Allworth Co-CEO Scott Hanson shares his thoughts on why retirement should be considered a transition - not a destination.
What do you want to be when you grow up?
Everyone reading this has answered that question. And it’s also likely that the first time you were asked, however you responded, your answer evolved over time.
Now, here’s another question: how do you want to be remembered?
While we advise people at just about every stage of life, year-after-year, if I had to guess, I’d say our single largest contingent of new clients is comprised of people who are preparing to retire and who will soon have money in transition.
That is, while money should always be hard at work making even more money, during the transition, the focus for some people shifts from “saving for retirement” to “using that savings to retire.”
But here’s the rub: After you’ve completed your career, and someone asks what you do, consider breaking the habit of saying: “I’m retired.”
That’s a default description. Describing yourself as retired infers that you are done growing, or through with reinvention.
And that is hardly an accurate description of today’s post-career crowd.
However, until you retire, how can you know what it’s going to be like? After a lifetime of hard work, how can you understand the extent of the challenges you’ll face when your career is no longer the primary driver of not only who you are, but how you spend your time?
I’ve worked with CEOs who routinely had 60 hours a week scheduled out in advance for years upon years. There can be no question that a career is an identity.
But retirement? Retirement is a transition. (And not an ending.)
And my experience has been that the transition into retirement is more likely to be successful if the following three challenges are met.
As I previously mentioned, most of us spend a huge portion of our lives working to earn money. For many people, while work can be stressful, and while of course not everyone loves their job, work typically provides satisfaction, status, and, most of all, a sense of purpose.
Make no mistake (and those of you who are already retired likely know this), but when you transition into retirement, you undergo a massive shift of purpose.
So, the big question is, both during and after that transition, where will all your purpose land?
I say, without any risk of overstatement, that the “Where will all your purpose land?” question is among the most important of our lives. And the closer a client gets to retirement, the more we advisors try and touch upon how to spend time once that transition occurs.
And that’s because, not only does everyone need purpose, because they do, but it’s also because happiness and health depend on it.
If you haven’t transitioned into retirement - or if you already have, and you are feeling at loose ends - it’s never too early and it’s never too late to ask yourself: “What can I do to make the world, or my community, or my street, or even my neighborhood, a better place?”
Think of it this way: retirement is not in-and-of-itself a destination any more than a freeway is. Retirement is the metaphorical highway of life. It’s a mechanism that, when well built, enables you to get to your purpose.
So, with that in mind, the goal should not be to retire, it should be to embrace the change by picking a purposeful destination.
Do you view money as a tool that works for you?
Far too many people see their savings the way they see the sand in the top half of an hourglass. They view it as an abstract entity that will dwindle year-after-year until either they pass away or run out of cash.
Picture this: you have $1 million just sitting in the bank. Now, imagine your first year of retirement. Let’s say you take two vacations, then you get a new roof put on your house, and then a child has an emergency and needs to borrow $30,000.
Next, subtract living expenses, and you can see that it’s been just a single year since you retired, and now you may have as little as $850,000 left in the bank.
The money you’ve saved throughout your life exists to support your new purpose(s) after you transition through retirement. When you view it that way, you may come to understand that there is no magic number that ensures you’ll have enough money to pay for a 30-year, post-career existence.
Your money is a tool, and as such, its work never ends, and it never gets to retire and live the good life.
Financially, the most worry-free retirements are enjoyed by those people who save enough money and invest it in such a way as to be able to live off the interest or dividends (and subsequently never touch the principal).
Never.
That’s financial freedom and it should be your goal. Your money exists entirely to work for you to free up your life (and your energy) so you can devote yourself to your purpose.
Have you ever heard someone say, “If I’d known I was going to live this long I would have … done this, or done that”?
The older we get, the longer the road stretches out behind us. Yet, when you drive, do you spend more time looking at the road ahead or looking in the rearview mirror?
My experience has been that one of the keys to a successful, happy, post-work existence is to look forward more than you look back.
And I love nostalgia and enjoying thoughts of the past just as much as anyone.
But focusing more on the future? How do you do that?
First, it goes back to identifying your purpose. Volunteering. Creativity. Mentoring. A master’s degree. Maybe starting a new business doing something you are passionate about.
It’s a fact that most happy people have a good reason to get out of bed in the morning. Identify one, and then find five more.
Second, while we should all try and embrace each day, another interesting trait that I’ve noticed in happy people is that they don’t worry obsessively about how much time they have. Simply, try not to allow yourself the luxury of hesitating to try something new just because you’re worried you might not be around to enjoy the fruits of that labor.
Third, as mentioned throughout this article, happy people resist the urge to think of retirement as an ending or destination. To them, retirement is the transition to another exciting part of an ongoing life.
How do you want to be remembered?
Commit yourself to living today well, and with purpose, but also with your eyes looking ahead toward a long and rewarding future.