Ten years is not enough

Ten years is not enough

A major problem I have with how retirement is currently practiced in America is that it doesn’t give you enough time.

If you retire at 65 and stay healthy and active until 75 (a stretch for many), then you’ve got 10 years to do everything you’ve been putting off for the last 40.  To be blunt, 10 years is not enough.

How can we deal with that problem?  The most obvious solution is to start retirement sooner.  We don’t do this, though, because in our minds we’ve coupled retirement activities with age, work status, and assets.  If we haven’t saved enough or we’re still working, then our dreams stay on the drawing board.

I’m putting the finishing touches on a free guide (you’ll be the first to see it) that will show you how to re-imagine retirement and jettison the idea that it can only start after the retirement party.  The guide will be ready soon, but for now, I thought I’d point you to a few articles from the IR Archives that address this issue.

We have quite a few new readers since our London Calling article got exposure on the front pages at Yahoo and MarketWatch, so to many of you the above articles will be new.  For the rest of you they’re a good reminder.

Spend a few minutes reading them and then ask yourself this question:  “What is one thing that I’ve always wanted to do in retirement that I can actually start doing now?”  Maybe there’s something you’ve always wanted to learn or a trip you’ve always wanted to take.  There are four months left in 2012.  Set a goal to do that one thing before we ring in the New Year.  Then once you’ve done it, set a goal to do something else.  Why save the best things in life until the very end?


How to be happy: Part 1 of 300

How to be happy: Part 1 of 300

When talking with clients about retirement, I almost always hear some variation of the following sentence: “I just want to be happy.”

The more I heard the “H” word, the more I asked myself “What actually makes us happy?”

There’s certainly no single answer to that question.  In fact, the answers seem limitless.  Not only that, but we don’t seem particularly good at knowing what will make us happy.  The things we choose—say, money for example—often provide a short-term, fleeting sense of pleasure rather than a deep, abiding sense of happiness.

With that said, I decided to do a series of posts (300 should do the trick :)) on well researched, quantifiable things that have been proven to make us happy.  When I come across a particular fact, idea or action that is likely to make us happy, I’ll write about it.

Happiness Principle #1: Balance Pleasures and Comforts

In his book The Joyless Economy, Tibor Scitovsky argues that there are two kinds of potential experiences in life: pleasures and comforts.  By pleasures he means risks or pursuits.  These are the new experiences in our lives.  The things that get us out of our comfort zone and stimulate our minds.  Pleasures include things like meeting someone new, exploring an unfamiliar city, ordering something new off the menu or learning a new hobby or skill.

“A ship is safe in harbor, but that’s not what ships are for.”
~William Shedd

Then there are comforts.  These are the things that we know and are used to.  They’re safe and predictable.  They provide stability.  Comforts are things like our home, family, longtime friends and the job we’ve had for years.

“Be sure you put your feet in the right place, then stand firm.”
~Abraham Lincoln

Every day, we’re presented with choices between pleasures and comforts.  Left to our own devices we tend to choose comforts.  In fact, many times we’re so reluctant to embrace the unknown that we will choose unhappiness over uncertainty.  We’ll persist in a bad job or a bad relationship, simply because we’re afraid of what would happen if we didn’t.

Not surprisingly, Scitovsky argues that finding balance between pleasures and comforts will ultimately make us happier than if we have a lopsided tendency toward only one.

Choosing the safe, predictable path (comforts) too often will leave you feeling unchallenged, uninspired and bored.  Always taking the risk and stepping outside your comfort zone (pleasures), however, can leave you feeling stressed and unmoored.   The key is to find a balance.

So how do we apply this to life and retirement?  I certainly don’t have all the answers, but what I have tried to do is lay a solid foundation of comforts that give my family a sense of stability.  Our home is not opulent, but it’s comfortable and meets our needs.  We have great friends, a church where we feel connected and our daughter is in a good school.  In addition, we’ve tried to manage our finances in such a way that we’re not always stressed about money.

What those things do is provide a sort of safety net so we can feel more comfortable (and sure footed) when taking a risk and pursuing pleasures.  If we take a risk and it doesn’t work out, the foundation is still there.  We can travel and know that we have a warm bed to go home to.  We can go back to school (as my wife is doing now) or learn a new skill without feeling like we’re out-punting our coverage.  Our daughter can join the soccer team or take up piano lessons and know that she can crash and burn and still have a family that loves her.

How about you?  How are you doing balancing pleasures and comforts?  Is there an area in your life where you’ve gotten too comfortable and you know it’s time for a change?  Has the dogged pursuit of something left you feeling like you’re on shifting sand?  If so, spend some time this week thinking about balance and you’ll be well on your way to achieving the happiness that we all look for.


Will you spend less in retirement?

Will you spend less in retirement?

A common rule of thumb is that you can live in retirement on about 70 percent of your pre-retirement income.  Should you bank on that?  Will you really spend less in retirement?  Well, I’ve got good news and bad news.

The good news is, yes, you will spend less in retirement.  The bad news?  Most people spend less because they have less to spend, not because they couldn’t use the extra income.

Even with the house paid off and outlays on things like work clothes a thing of the past, many retirees still spend the same or more (especially during the first 10 years of retirement) because other expenses go up.  Two categories that often increase dramatically are: 1) Travel and recreation and 2) Health care.

So as you plan for retirement, don’t put too much stock in generalities or rules of thumb.  Think about what you actually want to do during those years and what your expenses are likely to be.  Then put together a well thought out budget that realistically matches those expenses with the necessary income.


When are your retirement dreams most at risk?

When are your retirement dreams most at risk?

At what stage of life are your retirement dreams most at risk?

Not in your 20s and 30s.  That’s when you’re just getting started.  Time is on your side.  Not only that, but you have some fire in your belly and you’re ready to make your mark on the world.

Not in your 60s either.  By then you can see the finish line.  Your goals are within reach.  You’ve run a good race and you’re anxious to transition into an exciting new phase of life.

The most dangerous time is in your 40s and 50s.  You no longer have that new car smell and you’re still a long way from the finish line.  You’ve probably been hit by a few obstacles and setbacks in life.  You’ve had the wind knocked from your sails a time or two.  Your dreams aren’t quite as clear as they used to be.  It’s easy to get discouraged, sidetracked or blown off course.

I’m entering that phase of life now, so I’ve been thinking a lot about how to stay motivated and on track.  If you’re there too, here are a few ideas:

  • Meet with your adviser to make sure you know exactly how much you need to save to fund your retirement.   Sometimes the easiest way to stay motivated is to know where the finish line is.
  • Answer the question “What do I really want out of life?”  Maybe the answer has changed over the years.  Maybe you’ve just lost site of what’s important to you.  Either way, once you know what you really want out of life you can allocate your time and set goals that align with your priorities.  In other words, let your passion and purpose drive your to do list.
  • Bring the finish line closer.  Rather than waiting a decade or two until retirement, retire today.  Start with version 1.0 and then add features as you go.

How about you?  Do you want your middle years to be a pivotal time of progress or the period when the wheels came off the bus?  Me too.  Let’s get to work.


Photo by Kevin Harber.  Used under Creative Commons License.
The surprising truth about how retirees spend their day

The surprising truth about how retirees spend their day

Do you remember the scene from The Princess Bride where Vizzini keeps using the word “inconceivable” at all the wrong times?  Inigo Montoya finally corrects him: “You keep using that word.  I do not think it means what you think it means.”

When it comes to the word “retirement” I feel a little like Inigo must have felt.  I keep hearing people use that word and I don’t think it means what they think it means.  Most think it is synonymous with things like travel, leisure, adventure and fun.  It is the time in their life when they will do everything they have always dreamed of.

A recent study by the Bureau of Labor Statistics (BLS) shows that, when it comes to retirement, perception may be different than reality.  The study, called the American Time Use Survey, analyzes how different age groups of Americans spend their day.

As you might imagine, everyone spends time sleeping, eating, shopping, working and enjoying leisure activities.  How much time we spend on those different activities varies depending on our life-stage.  Students understandably spend more time on educational activities.  People in their prime working years spend more time at the office.

How people reallocate their time when moving from their working years into retirement can tell us a great deal about the state of retirement in America.  Do we spend our Golden Years living life to the full or does retired life look suspiciously like our working years?

The Results

To get an idea, I compared two groups of people from the study: those in their prime working years (55 to 64) and those in the years typically associated with retirement (65 to 74).  The study showed that those in retirement spent less time on things like working, educational activities, and caring for others like their children.  They spent more time on things like personal care, eating, household activities, shopping, leisure, civic activities and talking on the phone.  In all, a typical retiree took 2.5 hours per day away from activities like work and added those 2.5 hours into activities like leisure.

Too much T.V.  Not enough travel.

If that number surprises you, you’re not alone.  It surprised me too.  The study seems to show that the typical day in retirement doesn’t look drastically different from the typical day during your working years.  Rather, it is a reallocation of 10-20 percent of our day from things that we are obligated to do to things that we choose to do.

Said another way, retirement happens at the margins.  You won’t be handed a 30 year uninterrupted block of time at your retirement party to do with what you want.  You will be given a few extra hours each day. How disciplined and creative you are with those few extra hours will largely determine how fulfilling your retirement years will be.

How are current retirees doing in that regard?  The numbers are a little concerning.  According to the BLS study, retirees are currently allocating about 9.45 of their extra hours each week to leisure activities like travel, recreation, reading and socializing.  That seems like a promising start.  Unfortunately, the bulk of that time (5.42 hours to be exact) is spent watching T.V.  The rest is spent on things like relaxing (about an hour), socializing (44 minutes), and activities like travel (a whopping 3.6 minutes).

That’s not exactly the stuff that retirement dreams are made of.  So why are people choosing the television over travel and other retirement pursuits?  It is likely because more and more people are entering retirement financially unprepared and without a clear idea of what they want to do.  In other words, television is winning by default.  How can we do better?

Save enough—Some of the best things in life are free, but pretty much everything else costs money.  If your plans include travel, hobbies, a vacation home or anything else that costs money, it’s important to make sure you’ve set enough aside.  I’m sure many retirees in the BLS study would love to do more with their time, but they just can’t afford it.  Before retiring, work closely with a trusted adviser to make sure that you are on track to save enough to fund the type of retirement you want.

Simplify—During retirement you are given the same 24 hour day that you had during your working years.  The more efficiently you are able to handle things like cleaning the house, getting groceries, mowing the yard, and going to the doctor, the more time you will have to allocate to things like family, relationships, education, adventure, community, hobbies, travel, and health.  Do everything you can to simplify, condense, consolidate, minimize, or outsource the maintenance so you can be free to spend more of each day focusing on milestones.

Have specific plans—As you transition into retirement, it’s helpful to have specific, new plans that will force you to steer off the well-worn path you’ve become accustomed to and proactively pursue your new goals.  If you don’t have specific new plans, it’s easy to fall into a routine that doesn’t look much different from your working years, save for sleeping in a little bit and having more time to run errands.

Retire to something, not from something—Ralph Waldo Emerson once said “Don’t be pushed by your problems.  Be led by your dreams.”  Retiring to escape a job is a recipe for misery and discontent.  Retiring to pursue things that you are passionate about is a recipe for meaning and fulfillment.

Dream big—When you dream big, something happens.  It changes how you think and how you act.  It changes the types of questions you ask.  It inspires and changes those around you. What are your dreams for the future?  What is the vision you have, not just for retirement, but also for the rest of your life?  If you can’t answer that question or if your answer doesn’t really inspire you, then stop everything else you’re doing and really think that through.  Don’t settle for more Seinfeld reruns when retirement can be so much more.

Don’t quit learning—Those 65 and older in the BLS study reported spending zero hours per day on educational activities.  That is unfortunate.  Learning new things is a key element to an interesting, rewarding retirement.  It helps to keep your mind sharp.  It helps you figure out what you like.  It helps you discover new things.  It gives you people to interact with.  It provides personal satisfaction and a sense of accomplishment.  Be a lifelong learner.

So as you head into retirement, remember to spend your time wisely.  An hour here and there can make a big difference as long as you spend that time doing the right things.  Be intentional with your day and having a mediocre retirement would be, well…inconceivable.

Have a great week!  Spend some time thinking about what you will do with your day when you’re the one calling the shots.


I originally published this article at www.fpanet.org.