Worry-Free Retirement

Life would be easier if everything could be boiled down to a simple formula. And to hear the financial-services industry tell it, when it comes to retirement planning, it can. Everyone from the big brokerage houses to mom-and-pop financial advisers promises that their "retirement calculators" can turn a few basic stats about your income and lifestyle into a road map for your future. And once you reach the age when you stop saving and start spending, they tout magic-bullet products like annuities and mutual funds that will take care of you for life. Talk about instant gratification: Fidelity.com will help you "create your retirement plan in 30 minutes or less," while innumerable books offer to take you to the promised land in just "5 easy steps."

But what happens when the formula doesn't apply? It certainly didn't work for Peter Fuechsel, a Glenwood, Md., engineer. For more than a decade, Fuechsel followed a traditional route, saving as much as possible so he could swap his research lab at Johns Hopkins for a full-time life of leisure by age 62. His plan worked like clockwork — until the day of his retirement dawned and: "I just wasn't ready to give it up." Dreading the thought of not working, he negotiated a three-day-a-week schedule, but he's paying the price for his earlier strategy. He's stuck in his employer's less-flexible retirement plan, and he even had to reimburse the government for the Social Security he collected.

Today's retirement is more complicated and often less predictable than ever before. Thanks to upbeat trends, like our society's increasing health and wealth, and a more unsettling one — the demise of the corporate pension — our most basic assumptions about the very term "retirement" are up for grabs. The postwork years look less like a time of serene sameness and more like an endless array of options. "Sometimes people are baffled by the range of choices," say Ron Manheimer, executive director of the North Carolina Center for Creative Retirement in Asheville, which teaches courses designed to alleviate that confusion. "Now people have to come up with their own plan." And as they do so, they're reaching another, anxiety-inducing realization: Each retirement plan has a very different price tag.

In fairness, the financial world's calculators and five-step plans try to help people manage this morass. Psychologists have found that faced with too many choices, many people don't choose at all — putting off planning and preparation that they badly need. But for a lot of people approaching their 60s, the ideal retirement is far from formulaic. One reason is that with people living longer and staying healthier, the typical retirement now lasts about 20 years, up nearly 50% since 1970. Shifts in financial assumptions are also changing the game. In previous generations company-sponsored pensions effectively dictated when you retired and how much you'd spend. But these days most companies opt for "defined contribution" plans, like 401(k)s, which saddle workers with more responsibility, more decisions — and more uncertainty.

In talking to retirees and advisers across the country, we found that people with a clear idea of what they wanted from retirement — people with distinct retirement "personalities" — sidestepped much of the worry. Above all they had an edge when it came to making sound plans and saving the right amount. Five personalities emerged from our reporting.

Obsessives

It may seem unfair to the rest of us, but it's the plan-ahead, compulsively organized types whose paths to retirement tend to be the smoothest. That's partly due to the fact that a disciplined saver can make the most of the power of compounding. Someone who sets aside $50,000 for retirement by age 35 and earns a modest 7% a year will see it turn into about $380,000 by the time he retires at 65; that same $50,000 scraped together by a 55-year-old will be worth less than $100,000 at 65.

Lamar and Debbie Johnson retired to their plush golf-course home, complete with an "outdoor living room," in the hill country outside Austin when their son graduated high school. Golf fees aren't the only reason to make sure you have enough saved: The cost of care for retirees has skyrocketed in recent years. And the asset Lamar thinks is crucial to retirement happiness? Long-term-care insurance. Families with assets between $500,000 and about $2 million are prime candidates for the coverage, says Kirk Kinder, a certified financial planner at Picket Fence Financial — they're too wealthy to ever qualify for Medicaid but not wealthy enough to absorb all the costs of a nursing-home stay.

Do-Gooders

Retirees in general are the most frequent and most generous charitable givers, according to The Center on Philanthropy at Indiana University. They're focusing on educating their families, too, with more than half of all the proud Pop-Pops and Nanas out there reporting that they've contributed money to their grandchildren's tuition. And we're not talking the occasional $50 savings bond; over their lifetime 31% of contributing grandparents say they expect to shell out between $50,000 and $250,000, according to a recent MetLife survey. Retirement-calculator math would suggest that leaving a legacy means piling up more money before departing from the workforce. But generosity can be more cost-effective if it's front-loaded.

Worker Bees

There was one thing Scott Fornelius was sure of for most of his working life: He would retire at 55. He made good money as a supervisor at the oil refinery, and he thought he could afford to walk away once he hit the $1 million mark; by age 55, he had $1.3 million. Mission accomplished. So what's he doing now, at age 60? Spending three days a week driving a backhoe near his home in Bountiful, Utah, laying power and water lines for his son Blake's excavation business. Nothing went wrong — this is what retirement quality time feels like for Fornelius, busy in the great outdoors, taking breaks with Blake to look for owls and red-tailed hawks in the surrounding treetops. "I never knew my boy so well before," he says.

Fornelius's motives may not be financial, but workaholic retirees like him have a monetary advantage over their peers — they can make a smaller nest egg cover more years of retired life and pay for a better quality of life. For people retiring at age 55 and older, continuing to work for a single year boosts postwork income — from pensions, Social Security and investments — by an average of about 9%, while an additional five years on the job translates to a jump of 56%, according to the Urban Institute, a Washington, D.C., research group.

Big Spenders

Travel, of course, has long been at the center of the retirement fantasy, and people age 55 and above spend more per trip than any other age group. Those trips and other retirement splurges add up; according to a recent study by Fidelity, two out of three retirees reported that their expenses either increased or stayed constant after they left the workforce, a major shift from the old financial-planner mantra that spending drops in retirement. That's one reason why John Bevelhimer is actually approaching his second retirement. In 1995, at age 53, he left a job with a local phone company after 28 years. He had nearly $1 million in savings, but he quickly realized that that nest egg and an annual pension payment wouldn't support a long, globe-trotting second phase of life. So he took a lump-sum payment, reinvested the money and continued working. The past 13 years have been good to him: His decisions have nearly tripled his nest egg.

Late Bloomers

Lori Beckman has worked as an illustrator for much of her life, building up an impressive portfolio of drawings that spans four decades. What she didn't build up was much of a nest egg: For most people, she laments, "the arts aren't well paid by any means." When she retired two years ago at the age of 61, living alone after a divorce, she realized that her financial future wasn't looking great. And when she took a nasty tumble and ended up with a stack of unexpected medical bills for a broken wrist, she realized she might need to head back to the retirement-planning drawing board.

But Beckman was able to put things on firmer footing with surprising speed. After hearing about a job from a former coworker, she started working as a freelance illustrator — and at a higher rate than she'd earned before retiring. Because an annuity she bought a few years ago is covering many of her expenses, she has been able to bulk up her savings. As a self-employed person, she was able to open a solo 401(k) and put nearly all her freelance earnings in the retirement kitty. Additionally, the income has given her the financial cushion to allow her to put off collecting Social Security until she turns 66, when she'll be eligible for 100% of her potential benefits, as opposed to the 75% she'd get if she were collecting now.