While a financial planner’s main focus is the financial aspects of retirement, the non-financial side of retirement is equally as important and likewise needs to be carefully planned. Many people approaching retirement do not realize that retirement typically involves a multiple stage progression that may last as long as their working life.
The first stage of retirement might be called ‘active retirement’.
The average life expectancy for a 65 year old in the United States is an additional 18 years for men and an additional 20.5 years for women (CDC National Center for Health Statistics 2014). With ongoing advances in health and medicine many people will surpass that, living active lives into their 80’s or 90’s.
What will you do with all that free time?
As you approach retirement age, the idea of ending the 9 to 5 rat-race can become more and more appealing. However, it is wise to spend some time realistically thinking about what you will do with your free time that will be both fulfilling and also make you happy.
Last month I attended the National Association of Personal Financial Advisors (NAPFA) Spring Conference in Phoenix, Arizona. One of the many great presenters there discussed how to retire well.
In his E.P.I.C. Retirement presentation Mitch Anthony discussed the characteristics of a successful retirement (Copyright MitchAnthony.com):
- Engagement: If you don’t use you your body or your brain, you lose them.
- Purpose: Money can fund purpose, but it cannot create purpose.
- Integration: There needs to be a balance between vacation and vocation.
- Challenge: Physical, intellectual, and spiritual challenges are the hallmarks of those who continue to thrive as they age.
Activity and purpose are important keys to being happy in retirement.
As it turns out, pursuing your favorite hobby or sport fulltime may not actually provide the fulfillment that you expect. Mitch Anthony discussed the case of a certain retiree who loved to play golf during his working life. He dreamed of retiring and pursuing his love of the game. Yet, after a short time, he realized that he had loved golf while working in counterpoint to his job. Golfing for its own sake all the time was becoming boring.
If an active retirement without E.P.I.C. can lead to boredom, a non-active retirement consisting only of relaxation and leisure is even worse. Without active engagement in life boredom and depression can quickly follow.
Striking the right balance. The keys to right retirement:
- Find an area of interest.
- Pursue it with just the right amount of effort to be engaging, yet not overly stressful.
- Keep learning, and stay active. Integrating physical and mental challenges helps keep you both physically and mentally fit. To paraphrase Mitch Anthony: Curiosity is the fountain of youth. It drives us to challenge ourselves and leads to aging well.
Quality of Life.
It is also helpful to contemplate what Quality of Life means to you. Financial planners typically equate this to maintaining a certain Standard of Living. However, Quality of Life is actually something quite different. Multiple studies indicate that which we intuitively know to be true: The most important determinant of Quality of Life is your health. As long as people are healthy, they tend to be reasonably happy even if their financial means are less than they expected. Now of course extreme poverty, war, natural disasters, etc. can reduce your Quality of Life in unexpected ways. But in an otherwise stable situation, one’s health remains the most important factor in maintaining a high Quality of Life.
The building blocks.
Basic health, a sound mind and a sound body, are the starting place for achieving Quality of Life in retirement. Comprehensive healthy aging comes back to being E.P.I.C. It also involves connections. As Sara Zeff Geber, Ph.D, discusses in her LifeEncore™ seminars, health requires human interaction. As you age the circle of people close to you tends to shrink. It takes effort and active involvement to build and maintain connections with friends and family. If you don’t your circle will increasingly be dominated by health care providers. I recently learned of an elderly man who realized this and decided to do something about it. He went through his phone book every week and chose 2 or 3 old friends to call up, talk to, and hopefully meet in person. He understood the importance of engagement and was willing make the effort to rebuild his circle.
In addition to planning financially for retirement, start thinking about what you will actually do once you get there. If you have not figured it out by the time you retire, make it your highest priority to examine what you want to do with the rest of your life. Remember that fulltime golf (substitute tennis, swimming, watching sports, dining, traveling, cruising, etc.) may at first sound like paradise, but the luster will eventually wear thin if you do not pursue a meaningful interest which provides challenge and includes human interaction. Know that you have more to do and much to contribute. Figure it out, go do it, and you will surely have a happy and fulfilling Right Retirement!