobbies, and fostering social connections.

Although retirement may present challenges, the research highlights that over 80% of retirees experience unexpected windfalls, including spending time with family and contributing to emotional and physical well-being.

In conclusion, retirement planning should encompass strategies to address unexpected challenges, make financial course corrections, and embrace the windfalls that retirement brings, ultimately leading to a fulfilling and purpose-driven retired life.