This article is about retirement planning and will touch on some of the consideration for a successful retirement including the health and social aspects of all this. While I will touch on some of the financial considerations like generating passive income or at least alternative income sources, I’m more interested in getting you to think about the big picture and what retirement means for you and yours.
Before I start, let me emphasize that this article contains my personal views and thoughts. I do know a bit about all this as I have owned an investment and financial business for over 10 years and advised many people, of all ages, about their life goals. Nothing in this article or on this site should be regarded as financial planning advice and you are urged to think deeply for yourself and get professional advice from a suitably qualified professional in your own jurisdiction.
What is retirement?
I guess the first point is that it’s not an end but a beginning. Very few people live to work. Most work to provide the lifestyle they want for them and their families plus those that are important to them. The last part is worth considering because increasingly people want to actively contribute and participate in communities and causes. So at least in part, “retirement” is about having the time freedom to do that.
There is a kind of hierarchy that we all need to deal with. We address the basics first -somewhere to live, food, a car, education, clothes, health needs then move onto more discretionary activities like holidays, travel, the digital world, charity work, sports and hobbies. For most of us we find that we must do the first stuff but want to do more of the latter. To satisfy those needs we and often that means both partners in a typical family, get a job. Hopefully that is something enjoyable but there is no denying the treadmill effect. Soon we find that the job is getting in the way of living the life we really want.
So, my concept of “retirement” is getting to a situation where you can step off that treadmill and have the options to do more of the stuff you really want to do rather than be stuck in a job doing the things you have to do.
It’s about options. One of those options maybe to be able to take a role doing something you like without the pressure of needing a pay packet at a level just to support your living needs. Another may be to stop doing anything regularly and become a nomad for a bit seeing your country and the world. It’s a personal choice that only you can make and there’s no right answer.
There is clearly a financial aspect to all this but that’s only one of several critical elements that you need to consider when planning a successful “retirement”.
The Three Big Questions
When you and the family jump in the car or get on a bus to go on holiday, it’s pretty hard to have that holiday if you don’t know where you’re going, why you’re going there and when you’re supposed to arrive. Similarly, if you are planning a retirement, particularly an early one, then these three questions are key and need some discussion and consideration:
Where do you want to live?
What do you want to do?
When do you want to do it?
Where do you want to live? On the surface of it this seems like a fairly simple thing to decide – location and what sort of house. But actually, there’s a bit more to it. A few things you might want to think about are:
- Near family. OK but what if the family moves? Does where the family live actually meet what you want?
- What type of home? A life style block or farmlet in the country is fine but what happens when you get older? A smaller apartment or other more modest home and grounds may be more practical.
- Medical and other facilities. As we age, access to quality medical facilities becomes increasingly important. On a more mundane level if you can no longer drive, is it easy to get to shops and recreational facilities?
Community connection. I worry about people who say “I’m going to retire and we’re moving to . My worry is that they are leaving a place where they’ve been for many years and are known in the neighborhood / community to somewhere that they have no connection to or with. There is great potential for considerable loneliness as the reality of the new place takes over from the initial euphoria.
- Living solo. It is an unfortunate but near certain fact that eventually you may be on your own. If you’ve moved somewhere new or are not close to wider family or other support networks this can be very difficult for the surviving partner.
What do you want to do? As I said earlier, “retirement” is not an end but simply a transition to the next phase of your life. There is only so long you can sit around doing nothing. In my case my wife is likely to get very annoyed with me cluttering up the house on a daily basis.
In the wider scheme of things, you may wish to do some extended travel, go touring in an RV or house bus or go live somewhere else for a bit and come back. You may wish to continue to work or get involved in a charity or community role that you are passionate about. And of course, given the time we are likely to be “retired” there won’t be just one thing – you may wish to do all of the above !!
When do you want to do it? For most people the answer is “as soon as possible”. Some people genuinely love the work they do so for them retirement is typically in their 60s. The reality though is that there comes a time for us all when for physical and mental health reason we have to stop full-time work. Basically we’re over it!
From a personal perspective and continuing the overall theme of this discussion, planning for an early retirement makes sense to a lot of people. Depending on how old and how financially sorted you are now will determine how soon that can realistically happen. All things are possible. It just takes a plan.
The biggest impact of the timing of your retirement is on your financial planning. How soon can you replace your income or at least have enough coming in to meet your retirement objectives?
Don’t stress about how all this might work. The big thing at present is to decide what it is you want. What’s the aiming mark? Until that is decided, all planning is, by definition a bit pointless.
Some over-arching retirement planning considerations
Educate Yourself For Retirement
Planning for your retirement, especially if it’s an early one, is a big subject. I have no doubt you have some cool skills in a number of areas but you don’t know everything; nobody does. Take some time out to fill in the gaps. It may be educating yourself a bit more about your finances and investment, running a retirement business, learning about social media or technology. It could be taking a critical look at your dream lifestyle of being an RV vagabond or owning a country estate to see if really is both practical and what will work for you and yours.
Read some books, research on the internet, go to lectures, or seminars. Talk to people you trust but make sure they really do know what they are talking about as opposed to just being loud about saying it !!
In all this, develop some critical analysis skills. Sometimes the Kool-Aid really is sour and should be chucked out not swallowed. When listening to the people giving you advice, always try to figure out who gets paid. While ii’s absolutely fair and reasonable to pay for advice, it the person getting paid isn’t primarily you then think seriously about the veracity and validity of the advice you’re getting.
Stay Solvent i.e. make sure you have enough cash coming in
As the saying goes, although money doesn’t buy happiness, at least if you have it you can be unhappy in comfort. Maintaining a steady stream of inflation proofed income is critical to a successful retirement. Put simply, the sooner you can get that in place, the earlier you can retire and have the opportunity to do what that means for you.
Even if you don’t retire until age 60 or 65 then you’re going to be “retired” for a considerable period with any luck. At birth, life expectancy is in the early 80’s depending on your circumstances. However, if you’ve avoided some of the pitfalls along the way (e.g cancer, accidents and heart attacks) and made it to 65 in reasonable shape then that increases to almost 90. From a planning perspective making your century is a realistic possibility given ongoing advancement in medical technology and “parts replacement”.
Put another way, if you started earning income around 20 and you retire at roughly 60, you will be retired for about the same amount of time as you were working. From a financial perspective that means that simply having a few bank deposits and a pension is probably not going to cut it and provide you the type of retirement you’re looking for.
Somewhere along the way you need to develop a cash cow to provide a steady stream of income. This can be a share portfolio, property investments or pension / superannuation schemes. It does need to be somewhat passive income and diversified to reduce both risk and volatility.
The reality is that most people develop a combination of income sources if they can … but it does take some planning. In my case, I have a couple of pensions, a modest share portfolio and an affiliate marketing business to provide us our income.
This is a whole subject on it’s own and I’ll write another article to provide further thoughts on this. The bottom line is that doing something sensible about retirement income is better than doing nothing.
It’s beyond the scope of this article but staying healthy is a big part of enjoying your retirement. I’ll write another article on this subject specifically to amplify this but there are some general principles we all need to consider:
- Keep moving so our joints and bones keep working. Walking is good, swimming is excellent. Try bike riding – not on an e-bike but even that provides some benefit.
Drink lots – in my case something other than the craft beer I make. Water is the thing. When you think you’ve had enough …… drink another glass. Without being too basic about it, if your pee isn’t running clear then you’re little dehydrated and need to drink more water.
Exercise. Yes, you can lift heavy weights or pound the roads if you want but do something every couple of days. You need about 30 minutes to use up those calories. Even normal household stuff like vacuuming or weeding the garden can provide what you need. Personally, I have always enjoyed martial arts and practice Tai Chi now for it’s flexibility. Balance and health benefits. It also has the additional benefit of being something I can do at home at no cost once I learned the forms.
- Wellness. This covers a lot of ground but generally speaks to how you feel. Are you happy? Look to your mental well being. Try to stay positive and strive to find something good or great in everything you do. Nobody likes a grumpy old man or woman on a continuing basis. Be satisfied with your lot and if you’re not then do something about it don’t just moan about it.
- Eat Your Way to Wellness. In my mind, eating and drinking is not only one of the great pleasures of life but something that should be pursued with energy and gusto! I love eating and enjoying cooking when I have the time. All this enjoyment comes at a price but one I’m happy to pay. It’s about balance. So, mixing healthy ingredients with good cooking techniques and some modest regular exercise is what works for me. If you live on processed, fast foods then you’ll need to balance the effects somehow.
If you are retiring a bit older, then your mobility and ability to travel around a lot could be or become constrained. It is really important that you stay connected to friends and family. Isolation leads to loneliness.
If you don’t already, get to know and love some of the online tools out there. Social media like Facebook, Twitter, Instagram and Pinterest are obvious general connection tools but for family a more personal app like WhatsApp is probably better. My granddaughters – 6 and 8 years old – leave voice messages and talk to us regularly using WhatsApp which is great fun – and quite worrying for their parents I think. There are lots of options out there. Pick one, sort it out within the family and use it regularly.
Like most things in life, you need to be true to yourself. Just because you have “retired” doesn’t mean that you should let your personal standards slip. As already discussed, you’re likely to be retired for quite a while. Don’t let yourself “go”. Maintain your personal hygiene and dress standards so you don’t become an embarrassment to yourself and those around you. Similarly, try to keep your house and garden, if you have one, to the standard you’d like. Ask for or pay for help if you need it.
Be proud of yourself and keep your self-respect.
So those are some of my thoughts about things to consider when planning an early retirement or any retirement really. Thank you for taking the time to read this far. If you like what you’re read please share it using the buttons on the side bar. I’d also be very interested in your thoughts and feedback so please take a minute and tell me what you think in the comments box below.