Why Creativity is Good for Your Retirement Life
Good for your health, good for your finances.
Many people sacrifice and save for the future (and they should be commended), but then they retire and ask me: “What now?” They tell me distressing stories, such as feeling a sense of worry about how they are going to fill up all the empty hours in their day.
Whether you’re a planner, or more of the spontaneous type, here’s a fact: My happiest retired clients are creative. That’s not to say these people considered themselves creative throughout their lives. In fact, many of my clients only actually tapped into their creative selves later on.
Creativity is defined as the desire or ability to recognize and generate ideas, alternatives, or possibilities that may be useful in solving problems, communication, and entertaining ourselves or others.
Sounds like an entire world of possibility.
For the purposes of this article, I want to discuss two types of creativity, financial and personal, and how, even though different, they are both integral to a healthy retirement.
Whether you are nearing retirement, or already neck-deep in your post-work life, now is the time to get financially creative. In a world where pensions are rare, and tax laws are ever-changing, knowing which retirement accounts to fund, or draw down, and in what sequence, is not only an essential part of making your money last, proper planning and timing can save you thousands or even tens-of-thousands of dollars.
Think I’m exaggerating? I recently met with a would-be client who was about to retire, and who had been forced to pay an extra $20,000 to Uncle Sam merely because she pulled a large sum out of a tax-deferred retirement account to pay off her mortgage.
Paying off the mortgage? That’s usually a great thing. But when you take a distribution from a tax-deferred retirement account, the government will usually calculate that withdrawal as regular income, and so she was taxed at both a higher federal and a state rate. Had she waited until after she’d stopped working, and drawn down that same account to pay off the mortgage over, say, four years, she’d have saved herself a lot of money and stress.
Simply, when it comes to financial creativity and retirement—and preserving your savings—things such as retirement accounts, what state you live in, the current tax laws, setting up living wills and trusts, managing consumer debt, and even when you elect to claim Social Security, there isn’t enough space on 10 websites to clearly outline all the possibilities that could, depending on your planning and creativity, cost, or save you thousands of dollars.
As I said earlier, many people think that retirement is 100 percent about financial preparation, and that the rest of it will take care of itself. Well, that’s simply not the case. Many of my pre-retiree clients say they plan to do some travel once they stop working, which sounds fine, but I have taken to asking them, “ What then?”
Your retirement will hopefully last a healthy 20, 25, or even 30 years, or longer. You need more than a solid financial plan.
Creativity is an important part of being alive. It reduces stress, boosts self-esteem, and stimulates the brain; which research has shown is a key component in the prevention of dementia. While I intend to visit this topic more in future articles, I want to introduce the concept of thinking outside the box and preparing for your creative life once you retire. This would encompass doing things you might never have considered before. Just a quick list would include: starting to journal, becoming a member of the local museum (get on that mailing list!), taking up sculpture or painting, taking a cooking class, going back to school, learning to play a new instrument, mentoring young adults, and volunteering to guide tours at a local park or historical site.
Both financially and personally, your retirement should be about creativity. But the transition toward a new, perhaps better self, won’t happen without some intention and introspection. Yet with a little work, and some enhanced creativity, you are setting yourself up for what could be the best era of your life.