Now is the time of year when financial advisors, stock brokers, and writers for every money-related publication suggests that you have a look at your portfolio and review your retirement strategies. Using a combination of science, statistics and their special form of soothsaying these specialists put forth their best guesses as to how markets will perform and what you should do today to maximize returns and have enough money for a happy retirement. Having a solid financial footing is vital, and the most emphasized part of retirement plans, but it doesn’t give the whole picture.
Most of the information I have found on retirement planning says something roughly like, “Through a combination of savings, annuities, and other financial instruments, in order to maintain your current standard of living, you should create enough cash flow to cover 80% of present income plus enough cash to pay for one time expenses like the trip of a lifetime or a new car.” Wait, what? How can you plan your retirement if you don’t even know what you plan to do when you retire?
Retirement planning should be a holistic experience, not just a financial one. Retirement gives you time to let go, move forward, learn new things, grow your comfort zones and have new experiences. It is your chance to have that gap-year you always wanted without ever needing to go home. You can start a new hobby, go back to school or even start a new business. Being retired isn’t about being inactive. When I sold everything I owned and took early retirement at the age of 50, it wasn’t because I wanted to maintain my standard of living. I wanted to improve my standard of living! After a quarter of a century of working largely just to sustain my possessions, I wanted the freedom that comes from having little to maintain – not just a more flexible schedule.
A trip of a lifetime? That’s not a retirement plan. Have a lifetime of many trips! They don’t have to be extravagant. A new car as a one time expense? I hope you will enjoy driving it long after it becomes a classic. Retirement is a chance for new beginnings and to stay vital we have to give ourselves things to look forward to and challenge ourselves. That is why we move around the globe and travel so much. Next year Sarah and I are planning to take the world’s longest journey by train from Lisbon, Portugal to Ho Chi Minh City, Vietnam. That is why I am determined to confront my fear of public speaking and create a presentation about overcoming fears. Eight years after retirement I have learned that living in a comfortable bubble and doing the same old things, is not a retirement plan.
Keeping yourself growing and involved with life is as important as your finances. If someone close to you asks what are you going to do with your extra time after you retire, you probably don’t want to have to tell them, “I plan to binge watch more television and get more involved in arguments on social media.” Use your imagination. Retirement is your time!
Sometimes it helps to write everything down – big dreams and small goals. Be specific. Get in shape or travel more is not a plan. Run a 5k or see the sunrise at Angkor Wat is more like it. Actionable things. Call it a ‘Bucket List’ if you want, but your goals should be acted on, and the list should be flexible and ever growing. Just saying, “It is on my list” doesn’t mean a thing if you don’t act.
While you are retirement planning, make sure to involve the people who are important to you in your plans as well. Couples over 50 is the segment of society with the fastest growing divorce rate. Discuss plans in an open and frank manner and if you aren’t on the same page, find a way to get that way. Openly and honestly discussing plans early in the planning process will avoid a lot of conflicts when retirement arrives. Don’t put it off.
Sadly, retirement seems to catch many people by surprise. Men over 70 have the highest suicide rate of any segment of society. Of course, there are many factors involved, but a big factor appears to be that these people have just lost their zeal for living. Again, always have something to look forward to. Many people have mixed feelings about retiring, but if you stay engaged and make an effort to fill your life with new and wondrous experiences, as long as your basic needs are taken care of, you may find retirement to be the best time of your life, regardless of finances.
To plan for our financial needs, we need to have a plan for life. Think about it. Perhaps a retirement filled with new challenges and adventure would not require as much money as ‘maintaining a lifestyle’ would. That is what I have discovered. Maybe you do need to work a little longer and save a bit more if your plans require it. But again, how do you plan for anything if you don’t know what the goal is? Money should be used as a tool, not as a goal in itself.
Money is a tool for accomplishing things. Yes, all things being equal, having more money is better than having less. But, it is a balancing act. As we get older and our financial assets begin to grow, we often forget how our most valuable resource is being depleted. That is why we need to ask ourselves not only how much money do I need to last me through retirement; we need to be asking how are we going to allocate our most precious resource of all – our time.