Retirement is a pretty ambiguous term these days, executive editor of AARP The Magazine Ken Budd explained on "CBS This Morning." "Some people want to chill, some people don't want to chill at all," Budd explained as he provided a list of the top five things you should know about being retired.
"I find the people who are happiest in retirement are the people who say, 'I'm busier now than I was when I was working,'" Budd said. "Remember that boredom is your enemy." As appealing as it may sound to kick back and enjoy some well-earned freedom from work and responsibility, it's important to have a plan for how you're going to spend your leisure time: leading a fulfilling lifestyle is just as important in retirement as it was for the years leading up to it.
Budd noted that many "retirees" choose to start a business. People over 50 are really leading the pack in terms of entrepreneurship, he said. "Forget about Mark Zuckerberg, it's the people in the older group who are really doing this."
He also delved into the importance of financial planning. "Don't spend more than 4 percent of your savings during that first year of retirement," he offered as a good rule of thumb.
Check out the video above for the rest of what Budd thinks is essential to know about retirement (and why he suggests retirees try brushing their teeth with their opposite hand).
EARLIER ON HUFF/POST50: 8 Ways To Prepare For Retirement
1. Start Saving
Americans spend an average of 20 years in retirement. If you're not saving, it's time to start. Begin small if you have to, and try to increase the amount you save each month. The sooner you start putting funds aside, the more time your money has to grow.
2. Estimate Your Retirement Needs
Experts estimate that you will need about 70 percent of your preretirement income -- for lower earners, the figure is 90 percent or more -- to maintain your current standard of living when you stop working. Use <a href="http://www.choosetosave.org/ballpark/" target="_hplink">this calculator</a> to come up with a ballpark estimate. Research shows that people who try to estimate their needs in advance ultimately save more for retirement.
3. Contribute To Your Workplace Plan
If your employer offers a retirement savings plan, such as a 401(k) plan, sign up and contribute as much as you can. Your company may kick in a match, and deductions can be automatically taken from your paycheck. Over time, compound interest and tax deferrals can make a big difference in the amount you accumulate. Make sure your plan isn't a lemon by searching the website <a href="http://www.brightscope.com/" target="_hplink">Brightscope.com</a>. If it falls short, ask the management to do something about it.
4. Learn To Invest
How you save can be as important as how much you save. Inflation and the type of investments you make play important roles in how much you'll have saved at retirement. Know how your savings or pension plan is invested. Learn about your plan's investment options and ask questions. Put your savings in different types of investments. By diversifying this way, you are more likely to reduce risk and improve return. Your investment mix may change over time depending on a number of factors such as your age, goals, and financial circumstances. Financial security and knowledge go hand in hand.
6. Don't Touch!
If you withdraw your retirement savings now, you'll lose principal and interest; you might lose tax benefits or have to pay withdrawal penalties. If you change jobs, leave your savings invested in that employer's retirement plan. Or roll them over to an IRA or your new employer's plan.
5. Understand Fees
The cost of your investments makes a big difference. Index funds are a good option for reducing costs. The Labor Department provides this example: Assume that you are an employee with 35 years until retirement and with a 401(k) account balance of $25,000. If the returns on investment for your account for the next 35 years average 7 percent and the fees and expenses reduce this by 0.5 percent, your account balance will grow to $227,000 at retirement, even with no further contributions. If the fees and expenses are 1.5 percent, however, your account balance will rise to only $163,000. The 1 percent difference in fees and expenses would reduce your account balance at retirement by 28 percent.
7. Open An Individual Retirement Account
You can put as much as $5,000 a year into an individual retirement account (or IRA). Those 50 or older can contribute even more. You can also start with much less. IRAs also provide tax advantages. When you open an IRA, you have two options: a traditional IRA or a Roth IRA. The tax treatment of your contributions and withdrawals will depend on the option chosen. You can set it up so that an amount is automatically deducted from your checking or savings account and deposited in the IRA.
8. Find Out About Your Social Security Benefits
Social Security pays benefits that are on average equal to about 40 percent of what you earned before retirement. You should receive a statement each year that gives you an estimate of how much your benefit will be and when you can receive it. For more information, visit the<a href="http://www.ssa.gov/" target="_hplink"> Social Security Administration's website</a> or call (800)772-1213.