(FORTUNE Magazine) – WHEN AND HOW

Henry Pearsall, Green Lake, Wis.

Fifteen years ago, before I retired as chairman of Sanford Corp.--which you may know as the maker of those Sharpie markers--I attended my 25-year reunion at Amherst College. At that reunion, a retired English professor, Ben DeMott, delivered a lecture entitled "DeMott's Rules for Retirement." His advice still rings loudly in my brain. Professor DeMott talked about identifying the where, what, and when of retirement. In other words: Where do you want to spend your retirement? What do you want to do with your leisure time? And how do you know when to take the plunge and retire? While professor DeMott's answers to these questions have helped shape my own retirement, I've also learned a few lessons of my own along the way.

Professor DeMott's first rule is: Stay put for a while. He points out that if you don't take the time to explore potential retirement locations before you move--perhaps by renting a house for a few weeks--you run the risk of being unhappy with whatever choice you make. Another wrinkle in the where issue that I discovered on my own is that you and your spouse need to resolve any differences about where you want to end up. Take my situation: We have a condo just outside Chicago; a house in Naples, Florida; and another home in Green Lake, Wisconsin. I love Florida, while my wife can't spend enough time in Wisconsin. Sure, the fact that we can afford to maintain three homes certainly helps, but what's just as important is that we have a mutual understanding that we don't need to be with each other 365 days a year. In fact, our marriage is much stronger because of this. Even if you have only one home, trust me when I say that you and your spouse will need to work out some sort of compromise when it comes to location.

Of course, where you want to go is often tied to what you do. This brings me to another DeMott rule: Work on a project regularly four hours a day. Looking back, I wish that I had given this some thought ahead of time. My retirement was sudden--I was 57. In 1992, when we sold Sanford to a larger corporation, Newell, I knew that I was going to step down as CEO after the merger. During the last three or four months of my career, I devoted 100% of my time to the deal. I didn't have the chance to think about what I wanted to do when it was all over, and that made for a rocky transition into retirement. I discovered that when you give up being the boss, you're no longer the center of attention. That's quite a shock, and it's up to you to fill the void.

Fortunately, now that I've been retired for five years, I'm happy to say that my biggest problem is trying to fit everything in. I'm busy doing lots of things that draw on my experience at Sanford, from raising money for Amherst to working on a retail franchise business with one of my sons. I also find that there's nothing like having a few big dreams to keep you going. Mine are mastering a foreign language, becoming a better piano player, and taking a circular boat trip from my home in Naples to Chicago and back. If I have one big retirement worry, it's that I'll end up in my rocking chair, not having fulfilled these dreams. So that's another lesson that I've learned, even if I haven't yet managed to apply it to my own life: Once you've retired, you're out of excuses to procrastinate.

In fact, I spend a lot more time thinking about fulfilling my dreams than I do about money. I've noticed that lots of retirees love to pore over their investment portfolios. Not me. Even though about 90% of my net worth is in stocks, I leave the buying and selling decisions to two trusted investment advisers. The one big exception to this is that I've stubbornly kept half my net worth tied up in Newell stock. Since I've been a director of Newell for the duration of my retirement, I'm convinced that I know the company better than my advisers do. They keep telling me to diversify more, but I haven't budged, and I'm very pleased with the results.

I've sunk the other 10% of my assets into a smattering of small businesses. My pet project is the Community Bank of Oak Park River Forest, a de novo bank that I helped organize and where I now serve as chairman. I'm so engrossed in this project that I enrolled in a course at the Graduate School of Banking at the University of Wisconsin. It was a lot of fun to get out there with mid-career bankers 20 years younger than I and fight like hell to stay even with them. The point is that being retired isn't an excuse to stop trying new things.

Along these lines, I've viewed retirement as an opportunity to get more involved in the charitable and cultural activities that I didn't have much time for during my career. For example, I serve on the boards of two local hospitals and the Morton Arboretum. It would be easy for me to say that I'm involved in these ventures because I want to give something back, but that's only half true. These pursuits keep me fresh by engaging my intellect. Without that kind of involvement, you'll go stale, and Professor DeMott's final rule will backfire on you. That rule is: Don't wait too long to retire. Because with some thought and planning, retirement can be one of the most fulfilling times of your life.

FINDING FOCUS

Nick Ciriello, Los Angeles

When I talk to my friends who are fellow retirees, I realize that one thing separating me from many of them is that I don't miss working. I worked too hard for too many years, and I'm glad to have that behind me now. After practicing corporate law for 11 years, I started putting together real estate limited partnerships, where we sold investors interests in single buildings or a group of buildings. To me, the most exciting part of the job was the deal, being involved in the actual creation of an investment product. Then I retired, only to find out that I was still creating--in this case, I had to create a new life for myself.

The challenge was especially great because I retired when I was 50, after I got an attractive offer to sell my business. One of the first things you notice after retiring early is that the most interesting people in your circle are not retired. It's suddenly much harder for you to structure your own universe. One way I dealt with this challenge was by turning to my love of music. I'm an avid opera fan, and one of the great joys of my retirement is that I've made a lot of friends who share this interest. It's not always easy to meet new people once you're retired, so it's extremely important to be involved in an activity that brings you into contact with others. I'm convinced that the single most important ingredient for a happy retirement is having a passionate attachment to something.

The most rewarding project that I've been involved in since retiring was helping save the Los Angeles Chamber Orchestra, which was flat-out broke when it asked for my help. I wouldn't have devoted so much effort to this project if I wasn't passionate about it, and all the passion in the world wouldn't have saved that orchestra if I hadn't made use of my business experience. Drawing on the experiences that I accumulated during my career is the best way I have found to take the edge off the anxiety that retirement can provoke.

Retirement has also allowed me to devote more time to my family. When my three sons were growing up, I didn't spend as much time with them as I would have liked. But since I have retired, I've taken advantage of the opportunity to get to know them better. While you can't make up for lost time, this has definitely brought me closer to my kids. It's really a treat to be able to take one of them out to lunch "just because." That's something that I wasn't very good at before. Until I started doing this, I didn't fully realize that time is the biggest gift that retirement has to give.

Having said that, I've also found that time can be one of the most deceptive aspects of retirement. During the first couple of years, people were always asking me to do things. The logic was: "Nick has the time to do this--he's retired!" So I said yes to a lot of people, and after a few years I discovered that my time was no longer my own. Staying focused on what's really essential has been a continual struggle for me. It turns out that one of the biggest challenges of retirement carries over from every other phase of life: making time for the things that are really important to you.

Focusing on my finances has been another challenge. I have a fair amount of money, and sometimes I feel as though there are too many people managing it. Not counting my mutual funds, I have six different financial advisers counseling me on everything from tax-free bonds to large-cap stocks. One of the reasons I've done this is that I'm trying to hedge my bets. I figured that if a couple of my advisers had disappointing results--and that has certainly happened--their losses would be offset by the gains realized by my other advisers.

When I was still working, I had only two advisers, and I wasn't asking as much of them. But in retirement, things have become much more complex: I need to generate an income for my family to live off and keep investing for the future. On the whole I've been pleased with my larger advisory team, but there's one big problem with this approach: No matter how many people are looking after your finances, you're still the one running the show. I haven't devoted nearly enough time to staying on top of my advisers and making sure they're all working toward a common goal. If directing your investments is a priority, it's going to gobble up a lot more time and energy than you think.

One serious issue still before me: My wife and I are trying to decide where we want to spend more of our time six or seven years down the road. I suspect that our decision will hinge largely on where our friends end up. Lately we've been spending a lot of time in Santa Fe, which has a great music scene, so that's very appealing. We're also considering returning to New York City, where I practiced law.

For a while the notion of settling in Paris seemed very romantic, but we've ruled that out. It's a wonderful place to visit, but it's still a foreign country, and I just can't envision making a home there. I've traveled enough to know that jet-setting to a different exotic location every year isn't going to make me happy. I'll be happy when I settle in a place where I have some roots and can let those roots grow stronger as the years go on.

SAVING PAYS

Ted and Madelyn Arrington, Martha's Vineyard, Mass.

There's an old saying that goes "Even when the right tune is playing, nobody tells you to get up and dance." That speaks volumes about how my husband, Ted, and I have handled our retirement. Nobody told us what to do--we just did it. Both of us worked in the New York City public school system: I taught kindergarten, and Ted was a high school guidance counselor. While we had very rewarding careers, we didn't retire rich. But through years of careful planning, saving, and teamwork, we've fulfilled our dream of retiring with a summer home on Martha's Vineyard. And if we could do it without the millions of dollars movie stars and socialites pay for homes on this island, anybody can.

So how did we do it? We saved. One of the toughest--but best--decisions we ever made was to live on only one of our salaries and save the other. To make this work, Ted and I got into a few habits that we've stuck to religiously during our 41 years of marriage. For example, we've always owned our primary residence. Why spend rent money that you'll never see again when you can be using it to pay off a mortgage? Yet when it comes to smaller purchases, we've always been cash-and-carry types. All of this is common sense, but over the years we noticed none of our friends were doing these things.

Our actual investments are minimal. Aside from the homes that we've owned, our only real investment is the tax-deferred annuity offered to us by our employer. But the funny thing is, we never really thought about investing or retirement planning per se. Instead we always thought in terms of "saving for a rainy day." Maybe it helps to think that way, because that "rainy day" doesn't necessarily come along when you're 65 years old.

Indeed, over the years, Ted and I have had to dip into our savings on a number of occasions. There were the times we had to make payments on the student loans we took out to put our two daughters through college. Later, when the girls got married, we had to pay for their weddings. But our biggest "rainy day" came along when Ted and I started visiting friends on Martha's Vineyard and became determined to have a house of our own there.

We didn't get our house overnight. In 1971 we bought a piece of land for $1,800, with the idea that we would eventually have the money to build a home on it. A decade later its value skyrocketed, and we sold it for $17,000. Buying that lot was crucial for us, because it gave us a foothold on Martha's Vineyard before the prices soared out of reach forever. Best of all, the $17,000 we got for the land almost paid for the house by itself. We used $10,000 of that money to buy a new piece of land in a completely deserted area. Then we applied the remaining $7,000 toward the $12,000 purchase price of a precut home that we erected ourselves on the land.

There was a heck of a lot of work to do, but after just six hours, we had a big room enclosed by what was just a shell of a house. We still had to put up walls, install plumbing, etc. I'm glad that we built it ourselves. This way, it's more than just a dream house. It's a reflection of the way that we've always done things--because we didn't get the life we have by waiting and dithering. Instead we got up and danced.