Experts advise to take retirement for test-drive first

— -- As Baby Boomers are moving toward retirement, they're often called the silver tsunami. The nation's largest generation grew up in the turbulent time of civil rights, rock music and counter culture; now, they're unwilling to settle for the retirement that their parents had.

But there is a dilemma. Most of the Boomers turning 66 have not decided what their retirement future should be like. And they face many financial risks.

"The Boomers have always been a generation of seekers," says Holly Deni, a Boomer who is director of the elder life division of Locker Financial Services in Little Falls, N.J. "Some of us are going to redefine retirement. We are going to find new alternatives. That's going to be our legacy."

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There are a number of things that older workers should do before they retire.

Many financial planners are even urging Boomers to rehearse retirement while they're still working.

Last year, T. Rowe Price launched a free online tool called Practice Retirement. "Many people spend so much time working that they don't think about retirement," says Christine Fahlund, senior financial planner at T. Rowe Price. When they do retire, they suddenly don't know how to define themselves.

"We thought they should practice retirement" while they are still working, Fahlund says. "Practice means you can make mistakes. Practice means you are trying it out."

Consumers can use T. Rowe's online tool to see how long they need to keep working so they have a sound financial future. It also recommends making a gradual transition into retirement so they have a smart plan.

Planning is vital

Experts agree workers should find time to consider these things before they retire:

Know your expenses. "You'd be amazed how many people don't know," says Carol Bogosian, actuary and retirement expert. "But you need to look at your expenses, understand what they are." Then you can make a list for retirement.

A growing number of older Americans are also weighed down by debt when they retire.

"People who still owe a lot need to work off their debt before they retire," Bogosian says. Not everyone looks at it that way, she says. But if they don't deal with it now, they'll deplete their nest eggs much more quickly.

Know your assets. Boomers can't make good plans if they don't know how much they have set aside for retirement, as well as the value of any pension benefits and Social Security they can count on.

If they realize that they have not saved enough as they approach retirement, they still have time to try to work longer or lower their expectations.

Nearly half, or 44.3%, of the oldest Baby Boomers are at risk of not having sufficient retirement resources to pay for "basic" retirement expenditures, as well as uninsured health care costs, according to the Employee Benefit Research Institute.

In many cases, workers retire as soon as they can start receiving Social Security benefits. "They believe that they will have adequate financial resources," says Jack VanDerhei, EBRI research director. But EBRI studies show that many of them spend down their income too quickly.

One reason: 46% of pre-retirees do not believe that they will live as long as the average population, according to a July report from the Society of Actuaries. Underestimating their life expectancy is another reason they're likely to exhaust all their resources, other than Social Security, in the early years of retirement.

Know your emotional needs. Planning for retirement is not just a financial issue. You need to be able to replace the social contacts that you've had on a day-to-day basis at work, Bogosian says.

One problem is that workers only see what's right in front of them, says Lauren Locker, a financial planner at Locker Financial Services. If they don't know what to do differently when they retire, it can put them into depression.

Richard Lodish, 65, was the principal of Sidwell Friends Lower School in Bethesda, Md., until he retired a year ago. "I was at Sidwell School for 35 years," he says. "The first few months after I left, I missed what I was doing. I missed the kids."

It turns out that he has no problem filling his time. Among other things, he works with the Bethesda Cares lunch programs for the homeless. He plays tennis and goes fly fishing. And he has collected many antiques from one-room schools.

Redefine retirement. Some Boomers may not want to stop working as they grow older, but they may want to work part time or change their careers. AARP recently launched a new social network, Work Reimagined, which can help older workers find jobs.

Deni, 57, was a public librarian, and a few years ago, she decided to become a financial gerontologist.

Now she talks to the firm's clients about how to age well and enhance their quality of life. When some clients want to stop working, she suggests that they use some vacation time before they retire to try out their hobbies and interests and get a feel for what such a lifestyle is like.

After considering the pros and cons of their retirement needs and goals, workers may realize that they need to make compromises. For example, some workers may decide to sell their homes and buy a smaller apartment in a less expensive town.

George Joseph is not a Boomer, but he can offer advice. At age 91, he is still working at Mercury General, the auto insurance company that he founded in 1961. He comes to the office every day and plays tennis three times a week. To older workers, he says: "It is important for them to know what they are going to do if they retire."

And those who want to continue working will be valuable because "they are motivated. The mind may not be not as fast as it was years ago, but you make up for it because of the judgment you can bring to the job."