Should You Work for Life?
When we were young whipper snappers, we’d get really excited to tell people they could financially afford to quit their jobs and enjoy the good life. Indeed, people love to hear it, even though they have trouble believing it most of the time. After 20+ years of experience, we’ve really changed our tune, though. With our experience we’ve seen what happens to people when they retire too young, too soon and without a plan for their time that is as thought out as a plan for their money. While some people get away with it, in our experience, many more do not have a longer, happier life than those who keep putting in the time to something that gives them purpose and satisfaction. In fact, many end up spending too much money, damaging relationships, and can end up battling illness or depression just from pure boredom. Without regular mental stimulation and a healthy amount of stress, we believe people’s bodies and minds don’t get what they need.
Before you decide to cut the cord from your professional life, make sure you plan for the following:
What am I going to do with my time? If you are working 40 hours a week- that’s a lot of time to fill. And, if you are working a high stress gig, you’ll find your other time feels a lot different as you won’t have much to recover from if you go cold turkey. We love suggesting that people make a “time picture” that helps them plan week by week, month by month, and year by year. This obviously changes over the course of retirement, but if you don’t have enough on there at the start while you are young and healthy- look out!
Who am I going to spend time with? Are there enough people to give me what I need to stay social? Lord, help your spouse if you retire and have nothing to do. We’ve seen people almost kill each other once one retires (and we get it). You will find quickly that your work friends took up more space in your life than you thought they did. Write down the names of all those friends you haven’t had time to have lunch with and see how many you really want to spend time with. If it’s not enough- figure out how you are going to make some new friends fast.
Where am I going to get my purpose? What will force me out of bed in the morning if I start feeling blue? You may HATE your job, but you still get up and go because you have to. When you don’t have to do it or anything else- what will get you out of bed? This may seem silly, but without real purpose, many people get very depressed. Having a passion about something will help, but if it’s not mandatory, the first major sadness that comes your way can be severely amplified. Committing to something- consulting, a part time gig, or a volunteer job that could not go on without you makes a big difference.
How will I keep learning and growing? This factor also frequently gets overlooked. Your job is probably forcing you to learn new things all the time and you don’t even realize it. A learning plan will keep your mind sharp and help you make continued contributions to your family and social group. Lifelong learner is more than a buzz word- they are words to live by. Classes, technology, and social interaction in community clubs all can make a wonderful difference here.
What is my Plan B if retirement doesn’t work out the way I thought it would? Where could I easily find employment that might not be financially rewarding but would be fun (a list of ideas is great)? We have a handful of retired, multi-millionaires working for clothing stores, not for profits, and even riding horses for minimum wage just to stay engaged- and they LOVE it. The pressure is low, and they love every aspect of it. Some of our clients have made MORE money in retirement than they did working- just because the financial independence gave them a chance to take a risk.
Don’t get us wrong- financial independence is AMAZING. It is still a privilege earned by so very few. But just like a kid with too much time on their hands, a retiree can turn into a miserable little creature quickly. Plan your time wisely.
70 to 80% of a person’s day is spend engaged in some form of communication. (Credit Donkey/Journal for Financial Planning)
Not Planning for Regular Expenses Can Crush Your Retirement
By Stephanie Guerin, CFP®
A concept our new clients have trouble grasping is budgeting for non-monthly expenses like travel and home improvements. They typically almost always underestimate these expenses, and it can do real damage to their ability to save in the long run and project expenses down the line.
People tend to think of their spending as the routine monthly expenses and often don’t add in(or know) the FULL amount for all of the non-monthly expenses they have. Here is a quick and dirty way to get an estimate of how much these expenses are: Take your gross income, subtract all of the taxes you owed for the year (including what you had to pay in at the end of the year for federal, state and local). From there, subtract all of the money you saved in retirement plans or investments you do not touch. Take out that regular monthly budget and that is how much you spent (roughly) on non-monthly expenses for the year. If your savings account went down, you should add in that difference too.
Now your first response may be, “This was an unusual year…” And ours would be, “They all are. The money just shifts on what it goes to.” This is a critical number that you need to know, however, if you are going to plan for a comfortable financial independence. It’s where we see most people get in trouble after they make the decision to retire. Give it the respect it needs in order to protect yourself.
“Retirement at sixty-five is ridiculous. When I was sixty-five I still had pimples”. ~ George Burns
Market Update: Fall Down
10-31-18 YTD Dow: 3.4%
10-31-18 YTD S&P 500: 3.0%
10-31-18 YTD World EX US All Cap: -9.7%
10-31-18 YTD US Agg Bond: -2.4%
Ah, Fall Down, Market. October was a fun one for volatility- although not as bad as some Octobers we have lived through. It’s not atypical for markets to be volatile in the fall as businesses make plans for the future and money shifts. Add to that rising interest rates and shifting foreign policy and you’ve set the stage for an exciting show. As a reminder, we don’t advise moving long-term portfolios for short term market mood swings. We DO advise (strongly- as indicated by the capital DO) that you have ample cash to ease the short-term damage a volatile portfolio can do to your income needs. But if you are a client, you hear us say that at every single meeting, don’t you?
The views expressed represent the opinion of The Planned Approach. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. While The Planned Approach believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and The Planned Approach’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties.