Jeffrey Stoffer CFA, CFP asked:


What is retirement? The definition has evolved over the last half century. How you view retirement can affect how you plan and invest. The current economic situation also comes into play. By viewing retirement as a process, by starting early and planning, it is possible to reconcile your values and priorities with the available resources to create your own definition.

The notion of retirement is actually a fairly recent phenomenon. In the early 20th century people worked until they were no longer able. By mid century there were too many older workers and high unemployment among younger people. Pensions and Social Security were seen as a way to ease older adults out of the workforce, making way for the young.

The early version of “retirement” was not pleasant for many people. They were relegated to a view of life from the porch. Suddenly no longer needed, their self-identity was called into question. The event called retirement was not necessarily something people looked forward to.

It was not until the 80’s that people started to look upon retirement as something more than idleness without purpose. The notion of the “golden years” came into being. Retirement was to be a time when people could count on Social Security and a pension for a life of travel, sunsets in faraway lands, and cocktails with umbrellas on a tropical beach. This view seems the equivalent of going out to eat with nothing but desserts on the menu. How could life get any better than that?

Have you fallen into the trap of seeing retirement as an event, where suddenly your life will transform for the better? Retirement beckons as a time of change and new opportunity, particularly if you have been unhappy in your job. You may find yourself working too hard and, without realizing it, sacrificing joy in the present for some imagined future that you hope will be better (I confess, I fell for this one.)

The idyllic, golden years view of retirement, may not be your ideal retirement; and pensions are becoming a thing of the past. Not to mention changes that may occur with Social Security in the coming years. If we have not spent considerable time thinking about and planning for the transition to retirement, it could be an event filled with disillusionment. Our idealistic and fanciful expectations may clash with a very different set of economic realities.

So how do we begin to figure out what retirement is, or should be? I found the following exercise enlightening, and I suggest you try it: write down your ideal day, from start to finish. What is really important to you? Look to those activities that bring you joy and satisfaction. What are the things you want to do more of or could not see yourself living without? Your menu for the future starts here, with what you value most.

I want to emphasize the focus on what you actually see yourself doing – what you want to be doing – in retirement, because we are a nation of “doers.” We don’t just sit around on a beach. We multi-task, we get stuff done. We are also concerned that we will have to work longer than the previous generation. But we are good at it. And how we define ourselves is tightly interwoven with what we do.

The menu of choices available to us is wide. I am willing to bet there are a number of you who have dreamed of starting a small business. Or you have a hobby that you would like to share with young people. There are so many ways to contribute to our communities that can provide a sense of meaning and purpose, as well as potential income. We have the opportunity to make choices about what we do in ways our forefathers never did. Few of us will inhabit a rocking chair on the front porch, unless it is by choice.

And what about economic reality? Now is a bad time to ask that question, but if you have been investing for a number of years you know that markets have their ups and downs. The present time is our cold, slap-in-the-face reminder that we need to pay attention to our investments. It is a reminder that our retirement funds are important and we should be careful stewards of these nest eggs. The bottom line is that by starting early with planning and investing there will be more time for your vision and your economic situation to converge, more time to make decisions that bring you closer to your definition of a well-lived retirement.

The definition of retirement is changing. Clinging to past assumptions or pre-conceived ideas will only hinder us from creating a future that reflects our values. If we see retirement as a process, it becomes clear we need to focus our attention on that process now. This does not mean that we sacrifice the joy and meaning of the here and now. Our futures may unfold in wonderful ways we haven’t even thought of. We can take charge of the future by creating our own unique vision. We can accomplish this by taking steps now, and consistently along the way. The result will be a sense of comfort that we are creating a retirement based upon our choices and values.



Reginald

Cindy Heller asked:


When life or working conditions become difficult, many people fantasize about early retirement as a form of escape. Early retirement can be a reality if you have taken steps early enough to prepare for this. If you have the foresight and the discipline to set aside savings from your employment income and invested them wisely, perhaps you stand a good chance to do whatever you want to do whenever you want to do it. For people who enjoy their work, mandatory requirement to retire at a certain age may not be looked forward to. They dread the day when they will need to stop going to work as part of a regular routine, fraternizing with their colleagues and basically keeping themselves productively occupied. Another group of people are content with their previous life stage as employees and look forward to transitioning to their next stage of retirement. In summary, different people take to retirement in different ways.

A minority of people start saving for their retirement from their first paycheck. Many people do not start saving for retirement until it is a little too late. Those who started early with saving and investing for retirement, usually can look forward to comfortable retirement. For those who are unprepared, they may survive their retirement out of sheer luck – inheritance from parents who may have passed away or funds from an insurance payout due to the early death of one’s spouse. For everyone else who is unprepared, life will be pretty hard during their retirement. They will have to severely limit their choices in terms of quality of accommodation, activities like travel and potentially even the types of food consumed.

Do Not Daydream About Your Retirement; Prepare For It

If you wish to enjoy the flexibility to do whatever you wish upon your retirement, you need to prepare for it by saving and investing wisely according to a financial plan. You can choose to wake up whenever you wish. You may decide to spend time with your friends and neighbors. You can spend time with your grandchildren and watch them grow up. You may wish to work in the garden or take long naps. You can catch up on your favorite TV programs or movies. In fact, your leisure choices are limitless. The key proviso is that you have the financial means to do so. So put in place a retirement plan as early as possible.

There are some who dread retirement, since they miss the sense of order in their day from employment. They do not have any particular hobbies or interests. They may not socialize easily. They just do not know what to do with themselves with all the time they have from retirement. Some of them may take on another job post-retirement. A job that may not demand much in terms of skills or physical strength. These people are contented to work as long as they can and do not look forward to their retirement.

Retirement Jobs Are Increasingly Becoming Available

The issue of retirement jobs may seem really odd to some, but the reality is that not everyone can afford to retire. In developed countries, the two issues of a shrinking population arising from fewer babies being born and an ageing population living beyond the previous lifespan estimates have meant that retirees who need jobs can usually find them. Since more people can expect to live longer, they need to take this extended longevity into their retirement financial planning. For some this may be a little too late, so they will grudgingly have to consider working longer. Many governments around the world have been systematically raising the mandatory retirement age over the last few decades.

Opportunities For Retirement Jobs In Consulting

Many professionals today can develop new careers in retirement by offering their services as consultants in the fields in which they have expertise and from which they retired. This allows them to stay in the workforce without the pressures of day to day job demands. Most will work on a part time basis and others will work as contractors, working only when there is work, leaving plenty of time for hobbies and other interests.

Those lucky enough to have lucrative part-time consulting retirement jobs have the luxury of working productively for short durations at a time, while having the flexibility to spend the rest of their time on other activities like hobbies and social service. Many retirees who elect to work usually do so with a strong work ethic. Businesses may benefit substantially from offering these charged-up, motivated and active retirees.

There is a great span of retirement jobs available for the retiree who is seeking suitable work. Some may be simple and undemanding work at retail stores like fast food joints and cafes right up to high-end consultancy positions. If retirement jobs give retirees some sense of purpose along with other tangible benefits, then society at large benefits too. National welfare systems do not end up being over-burdened.



Mike