Why do some people get bored in retirement and others don’t? Is there a secret?  Good question. Let me start by describing what many Americans do in their first year in retirement, give or take a few months.  They travel (which includes, in most cases, the long-awaited “dream trip.”) They spend time with their grandchildren. They clean out the closets and the attic. They have a few lunches with former colleagues. And then the day comes when they look in the mirror and ask: What now?  So…the problem, if there is one, isn’t so much the initial plunge into retirement. Most people enjoy their newfound freedom. It is what happens (or, rather, what fails to happen) after the first year that typically leads to problems—and boredom.  A fulfilling retirement, for the most part, has three ingredients: good health; a purpose, something that gives meaning to your days; and a good financial plan. Yes, “find your purpose” or “find your passion” might sound trite. But it’s true. It works. In recent years, Encore, the retirement report of The Wall Street Journal, has profiled retirees who have found purpose in dozens of areas, including:  Photography, teaching, full-time travel, cooking, antique bookbinding, leading cycling tours, oyster farming, “sugaring” (making maple syrup), playing a musical instrument, nursing, opening a whiskey distillery, driving an ambulance, directing a children’s performing-arts studio, starting a gardening business, opening a pizzeria, horseshoeing, fitness instruction, running a bed-and-breakfast, opening a yoga studio, wildlife conservation, and, of course, volunteer work and nonprofits.  In other words, there is no one way to avoid being bored. There are almost as many purposes as there are people.  If you’re adrift and unsure how to turn around your retirement, the following resources can help: encore.org, which is unaffiliated with The Wall Street Journal’s Encore; lifereimagined.aarp.org; nationalservice.gov/programs/senior-corps; “The Big Shift: Navigating the New Stage Beyond Midlife,” by Marc Freedman; “The Encore Career Handbook,” by Marci Alboher; “65 Things To Do When You Retire,” edited by Mark Evan Chimsky; “Boundless Potential,” by Mark S. Walton; “Master Class,” by Peter Spiers; “Second-Act Careers,” by Nancy Collamer; and “Second Wind,” by Bill Thomas.  It is my understanding that if you turn 65 and don’t sign up for Medicare Part B, you will pay a penalty in the form of a higher premium when you sign up later. I turn 65 soon but plan to continue working and staying on the health-insurance plan provided by my employer; as such, I won't sign up for Medicare Parts A, B or D for probably three years. Can I avoid the penalty premium? And, if so, how do I do it?  Be careful: Your particular health plan might require that you sign up for Medicare when you reach 65. So check with your employer as soon as possible. If you aren’t required to sign up for Medicare at 65, you can enroll—without paying a penalty—during what’s called a “special enrollment period.”  For instance, you have an eight-month special enrollment period to sign up for Medicare Parts A and/or B that starts the month after your employment ends or the group health insurance based on your current employment ends, whichever happens first. (Note: Under Medicare rules, COBRA and retiree health plans aren ’t considered “coverage based on current employment.” Again, be careful.)  Medicare explains much of this on its website. Go to medicare.gov and, in the search box, type: I have employer coverage.  During my working years, I was covered by either a defined-benefit pension plan or a 401(k). In most years, I also contributed the annual maximum to traditional individual retirement accounts for my wife and me with after-tax dollars, since I was unable to deduct these contributions. When we begin taking required distributions from these accounts, can we exclude the total amount contributed with after-tax dollars and only pay tax on the gain?  Technically, you don’t have to pay tax on withdrawals of after-tax contributions. But…the rules involving withdrawals from IRAs make the answer to this question more complicated.  Here’s the key: All the funds in your IRA are considered one pot, even if you have several separate IRA accounts. (The pot also includes balances in SEP and SIMPLE IRAs, if you have them.) After-tax funds, once they are inside your IRA, are mixed with pretax funds—and can’t be “unmixed.” So, when the time comes to withdraw funds, you can’t withdraw only after-tax funds, says Ed Slott, an IRA specialist in Rockville Centre, N.Y.  Mr. Slott calls this “the cream-in-the coffee” rule. Once you put cream in your coffee, you can’t take out just cream. Each drop that comes out contains some cream and some coffee. How much of each? When funds are withdrawn from an IRA, they must follow the “pro rata rule.” Each dollar withdrawn will contain a percentage of after-tax funds. The percentage is based on the amount of after-tax funds in the total balance of all your IRAs.  Mr. Slott offers this example: Let’s say you have a total IRA balance of $300,000, which includes $30,000 of after-tax funds (the cream). You can’t withdraw only the $30,000 of after-tax funds and pay no tax. If you withdraw $30,000, then 10% will be tax-free and 90% will be taxable. That’s because the after-tax funds are 10% of the total IRA balance. So only $3,000 of the $30,000 withdrawal will be tax-free.  Mr. Ruffenach is a former reporter and editor for The Wall Street Journal, and co-author of “The Wall Street Journal Complete Retirement Guidebook.” His column examines financial issues for those thinking about, planning and living their retirement. We welcome your questions and comments at askencore@wsj.com.
Retired Wall Street Journal editor Glenn Ruffenach answers readers’ questions on what to do about boredom in retirement, as well as questions about Medicare and 401(k)s.