It’s your last day at work. Your colleagues took you out to lunch last week, and you received a packet of papers from HR. Now you’re walking out of your office carrying a banker’s box full of personal effects. Congratulations, you’ve been disrupted. You weren’t fired. This was your idea: you just retired.
What’s next? If you’re like many people, you’ve been answering that question for the last couple of years with a shrug, saying “I’ll figure it out when I get there.” Now you’re here, and ironically, you would have had more support for this life transition if you had been fired. The laws that apply to involuntary terminations ensure that employers have at least a few processes to “off-board” employees. When it’s your idea to leave, you’re often on your own.
Retirement is framed as a reward for hard work and part of the natural progression of life. However, it’s a decidedly human construct that distinguishes humans from other animals as much as our skyscrapers, combustion engines, and flights to the moon. The sparrows singing each morning don’t cease foraging for food and expect to live the last third of their life on what they’ve already gathered.
Retirement is also a new feature of human life, having been around in its present form only a few decades. For most of humanity’s existence, people worked until they dropped, or relied on family members to care for them if they couldn’t work. Thus, we’re still figuring out the details, and while still a reward, retirement can also be one of life’s bigger challenges.
The challenge is often framed in terms of how to accumulate the money you’ll need to support yourself when no longer working. But if you do work, save and invest to accumulate the resources, the question arises: how will you spend your days over the possibly several decades that lie ahead?
It’s a question that seems easy to answer, and people like to joke on discussion boards about what they’ll do with their surfeit of time:
Friend: “What are you going to do today?”
Friend: “But that’s what you did yesterday!”
Retiree: “Yes, but I didn’t finish.”
Most of us, though, have had little experience deciding how to live day-to-day with so much time at our disposal. As children and young adults, school and extracurricular activities dictated our schedules. Later, jobs, commutes, and perhaps familial obligations meant we had at most two or three hours a day of free time to manage. In retirement, this ratio flips: apart from sleep, we need only a couple of hours to address life’s necessities, the rest of the day is our own.
Too much time – we should all be so lucky to have this problem, right? Perhaps, but there’s evidence suggesting that an overabundance of time makes people less happy than busier folks. There’s also this: how you spend your time during your “thirty years of unemployment,” as one person called it, will determine how you’ll spend your money.
You can choose to “wait until you get there” to figure out retirement. But you’ll be doing the equivalent of shopping for groceries on an empty stomach, more at risk of an impulse purchase, with higher potential consequences.
At the beginning of retirement, financial temptations abound. Investment accounts look larger up close than across the span of several decades. It’s hard to imagine that the kitchen remodel we want today won’t be so satisfying tomorrow, and since we now have time to undertake the project, why not?
Sometimes, we simply change our minds about what we thought we wanted. Before retirement, traveling abroad once a year was a “minimum requirement.” After a couple of trips, it’s “been there, done that.” With new data coming in daily about the reality of retirement, you may find yourself re-evaluating, well, everything.
For these reasons, retirement planning is more than a math problem. It’s a life-design problem that requires us to forecast potential scenarios in more than just time frames and dollar amounts for how we might live once we are no longer required to work.
If, at least a few years out, you’re willing to invest the time to take a more strategic approach to retirement, you’ll reap a number of benefits. Your social network is probably bigger now than it will be later, so you’ll have easier access to information about things you might like to do. It’s easier in some ways to explore new interests. If you find an activity you want to pursue, you can plant seeds now rather than start cold turkey later. You may even discover, after doing the exploratory work of retirement planning, that there’s no good reason to put it off any longer.
Most of all, you’ll go into retirement with your eyes wide open, better prepared to make adjustments and adapt as necessary. Retirement will no longer be solely an abstract promise of a better day, like Nirvana or Heaven, but rather what it really is: a continuation of your present life.
Kiplinger’s Personal Finance, January 3, 2019
Milo was quoted in an article by Sandra Block, “Countdown to Retirement: 5 Years Away”, which discussed the financial steps to take five years from retirement. Milo noted the importance of getting a realistic assessment of whether you’ll have the required resources, since there’s still time to make adjustments if you don’t. “If you’ll need to work a couple of years longer, you need to know that now.”