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It May Be Time To Reconsider What Retirement Means to You

Whether you’ve been told you should retire at 62, 65, or some other age, only you can decide what is right for you. In fact, you may want to reconsider retiring at all––at least in the traditional sense.

Many of us don’t like the circumstances we find ourselves in––and look at retirement as the nirvana we’ve been missing. The truth probably lies somewhere between completely dropping out (i.e., piddling around in retirement) and never retiring (i.e., dying with their boots on).

The reason many of us find ourselves in such situations is that we have been sold on an idea about retirement that is flawed: the idea that we should do what we don’t enjoy to accumulate the money we need to someday do what we want. This hope of doing what we really want to do is why the concept of traditional retirement is appealing to so many of us.

Although this may surprise you, many people who have retired and dropped out of the race are not altogether happy with their decision. The truth is that traditional retirement doesn’t work for everyone. Instead, people want freedom to pursue their own goals and interests. They want the autonomy to call their own shots––to do what they want, when they want, and where they want.

There is no question that having money provides options. If you have enough, you can usually do things the way you want. But money is only part of the equation––finding a work/life balance is just as critical.

There are two important steps to take when planning your retirement:

1. Decide the path you want to take: continuing to work, not working at all––or a                             combination. If you have a partner, it’s critical to involve him or her in the process.

2. Put together a plan that will enable you to achieve your goals.

These two steps will help guide you in living a life you love with the money you have––on your terms, not someone else’s. People are still haunted by the old rules and media hype that bemoan their lack of preparedness to reach this artificial goal line of traditional retirement. Many don’t understand that they don’t have to stop working to start retiring.

Life can present all of us with challenges that can radically alter our course: disability, a death in the family, divorce, and so on. We need to plan ahead financially because our minds and circumstances can change over time. For example, what interests you today may bore you ten years from now, or an unexpected disability may prevent you from plans you made for the future. Investment savings are necessary to purchase the freedom to change course when you choose––or need––to change it.

Many of us have already seen enough of our parents’ and forerunners’ retirement lives to know that this is not the life for us. We have already figured out that our lives will be full of challenge, relevance, stimulation, and occupational adventure. We may slow down but we are not leaving the track for the concession stand.

When you ask many retirees how they’re doing, they often reply, “I’m keeping busy.” This is an acknowledgment of the void that retirement has brought. Most people are truly happy when they are busy doing what they love. Conversely, if people are not productive and contributing in some way, they are most likely not very happy.

The goal of investing––including retirement planning––is to have the resources to have the liberty to do what you want when you want. What is the point of using that kind of liberty to do nothing but play golf? It may sound like a great idea when you’re commuting three hours a day, but it gets old quickly.  Redefining retirement is about balancing vacation and vocation. How you define retirement is up to you.

Are You Getting the Best Return on Life You Possibly Can?

 

When it comes to investing, the current standard of return on investment (ROI) can be self-limiting, adding pressure that is counterproductive. So much of ROI is not within our control. We can diversify investments––always a good strategy––but we cannot control how the markets perform or how global events affect the markets. Just as meteorologists can predict the weather but still be wrong, we can try to predict and plan for market upheavals, but we cannot control them.

It’s important to balance return on investments with return on life (ROL). ROL is defined as, ‘How well you are doing in living the life you want, with the money you have.”

Here are some key ROL indicators:

  • Living well within your means
  • Investing time, energy, and resources in people and engagements that energize you
  • Allowing yourself to have experiences and fulfillment whenever possible
  • Not comparing yourself to others who may live with a different set of circumstances
  • Living purposefully
  • Not allowing your identity to be defined by numbers

Since money is a vessel that can help you navigate where you want to go in life, it is important to control your money, instead of letting your money control you. When you focus on ROL, your investments serve you, not vice versa. Too many people feel as if life is little more than “getting ahead” of someone else’s definition of what a successful life ought to be.

The best financial conversation you will ever have is to ask yourself, “Who and what really makes me happy in life?” and then arrange your finances to keep those people and experiences front and center in your life.

Too often, when it comes to our financial lives, we don’t look at the big picture. Instead, we move pieces around by replacing investments, insurance policies, debts, purchases, and the like––all the while paying too little attention to long-term and holistic perspectives.

You may have been told that every money issue should and can be solved through a formula: “Let’s take your age, the amount of money in your portfolio, run some calculations, and presto! Here’s the answer for your life.” With this approach––and if that number is out of your reach––your future can become a self-fulfilling prophecy.

How can you balance the books between quantitative and qualitative factors in developing a financial plan? By focusing on ROL––and ensuring you pay as much attention to your non-financial goals as your financial ones.

These calculations are important and necessary, but work only if you understand the qualitative goals your investments are meant to fund. In the traditional financial planning model, the primary components include asset management, risk management, debt management, tax planning, estate planning, and income planning. While each area is essential to your financial well-being, there is an underlying assumption inherent in the solely quantitative approach used to perform these functions: everyone is essentially the same, and the only thing that really needs to change from one person to the next is which numbers get plugged into the formula. This is probably not an assumption you would want someone to make about you.

Your values and principles with money are not the same as everyone else’s, nor should they be. The most important aspect to be derived from the numbers is to achieve the quality of life you desire. The numbers do not exist to drive life but to support it.

Because many people view retirement as purely an economic cliff from which they will jump once they’re in their 60s, they have done little––if any––work on all the life issues accompanying such a transition.

It is important that your life before and during retirement is both challenging and enjoyable. At some point, almost all of us will require help––meaning we’ll have to make contingency plans. These contingencies include long-term-care insurance, in-home care, and the like. These investments are a natural part of ROL planning because they help you continue to live a full and balanced life as long as possible.

When you achieve balance––and as a result, true financial freedom––you will still be confronted with issues that organically arise with retirement. These manifold issues include the following:

  • How you best spend your time and energy
  • How you address your personal health and well-being
  • How you continue to challenge yourself
  • The role you play in your parents’ and/or children’s futures
  • The kind of legacy you want to leave
  • Your definition of success

It is important to understand the impact of money on every area of your life. By engaging in a financial planning process focusing on what’s happening in your life––adjusted financially to facilitate those happenings––you will reach the ultimate goal of using your money to create a better life.

Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Thank you. Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Kestra IS and Kestra AS are not affiliated with Fish and Associates. Kestra IS and Kestra AS do not provide tax or legal advice.


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