#117 The Psychological Impact of Retirement: Preparing for Life After Federal Service

Jamie Shilanski  00:46

Welcome back, everyone. This is Jamie Shilanski and I have a guest speaker with us today, Floyd Shilanski, here at Plan Your Federal Retirement, and we’re going to be talking about one of our favorite subjects, and you’re going to get two varying perspectives, because there’s a little bit of an age gap between Floyd and me. Floyd is my father, and he’s also Micah Shilanski’s father as well. He and my mom started our financial planning practice up in Anchorage, Alaska, back in 1981, and we have been at this, I would say, a minute or two. So, when it comes to helping people prepare for retirement, I would say we’re kind of experts in the field. So, if you stay with Floyd and me today, we are going to tell you about the hundreds of people that we have helped get to and through retirement, and we’re going to talk to you about the key areas in which we see people have to go back to work time and time again because they absolutely miss this important aspect of retirement, and it makes them pull themselves back out of retirement and enter the workforce when they get these particular points wrong, wouldn’t you say, Floyd?

Floyd Shilanski  02:00

Without a doubt, Jamie. You know, just up in Anchorage, we just did a live presentation, and it was amazing listening to people talk and talking to them about getting ready to retire. In our firm, as you know, Jamie, we have some very specific things you know, retirement timeline, how to prepare, what to do, and how to get ready for it, and all that’s monetary. What happens is, many times on the monetary side, people think they’ve got that wired, but they don’t start thinking about the emotional—and what am I going to do next? And I think that’s a huge thing as we prepare for retirement, especially in the last five years or so of your tour of duty with the Feds, is that emotional side as well as the financial side. The other piece of it is how many people listening to this are in the first five or 10 years of employment with the federal government, and never thought they’d be there that long. So, we don’t start thinking about—our experience has been we don’t start thinking about retirement until we get past that 10, 11, 12-year mark, because I’m not sure I’m going to be here. Well, I’m not sure I’m going to stay. I’m not going to fully fund my TSP, because I’ll probably go to the private sector. These are the type of things that I hear all the time, Jamie.

Jamie Shilanski  03:11

Yeah, it’s interesting when you said that, because I often think of our military personnel, right? So, especially being in Alaska, we have a huge military presence here in the state. And it’s funny when we’re talking to military folks about reenlistment, because year eight is a critical point in somebody’s military career, because normally they signed up for a four-year tour. They’ve extended. They did another four-year tour, so they’ve got eight years of under service, but all of a sudden now, at the end of that eight, they have to decide, are they going to go 12? Because automatically, the psychological aspect of that is, if I do 12, well, shoot, I might as well do 20. And for a lot of our civilian federal employees, I find that they have the same sort of mentality. They get a federal job, they’re really pumped. They’re in it five years or so, and they get to about year eight, year 10, and they go, shoot, if I’m already in it this long, I’m finding meaning in the work. I’ve got great, phenomenal benefits, phenomenal benefit package as a federal employee. Then why don’t I stick and just do the next 20 years here in my position? And as they get ready for that to do 20 years with the federal government, there’s a lot of preparation that goes in beforehand. One of the travesties I find is that most human resources and at the OPM office encourage federal employees to sign up for pre-retirement classes five years before they’re ready to retire. Well, five years is not a lot of time to make financial decisions to get you ready for retirement. We love people to start as soon as they begin their career, definitely mid-career, because it’s time in the markets, not timing the markets, and so as we sort of get these nest eggs built up. Having all of those years in advance is so advantageous to making a plan. Now, when you come and work with one of our Federal Employee Benefit experts, we sit down and we start planning out, as Floyd mentioned, we have a roadmap to retirement, all the things that you should be doing and getting organized and getting ready before you actually submit your standard form, 3107 to apply for an immediate retirement. And part of that conversation that we’ve had with a lot of people is we’ll say, okay, great, you got these three benefits, you know, you got your TSP, you got your Social Security, and then you also have your pension. Now, OPM often calls your pension annuity. We call it a pension because it’s a pension, and we don’t want you to get confused with insurance products which are also annuity. And so, as we start looking at that, we start going over cash flow, how much money do you need in retirement? We do all of this financial calculations to get you ready and your spouse and your family for what that transition is. But somewhere about—what do you think, Floyd, 18 months prior to you actually retiring, we have a different type of conversation. We have a conversation that talks about the anxiety of getting ready to retire.

Floyd Shilanski  06:17

You know Jamie, let me just jump into that just a second. But you know, for those of you out there in podcast world or listening, GSA actually has a requirement that every agency is supposed to provide financial education every year. And what we find is that doesn’t always happen, number one. And number two, I think they should make it mandated when they first come in and they become an employee, they should attend a class on about the benefits and how the benefits work to start thinking about that retirement, and every five years they are to have that review. Now, to your point, 18 months out, if you’re planning retirement, and your retirement income is going to be 30% less than your take-home pay, how do you make up the difference? And I think that’s the huge piece of it. Whenever the advisors in our firm, when we go out and we talk to high schools or the younger generation, we talk about having three to six months’ worth of living expenses in the checkbook. My pre-retirees, I want one to two years’ living expenses in the checkbook. So, if you’re living on $5,000 a month, you don’t want less when you retire. So, five times 12 is 60. 60 times 24 months. We’re talking a lot of money, right? So, from our advising point, but especially when I meet with pre-retirees three, hopefully five years out from retirement, we calculate what their PERS is, or their FERS is going to be. We calculate whether they’re going to get the FERS supplement or Social Security, we calculate TSP plus their IRAs and any other investments, and then we start looking at cash flow. And here’s what I know in doing this for the number of years I’ve been doing it is that the first 12 to 18 months, typically retirees, not all the time, but typically, retirees spend 100 to 130% of their income. And I get people say, well, there’s no way. And I look at them, I go, you’ve got honey-do projects to do. You may be relocating, there’s travel you’re going to do. There’s all these things that you may have postponed until, quote, you retire, so you have what? More time to go do it. So, in our retirement projections, I know Jamie knows that over the first 12 months, we already calculate that additional 20% or so that we’re going to overspend, but somewhere around the 12th, 13th month, it better start trending back down to that number that we projected. So, why 24 months? Jamie, when’s the last time you heard someone retire from the Feds, and OPM had their retirement check the first of the next month after they retired?

Jamie Shilanski  08:52

It never happens. So, to OPM’s credit, they have done a phenomenal job of course correcting. They had a really bad crux because you had all those boomers, right? So, all the baby boomers were retiring, and they had a minimum, you know, number of files to get through. So, there were a few years when OPM was taking six to nine months to process retirement checks. And they’ve really gotten up to speed. They’ve really done a good job. I also think retirees have done a better job of getting more informed so they’re not in those positions. They’re not sending incomplete files to OPM and causing, you know, delays. But right now, I think, like, if you submit… So, you know, we’ve got a special timing that we like, you know, retirees to use when they’re planning out their retirement on the monthly calendar, and then when they go to retire, you know, we’re telling them, “Let’s prepare for six months of not getting your first pension check from OPM.” Now, in that zero to six-month period, OPM will make up all of the time that they missed, and in between that, they’re going to send you an interim check. The interim check is going to be what they think it should be for your pension while they are auditing, going through, and validating all of your credible service. As they do that, that interim check might be a little bit different than you and your financial advisor have been calculating, which is why it’s so critical to have cash on hand to bridge that gap. OPM, in the best-case scenario, takes three months, and they’ll get it all certified and back to you. That is best case: every “i” is dotted, every “t” is crossed, your electronic personnel file is in tip-top condition, you’ve already reviewed it, and you’ve already audited yourself. You have everything outlined, picture perfect, for your 20-plus years of service with the government. And remember, if you’re looking to retire in the next five years, there’s a real strong chance that your electronic personnel file was not always electronic. It was paper and had to get scanned. So, making sure you’re doing all of this work ahead of time is imperative for retirees.  So, let’s move into Floyd talking about— you mentioned this, and I think this is so true— I don’t care, and I shared with you that we are on a mission here: we have helped hundreds of people get to and through retirement, we have talked to thousands of federal employees all across the United States, and we are the go-to source for credible content when it comes to your benefits and planning for retirement. We are on a mission to help 1 million federal employees learn about their benefits to be able to retire informed. And in that process, I think less than 1%— like, if we actually did a study and went back and looked at all of our cases— less than 1%. And I don’t care if you were a GSA employee, I don’t care if you’re from the Department of Labor, I don’t care if you’re a surgeon who did public health service and came into the federal government. This holds true for everyone. Everyone comes into our office, and we tell them how retirement normally works. Boyd alluded to that bell curve, which means when you retire, your expenses are going to ramp up. They’re going to ramp up considerably, and then somewhere around that 18-month mark, it needs to start stabilizing. That first year of retirement, that first 18 months, you are going to overspend your income. If we look at all the cases, I would say less than maybe 5% have ever proven us wrong when we’ve had this conversation, and it’s really informed people— people who have budgeted their whole life, people who have watched every penny. But what happens when you go to retire? What happens when you finally pull the plug and you don’t have to get up at 6 a.m. or 7 a.m., you don’t have to get camera-ready for Zoom, you don’t have to brush off the snow from the car and go into the office anymore? Instead, you get up leisurely, read the paper, have your coffee, and get to do what? Floyd, plan your day? Yeah, you get to plan your day to do whatever it is you want to do. And what normally happens when you’re planning your day? You’re going to spend some money. Think about it— think about how many times you’ve looked at the Home Depot and Lowe’s parking lots. When is it the most full? It’s the most full on Saturday and Sunday. But what happens when every day of the week becomes your Saturday and Sunday? Is your spending going to automatically stop? Are you going to retract and say, “Hey, I’m retired now, so I’m not going to spend any money”?

Floyd Shilanski  13:41

No, actually, you spend more. But Jamie, you know, that’s great for the people who are preparing and listening and kind of getting ready to go to work. But I’ve worked with a lot of senior military officers, a lot of senior GSA or civil servants, and I find they didn’t participate in the TSP, they only put enough in, maybe to get the match. And as you drill down into it, well, we were raising a family, we did this, we did that, and now all of a sudden, they’re at the end of their careers. They’re tired of getting up and going to their job, and then the fear sets in: I’m leaving this job, and I’ve got to go find another job because it doesn’t cost me less in retirement. Forty years ago, you know, you’d go to the grocery store, and if you walked out with four bags of groceries, you spent maybe $100. Now you walk out with four bags of groceries, and it’s $300. Regrettably, this cost of living has continued to go up with inflation, and we can blame it on lots of things.  What I try to tell an individual is, don’t compare yourself to somebody else. Don’t look at how you compare with your counterpart that you work with, or the person you talk about this, that, and the other with. Don’t compare yourself to the person who retired three weeks ago or three years ago. You have to look at your situation. How much do you have in savings? What do you spend per month? How are you taking care of your children? Are you taking care of elderly parents or relatives? All these little things factor in. And when you’re working with an advisor and preparing for retirement, and you’re doing that retirement timeline, ladies and gentlemen, you have to be extremely honest with that advisor.  “I’ve got a senior parent that I’m worried about. I’ve got a senior aunt that I just simply love, and I worry about them because I know they’re not taking care of themselves. How do I help them?”  Because all of a sudden, you may be retired and not worrying about it, and then you find yourself as a sandwich generation. You’ve got kids behind you and parents ahead of you, and you’re helping both. You’re in the middle, and you’re tired of your job. You want to make a job change. All these things factor into emotionally preparing to retire, and I think that’s critical. And so many times we meet people through the seminars, through the interviews that we do, that when we start talking about these other issues, their comment is, “I thought it was just about money.” And it’s not just about money; it’s about your life and what you’re going to do with the rest of your life. Yes, you need money, but we have to understand what liabilities there are, what the risks are not market risk, but the risk of how we’re going to spend more money.

Jamie Shilanski  16:22

Let’s dive into the psychological phases of retirement. And you know, first, you know, Floyd and I are financial advisors, so we have no background, education experience in psychology. So when we talk to you about this, we’re going to be talking to you from our perspective of meeting with hundreds of people as they prepare to go to and through retirement phases. And that number one is that free retirement anxiety. It is that getting ready and having concerns about transitioning.

Floyd Shilanski  16:51

Oh, without a doubt, it’s the unknown, right? I love it, and I tell the story of a client that, you know, hired or retained our services years and years ago, and they came in. The wife hired me because the husband was a retired Air Force, and he was also working up at Prudhoe Bay. We called it the slope in Alaska. During that period of time, he would go to work for two weeks and come back, and she would stay here with the family and the grandkids. She says, “Boy, we really want to get him off the slope and retire.” So, he walks into the office. The first time I meet him, he asks me, and I start telling him about what we do, how we do it, and how we prepare. He looks at me dead in the face and says, “Can I retire?” I said, “Not at this time.” He got up, walked out—literally got up, left the conference room, and walked out, and his wife says,

Jamie Shilanski  17:37

Out of the conference room. 

Floyd Shilanski  17:40

Oh yeah. Now, three years later, I mean, as we’re going through this, we’re meeting with them very regularly, managing cash flow, paying off debt, balancing things up. Every meeting, he would show up, ask one question, and leave. Then, about three years into it, he asked that question again. I said, “Yeah, we can retire.” He got up, walked up to the door, looked at me, and said, “What’d you say?” I said, “You can retire. The money seems to be where it needs to be. I feel very comfortable. You can sustain your lifestyle.” Well, he still went back to work, but when he did retire… Now, this is the crazy part. When he did retire, after about three weeks, I’m in a meeting, and his wife calls us. “I gotta talk to Floyd. It’s about my husband. I gotta talk to Floyd.” I’m going, you know, the staff interrupts me, and yeah, and they said, my mind goes, “Oh God, he’s dead.”

Jamie Shilanski  18:26

Yeah, how many completions does that happen? Right? That people, oh yeah, work their entire lives, they retire, and they’re dead within 30 days. Yeah, yeah. It just blows your mind. Yeah, but that, but that wasn’t what Sue said about Bob, huh?

Floyd Shilanski  18:40

No, not at all. What she said was, “Floyd, you have a job for him?” I go, “What?” No, I said, “Don’t get me here. I love my husband, but he’s rearranged the kitchen. He’s done this, he’s done that, and if you don’t get him out of here, I’m going to take a black skillet and leave him upside the head,” jokingly, of course, right? But one of the things that we talk a lot about if you’re married, if you have a spouse you know, is your spouse ready for you to retire? Mm-hmm. I hear that so many times. “Well, I’m going to retire early, and she or he is going to continue to work.” You know what? Oh, yeah. I want to say, “I’m going to do all the meals, and this, that, and the other.” And how long does that last? One of the couple lays in bed while the other one gets up at 4 a.m., puts their clothes on, and does the shuffle. It doesn’t last long, and all of a sudden, now they want both to retire. So what’s that balancing act? That communication open communication between spouses as well as advisors is extremely important, Jamie.

Micah Shilanski  19:33

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Jamie Shilanski  20:54

Yeah, and so, you know, it’s interesting because we go through these different phases as we gear up for retirement. So, you know, the first, you know, when we start thinking about retirement, we start getting anxious that we don’t have enough money, right? Because, because most retirees that we talk to, pre-retirees, their number one fear is outliving their retirement savings. That’s the number one fear. So if we had one scope or objective, it is to help people not do that. We don’t want you to outlive your retirement savings. That’s what we are on a mission to do. But as they build up and they get closer to that actual retirement date, there’s all this anxiety that Floyd was alluding to when he was talking about Bob coming into the office and saying, Hey, can I retire? Can I retire? Can I retire? And it was no, no, no, no, no, because they weren’t financially prepared. They hadn’t done the grunt work to get ready for retirement, but the day Bob heard Yes, he was able to retire, he didn’t believe him. He didn’t just go over and fill out his SF 30107 and turn it in. He didn’t believe him. He said, No, there’s no way. There’s no way. There’s no way. And so all of a sudden, I find that the federal employees that we work with, they get really, really excited about retirement, but then about as it becomes reality, as we’re actually setting a date, as we’re actually talking about when they’re going to submit their paperwork, all of a sudden these, in fact, we just had another client do this this last year to us, Floyd, we were working with them. So we call all of our clients Bob and Sue. So Sue was ready to retire. She met all her qualifications. She had great assignments. She, yeah, loved the work she was doing. It was real, it was fun, just wasn’t really fun anymore, and she was ready to move on to do different stuff. We filled out the retirement application. She ran it by, she filled it out, brought it to us. We always like to put a second set of eyes on it, just to make sure. Never hurts to have somebody else also review it? In particular, I want to make sure that, especially if you’re married, you’re not disinheriting your spouse on that retirement paperwork, it’s easy to do, so we want to make sure that somebody’s there to catch it. And so she filled it out. We thought she retired. We’re going in to have a meeting with her, popping champagne corks and thinking, great, she’s retired now. And she said, Oh, no, no, actually, I took a different assignment. I’m good. I didn’t, I pulled that paperwork back. She got nervous about wanting to retire, nervous. Well, why? Why was she nervous about wanting to be done? Because we often think so much about like, gosh, it’d be great to retire. I can’t wait till I’m done with my job. I can’t wait till this is done. And now we go into this phase where, when it becomes a reality, we are so anxious and nervous, and it’s a very tumultuous event about whether or not it’s the right time to do it. You know, the first phase that we go through after we have that pre-retirement anxiety is this honeymoon phase. So we retire from federal service, and we’re getting used to it. Those first 90 days are really weird, believe it or not, they will be for you too, because for 20 plus years, your circadian clock is set to wake up at a certain time, and you’re set to have certain objectives, and you’re set to have certain goals for the day that you need to get done, and all of a sudden, you’ve got this expansive amount of time before you where you don’t have to race off to something else. And then after we kind of get through that transitional period, then we go into the honeymoon phase. And that honeymoon phase is, I can’t believe this is real. I can’t believe I still get to spend money and I don’t have to go to work. But as Floyd was telling you, with that honeymoon phase, that’s that bell curve, right? And that honeymoon phase, this is where we see people, as Floyd said, I believe 130%, is that what you said, Floyd? Yeah, they spend over about 130% of their income because now it’s your time. Now it’s your time that you get to go on the extended trips. No longer is it two days, and did I get enough leave and I have to race back? Now it’s, yeah, I could spend 30 days in Europe, cool. I’ve always wanted to see what Sardinia was like. Let me pop over there and run a boat. Then it’s, you know, a lot of clients did the El Camino. You know where they did the not El Camino. Why do I always call. What does it call?

Floyd Shilanski  25:01

Yes, the Camino, the Camino,.

Jamie Shilanski  25:03

Camino Santiago. Is that? What is de Santiago? Yeah, so, so the big walk over in Europe that people do or, you know, they’re building sheds, they’re doing woodworking, they’re doing gardening, they’re helping out with their grandkids more than they ever thought they were going to, necessarily. And so in this honeymoon stage, it is spend, spend, spend, because you’re giving yourself this permission to do so. I earned this. I waited my whole life for this, and

Floyd Shilanski  25:35

You know, we had that one client retire, and he took up flying lessons, and that took up so much. I mean, just to get his private pilot’s license, we got him on a separate credit card, and every time we’d come in and review their spending, that credit card kept getting bigger and bigger and bigger and bigger. And then we had a client retire and want to go race car driving. Remember that? Oh, and then, yeah, he spent five years on, I’m gonna call it the formula V class, but very basic, low-end on the Grand Touring classes. And he did that for about five, seven years. Then we decided he needed to go back to work for a little bit, because he didn’t slow down. In 18 months, he continued to spend, but it was after, you know, 30 years of being an executive, he was done. He wanted something that he wanted to do that he had postponed.

Jamie Shilanski  26:23

 So that is where I feel, Floyd, that most of the clients struggle the greatest, and we saw this with clients that are executives. So if you have been a manager or supervisor, if you’re an executive, if you’re a commander in the military, this is where it normally really hits, or with pilots, right? We see this a lot with our pilots. And that is, when you go to retire and you no longer are what you do, then who are you? Right? It’s that identity crisis, especially if you are used to leading a mission. Whether that’s a mission with the VA, with the Park Service, or something else that you are trying to accomplish, you go to retire and think, “Now, what?” Who are you when you are no longer what you do?

Floyd Shilanski  27:18

Yes, and it’s kind of like framing the mental mindset, right? So we work with teachers, and when a teacher retires, they typically retire in May. Teachers have the summer off, and they may do some continued education, but they don’t get up and go into the classroom at least, not in Alaska, since we don’t have year-round education. But they don’t really feel retired until September, when all their friends are heading back into the classroom to prepare, and they don’t have to. It’s all about that mental shift. A lot of energy is spent on education about money, cash flow, and budgets which, by the way, I hate, so we call them spending plans. But sometimes, not enough energy is put into thinking about the mental side of retirement and how it’s going to change so many things.

Jamie Shilanski  28:12

That’s so funny because as you’re saying that, I’m remembering a lot of our clients saying, “Hey, you know, come in October, and they’ll say, ‘January 1, we’re going to retire.'” And I’m thinking, “We live in the Pacific Northwest. Why would you want to retire in January?” It’s dark, it’s cold, and unless you’re immediately heading to Maui, why would you retire during the winter months when you’ve been getting up and going to work in that environment? I always suggest, why not retire in the spring, when you actually don’t want to go to work anymore? That’s when the days are longer, and you have other things you can do that aren’t related to work.

Floyd Shilanski  28:43

Or if you’re burning a bunch of leave time, you know, you could work until March and then use the leave to go play and enjoy it. There are so many strategies that fit into this. And I think the biggest takeaway from this podcast, Jamie, is not just the financial side, being prepared with one to two years of living expenses set aside, but also the emotional side. In the seminar we did last week, I encouraged people to get a day timer, remember those old ones before they went digital? If you don’t have one, grab a piece of paper or a calendar and say, “Look, when I retire, this is what I’m going to do. This is what my day will look like.” Plan it out, write it down, so when you retire, you already have an idea of what you want to do. So often, we hear retirees say, “Bob, who retired last year, still comes around the shop two or three times a week to drink coffee.” Why? Because their social life was so tied to the workplace. By planning and plotting it out, you can help with that separation and ease the transition.

Jamie Shilanski  29:50

So I have to share with you my mother-in-law, because we were chatting with her, and my spouse was really concerned that she was starting to show signs of dementia. She said, “You know, every time I talk to her, I’m hearing the same stories over and over again, and she’s forgetting that she already told me that.” So we sat down, and I said, “Okay, you know, let’s look at these areas where you can really tell somebody is starting to slip.” And then I said, “Do you think she really has a cognitive disability? Or do you think that, after working her entire life and then retiring, and no longer having coworkers and work friends, her social circle has diminished, and she’s telling you the same story because she doesn’t have many people to tell the same stories to anymore? And that social aspect we forget about so often.” It will be interesting to see, post-COVID, with so many people now working remotely, if they still feel the same way. But you’ve got to think that your social circle, maybe your friends are retiring at the same time as you, maybe they’re not. But who are you now going to be friends with? And maybe the people retiring at the same time don’t have the same financial situation. So maybe you’re planning a trip to, you know, Africa, but that is way outside of their scope of what they could do. They’re planning a trip to Vegas, you know? So who are you going to fill your daily life with? Who are the new friends and new communities that you are going to start developing? And it’s so funny to say this fully because when you sit there with a 40- or 50-year-old, they’re in the throes of working, they’re in the throes of raising their kids, getting them off to college, and they’re like, “You know what? I don’t need more friends. I have enough friends.” But we have seen, and we have witnessed, that some of your best friends that you will have for the rest of your life, you don’t even meet until age 60.

Floyd Shilanski  31:54

That’s a true statement. Jamie, in Alaska, we have a lot of “I’m going to go home” transplants. So a lot of the people that come up here, they come on a short-term tour, and then they opt to stay. And when they opt to stay, their dream may be, “I’m going to go back to my hometown. I’m going to go back to the last place that I knew before I moved to Alaska.” In our conversations, we ask, “Why would you do that?” And they say, “Well, it’s simple. That’s where all my friends are.” If you stop and think about it, though, your friends may not have moved on, as you had. My hometown in North Texas, the people I know there, they’ve never left. They don’t go on vacations, they don’t go on holidays. And we sit and talk with them, and they talk about, “Yeah, you know, my vacation is two weeks up at the lake. We got a trailer, and we just go fishing every day.” And in my mind, I’m going, “Whoa, that’s all they have,” but that’s all they have. I have cousins who’ve never been on a jet airplane because they’re wrapped into this one little world that they stay in today. And I think that’s important for our pre-retirees to kind of think about. You can always go home, but maybe you can’t go back home unless, of course, you’re going back to take care of parents. And then that’s a whole nother thing.

Jamie Shilanski  33:11

Well, so let’s check about that real quick, right? So, not parents, but I’ve seen in the last three years a lot of federal employees leave where they’re at because they want to be closer to their adult children, oh yes, for sure, and their grandkids. I tell my son all the time, he’s 23, so I said, “Hey, I can’t wait to be a grandma, but I will be a grandma. I cannot wait! I see what my parents get away with, and it’s close to murder. Can’t wait for that role.”

Floyd Shilanski  33:42

Be nice, Jamie, be nice.

Jamie Shilanski  33:45

But we see a lot of federal employees that when they get done, they’re waiting for their adult children, who are normally in their 20s, maybe early 30s, to figure out where they’re going to settle. And then they’re selling everything and moving near their adult children. Now, fast forward to moving near your adult children, and about a year and a half down the road, all of a sudden we’re having conversations with those federal employee retirees that go something like this: “I thought I would see my kids more. Yeah, I thought I would see the grandkids more. They’re busy. They have their own lives going on. They have, you know, the school, the kids are active in all the sports. I thought it would look a little bit different.” And so then, all of a sudden, they move down to this place to be closer to everyone. But you don’t necessarily want to do all the babysitting, you don’t necessarily want to do all the shuffling to all the different school activities. And so you’re in this weird position of, do I get to be the grandma, or am I the bus driver and the babysitter? And this is where we see most of our retirees start branching off and developing new hobbies, new interests, because now they’ve moved away from home, they’ve moved away from their social circle to go be close to their kids and grandkids, but they’re finding that most days they’re not spending the time they thought they were going to with them. Now they have to go develop other forms of community around them, you know.

Floyd Shilanski  35:15

And it’s that community, Jamie, that is so important. In fact, we were talking to pre-retirees this last week, and one of my motivations, if you will, is if you’re going to leave the state of Alaska and you’re going to travel or retire someplace else, two to three years out, I encourage people, when they take their vacations, to rent a car and start driving. Go look for that place that feels really good. And when you find that place that feels really good and you retire and move into that area, I encourage them not to buy a house, but to rent for the first year. You may find that where you thought you wanted to live, you don’t fit in. What does that mean? Well, think about it: if you go back home, if you go somewhere and you’re active in your church, a lot of times church has little cliques. If you’re active in church and have cliques, or the moose organization, you show up, and everybody embraces you for the first day or two because they think you’re traveling through, but all of a sudden, as you try to fit in, you’re talking with people who have been friends for 20 years, and you’re on the outside of that. How do I make that connection? And those things play out a lot, and that’s the thing that a lot of times we forget. I tell my pre-retirees, I tell my retirees, when you leave and retire, you’re not buying your last final home. You’ve got three more moves left. “Oh no, Floyd, this is it.” Alright, and they’ll go build, I call it that McMansion, but they’re going to build their dream home. And if they like to play golf, it’s going to be in the sunshine, lots of golf courses; if they’d like to ski, it’s going to be in the mountain areas; if they like the ocean, it’s going to be, you know, on one of the coasts. Typically, I said, well, that’s fantastic, but all of a sudden, three, four, five years later, that three- or four-thousand-foot home, when the kids don’t come up and the grandkids aren’t around, gets rather large. So you downsize, right? And then when you downsize, you know, the kids are, you know, it’s gotta get on an airplane, and in Alaska, the travels start in Seattle. So, I don’t want to have to fly to Seattle and then fly across country, so I want to be close. How close? Oh, a day or two drive. That’s fine. So now you’re a day or two drive away, and as you get older, as we get older, what happens is we become a little more worrisome about how we take care of ourselves. And I will tell you, every parent I know, myself included, and everyone that I talk to in a seminar and say, “What do you tell your kids when I retire? I do not want to be a what, Jamie?”

Jamie Shilanski  37:47

A burden. I do not want to be a burden to my children.

Floyd Shilanski  37:50

Right, right, so you move closer. That’s your second move. Your third move is you typically move into the town or the city where the kids are, so they can help you out as you age, and the next move is either into an old folks’ home or to the basement of your kid’s house. A reversal. No, no, no, it’ll never happen to me. Let me just say this to the audience: In my 40 years of doing this, helping Feds and non-Feds retire, I’ve helped thousands of people retire. That’s an 80% probability of what’s going to happen.

Jamie Shilanski  38:20

Now, Floyd keeps mentioning Alaska, because that’s where our home office for Plan Your Federal Retirement is located, but we work with federal employees all across the United States. So when we mention something in Alaska, don’t think it isn’t going to happen to you. This is even if you are living in Maine, it’s still going to happen to you. We see people move from Tennessee to Kentucky. We see them move from Massachusetts to Oregon. Idaho was really, really hot for the last three years for people to move to—it gets all four seasons, easy commute on the roads, and is not overly populated. This happens all the time, because we’re humans, and we go through all of these different key areas, psychological phases of retirement. This reorientation phase, which is what we’re talking about, is finding new hobbies, new routines, new friends, and developing new communities. It’s all about continued sense of purpose and making sure—remember, we said “to and through retirement.” So, as we get closer and closer to that stability phase, that’s the imperative part: remembering that just because we’re retired doesn’t mean we’re done transitioning with our lives. So, as we move into stability, what does that look like for most of your retirees, Floyd?

Floyd Shilanski  39:44

You know, Jamie, you brought up an excellent point on that one. Number one is that, you know, some of our clients are here in the States, but right now we’re working with people in all 50 states, and we’ve got three or four clients either stationed or working in the European markets. I don’t think we have anybody in the Asian markets right now, but people hear the podcast or see the YouTube channel, and we’ve had lots of interesting conversations with people globally, if you will.  So, you know, in this transition, getting ready and trying to find these new organizations, I encourage a lot of people, you know, if the monetary side of it is good, to volunteer. Find something besides only four walls that they can get involved in and try to make a difference. For our executives or upper-level employees in the federal system, there are programs in local towns where you can go in and be a part-time CEO to mentor younger people and drive, you know, making things happen.  Just recently on the East Coast, one of my retired military officers, also a retired high-level civil servant, I introduced him to a friend in South Carolina who’s helping him align himself with some of these younger startup companies, to kind of mentor those types of things. And that’s the biggest piece of it, Jamie, is finding that purpose again. Not only the friendships, but how do I make a difference in the world if I’m not supervising 10 or 15 people?

Jamie Shilanski  41:10

A new sense of living and satisfaction through that living. And you’ve got to think, with a lot of retirees, there’s a lot of institutional knowledge just leaving the workforce that this new generation is thirsty for. We can make all the derogatory comments that we want about the generations. We did it to the baby boomers, and it’s the millennials doing it to Gen Z. Gen Z will do it to Gen Alpha. It will continue to perpetuate that we think the up-and-comers aren’t as smart, aren’t as caring, or aren’t as hardworking as we are. But whose responsibility is that to change the narrative? It’s ours.  So, if we have something to give to the younger generation, go find the ones that want to listen, that are eager to hear it, and let’s be a part of that difference. Let’s create a retirement in which we are feeling very satisfied and good about our contribution and our sense of purpose. I mean, we can do all the best financial planning in the world, and we can financially calculate, you know, with our joke in the office, when people say, “Do I have enough money to retire?” Well, tell me the day you’re going to die, and I’ll get this thing down to the penny. But other than that, we can make a sustainable, long-term plan, but there are so many different variables that will come into play.  So as we prepare people for retirement financially, that sense of purpose, you’ve got to come up with it, focus on it, and be just as dedicated to finding that in retirement as you were to your career and saving for retirement, because that’s what gets you through retirement.

Floyd Shilanski  42:59

You know, Jamie, I say this all the time to my clients: I like to see five-year plans. If you’re five years out from retirement, here’s our plan. Write down that day you’re going to retire — that gives you a waypoint to navigate toward. Then, one year into it, I say, “Pop up the periscope. Look around. Does everything look good? If so, we continue to sell.” So now, not only do we have a four-year plan until retirement, but what’s my year after retirement going to look like? Three years out, pop up the periscope again and look around. What has changed? Maybe a job has opened up in another city that you’ve always dreamed about doing. “Hey, Floyd, I’m going to throw my name in. I’m not going to get it, but I’ll throw my name in.” Then, six months later, you get the phone call, and they want you to come in for an interview. Whoa. Pop up the periscope again. What would it look like if I extended my retirement by two years to do this job or project I’ve always wanted to do? Let’s plan for it. Let’s plot it out.  But sometimes, it’s like drawing a card — this is what you go do. We’re planners. The more we plan, the more we can adjust. Nothing’s written in black and white except for your “COD date,” right? Yes, when we say COD date, people think it means “cash on delivery,” but no, that’s your “crap out date.” That’s in the very bottom right-hand corner of your birth certificate. Just a joke. It’s a terrible joke, but sometimes we minimize those things. But it’s so important. The more we have a plan, the more you can adjust. Some people like to adjust on the fly, and that’s okay, but I really like to plan. What we’re going to do, where we’re going to go, and then modify along the way if you need to. In my years of doing this, every time we’ve had those plans in place, we’ve always modified them. But as for retirees, I think I’ve only had two in my career who’ve gone back to work. Why did they go back to work? They started trading. That was back in the 90s. But we plot and plan, so when we say you can drop your retirement papers and do it, we feel confident with an 80–85% probability that it will be successful, even with the craziness in the international world and the markets today.

Jamie Shilanski  45:16

So true. So true. All right, so this podcast is all about giving federal employees action items that they can take and implement right now. Floyd and I walked you through our perspective as financial advisors about the psychological journey that people go on in retirement, and when they get this wrong, when they fail to take this into consideration, their retirement plan fails because it isn’t what they wanted it to look like, and it doesn’t feel like you thought it would feel like. And don’t sit here and pull the wool over your eyes thinking, “Oh, it won’t happen to me. That’s not me, that’s not us.” What if your retirement plan is different than that of your spouse’s, then what? How are you guys going to find that balance and that new sense of purpose as you move forward? And we find this a lot. You know, when your kids leave and you get that empty-nester kind of thing — they call it empty-nester syndrome — and I think a lot of people have done a really good job of navigating what that looks like. But think about that change of identity when it was two ships passing in the night because somebody’s doing schoolwork, somebody’s getting the kids to hockey practice, somebody’s got a full-time job, you’ve got snack day, you’ve got all these things where your identity and your purpose was your job and raising your kids. Now, you remove both of those elements off the table. Now, what is your sense of purpose? And when you fail to put time into planning that, your retirement plan fails you, because all of a sudden, it doesn’t matter how much money you have saved away for retirement; you don’t know what to do, and you don’t feel good about who you are any longer. So, the areas that we talked about, the five different areas, the psychological phases we find most federal employees go through as they plan for retirement: Number one, that pre-retirement anxiety — the concerns about actually transitioning. What does the 18 months before you retire actually look like, and how are you planning for that? Number two, the honeymoon phase — the excitement about all the freedom and the opportunity and the chance to go do all these different things that you never had time before to do. Number three, the disillusionment phase, especially if you’re on the upper echelon of working for whatever agency that you’re employed with — Do I have a sense of purpose any longer when I’m not doing what I did for a living? Then who am I? And that feeling of loss — it’s real. And then the reorientation phase — finding new routines, finding new hobbies, finding new friend groups. And then we move into that stability phase, where a new sense of living and satisfaction has to come from. Has to come from. You have to find that for your retirement plan to be successful. So, those are the common challenges that we see, that we identify really specific ones, like the loss of identity and purpose, the social isolation, even if you move near your adult children, and then having a really hard time adapting to changes in daily routine. You know, when we get “stuck in our ways,” how are we going to safeguard ourselves from not having that happen? So, Floyd, as they look towards preparing themselves psychologically for retirement, not just financially, as an advisor, what would you recommend for them?

Floyd Shilanski  48:41

Again, plan out your day. Take that day timer. What am I going to do? What trips are you going to take, and when are you going to take these trips? If both you and your spouse are retiring at the same time, it’s a little easier. If your spouse is working and one retires a year beforehand because of eligibility or something like that, how does that transition look? Start trying to work it today. The more that you can act as if you are retired before you retire, the more you start seeing some of the chinks in the armor, if you will.  So, number one, I would say, get a day timer. I don’t like digital personally; that’s just my age group. So, pen and paper and write it down. If you’re digital, type it in. Get it structured. This is what I’m going to look like in the first month, the third month, the fifth month. My end goal after the first year is to do XYZ — all those things. At least that way, you get the mind thinking. I’m one of those guys who believes that if we can think it, speak it, and share it, it’ll come to pass. It’s when we keep it only in our brain, and we don’t see it in black and white, and we don’t share it with our spouses, that it changes. Okay? The brain says, “Well, he’s not really interested, so we’re not going to worry about it.” But when you write it down, share it with somebody, and speak it out loud, the brain goes, “Oh, my goodness gracious, he really wants to do this.” And if he really wants to do this, we better get our proverbial act together. So, the day timer — write it out. Plan it out for the first year, first 18 months, Jamie?

Jamie Shilanski  50:09

All right, I also think it’s important to set realistic expectations. Don’t live in fantasy land about what you think this is going to be like. Plan it out on a day-to-day basis, like Floyd is mentioning. What does it look like? What time are you getting up? What are you doing with the first half of your morning? What does the afternoon look like? What does the evening look like? How are you actually going to get through the day when no exterior force is driving your hour-by-hour schedule? Set realistic expectations. If you dreamed of traveling the world with your friends, are you in the same retirement position that they are in? And if you’re not, are you open to meeting new friends and going on new experiences with them?  Lastly, how are you going to stay connected? One of the best pieces of advice, Dad, I can’t remember who gave it to you, but someone probably in their early 60s when we met them, told us something. I was a kid at the time, so I was probably a teenager. They said, “You have so much vitality, so much energy. You’re always thinking of the future and what’s ahead. How do you stay so young-minded?” And they said the best piece of advice they could give someone is: always have friends a little bit older than you, friends in your age group, and make friends with people who are 20 years younger than you are.

Floyd Shilanski  51:33

Technically, right?

Jamie Shilanski  51:34

Yeah, and it helps keep you engaged with things. It helps keep you aware of the social and economic concerns for the up-and-coming generation, and they remind you of your vitality. They keep you invited to all those things. I always thought that was really interesting. I dismissed it as a kid, but as I age, I see the importance of staying connected and staying open to making friends in all different areas of your life.

Floyd Shilanski  52:05

Without a doubt. Yeah, there’s that joke going around when your grandma can’t figure out how to make one of her iPhones work. She calls the grandkids, and the grandkids roll their eyes and say, “Grandma, just turn it off and turn it on.” You know, a hard reboot, if you will. All these technologies are moving so fast that people my age have a tendency to fall behind. I think I’m pretty intelligent with it, but I see some of the stuff that the younger generation, Jamie, and my grandkids are doing, and I’m going, “I’m lost.” It’s hard to keep up, but having them in my life compels me to want to learn more. Having them in my life compels me to want to try to keep up. Now, there are those times I’d rather go hang out with people in my own age group, drink a couple of glasses of wine, and not hike 35 miles with Jamie and her grandkids up and down the mountains, trying to collect the inheritance sooner I think.

Jamie Shilanski  53:00

Okay, one time it was seven miles, and I apologize several times. It was very poor planning on my behalf.

Floyd Shilanski  53:09

But your mom and I tried to keep up, yeah

Jamie Shilanski  53:11

Not tried, you did, but I was real worried we’re going to get helicoptered off that mountain.

Floyd Shilanski  53:17

It was a couple times, yeah.

Jamie Shilanski  53:20

All right, Plan Your Federal Retirement community. I hope you found this episode on the psychological impacts of getting ready to retire, from a financial planning perspective, helpful. We are always here to answer your questions. If you have questions like this or similar, or topics that you want to hear about, we want to know we are on a burning mission to touch 1 million federal employees and make sure they can make informed decisions about their retirement. We cannot do it without you, we grow organically. You won’t see us advertise, you won’t see us big billboards outside the DFW airport, we rely on you guys to let us know if this is information is a value, and if it is a value to you, share it, and let’s help us make that mission possible. Let’s make more informed decisions by people who really care about you having a successful retirement. Until then, Happy Planning!

Floyd Shilanski  54:18

Happy Planning!