The biggest fear BEFORE retirement is money. Pre-retirees worry about whether they’ve saved enough and if it will last. The biggest fear AFTER retirement, however, is health. Once retired, people worry most about getting or staying healthy so they can do the things they want and have a good quality of life. So, depending on where you fall on the retirement spectrum, health is either already a major concern of yours or it soon will be. With that in mind, a few studies caught my eye recently that I want to share with you because they can help boost your memory and extend your life.
How blood pressure affects your memory. A recent study by the National Institute of Health (NIH) examined whether more aggressive treatment of blood pressure could improve heart health. The results were so impressive that they stopped the study early and lowered the systolic blood pressure recommendations from 140 to 120 (and overall blood pressure recommendations to no more than 120/80). That more aggressive treatment reduced the risk of heart attack and stroke by nearly a third and death by almost 25 percent. They did further research to see if there were any other benefits and last week they announced that bringing the systolic below 120 also reduced the risk of cognitive impairment by about 19%. Cognitive impairment can lead to dementia which can lead to Alzheimer’s. The takeaway? Go get your blood pressure checked and if it’s above 120/80 you should talk to your doctor about bringing it down.
How relationships affect your health. While I was reading about the blood pressure study, another NIH study caught my eye. It summarized the growing body of evidence that shows how strong relationships and social connections can have a positive impact on your mental and physical health. Here are a few of the findings:
Relationships have a cumulative impact on your health over time.
People with weaker relationships and social connections are much more likely to die prematurely.
Weak social ties are directly linked to a higher probability of developing conditions like heart disease, high blood pressure and cancer.
Once you develop those conditions, you’re more likely to die from them if you have weak social ties. For example, heart patients with weak social connections are twice as likely to die of cardiac arrest than patients with strong social connections.
Weak relationships also affect your immune function and your ability to recover from illness.
Why do relationships have such an impact? One reason is that behavior explains roughly 40% of premature mortality and relationships have a positive impact on our behaviors. You tend to take better care of yourself when you have people you care about. Another reason relationships help? Good relationships reduce stress and help foster a sense of meaning and purpose, both of which can help improve your mental and physical health. The takeaway? Work hard to foster meaningful relationships with friends and family. It can greatly impact your overall health, longevity and quality of life.
Money is an important ingredient to a successful retirement, but it’s meaningless if you’re not healthy enough to live life and do the things you want to do. So work hard to get your finances in order, but take these words from Emerson to heart: “The first wealth is health.”
“We try more to profit from always remembering the obvious than from grasping the esoteric. It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” -Charlie Munger, investing partner of Warren Buffett
Sometimes we make things too hard. Retirement (and life) works pretty well if you get the big things right. Things like a roof over your head. A good relationship with your spouse. Meaningful friendships. Your health. Satisfying pursuits. A healthy spiritual life. Freedom and independence. We should all spend our time, money, brain power and willpower getting those things right.
If your life were a house, the big things we’re talking about would be the foundation and load bearing walls. They are what gives the house structure, support and a secure footing. Once those are in place you can worry about paint colors, furniture and decorations. Those things are important too, but the color of your living room won’t matter much if the house is on the verge of collapse.
Get the big things right and then you can worry about improving things at the margins. Too often we do the opposite. We focus on the trivial many instead of the vital few. Most of those details don’t matter much. Yes, they can take something good and make it a little better, but they can’t take something bad and make it good. Get one of the big things wrong, however, and no matter how good everything else is, life will be tough.
So today, as you live your life and plan your future, look for big wins. There’s no prize for making life complicated. In fact, it can be pretty simple. As Charlie so eloquently stated above, often times you don’t need to be brilliant, you can have enormous success by just trying to be “consistently not stupid.”
In life, we often have the option to do things the easy way or the hard way. We can choose between the wide and narrow roads. Paradoxically, choosing the easy way out often leads to a hard life while choosing the hard way often leads to an easy life.
Narrow, difficult decisions that require discipline and sacrifice usually pay off by leading us into a place where the road is wide and our options are plentiful. On the other hand, taking the wide, easy path often ends up funneling you down a narrower and narrower chute until all good options are gone and all that is left are painful consequences. In short:
Easy choices, hard life. Hard choices, easy life.
Nowhere is this more true than with our finances. We all stand at a fork in the road when making decisions on things like debt, saving, investing and giving. Path A is wide and well worn. Reach for that credit card. Try to keep up with the Joneses. Feed those desires. The other path, as Robert Frost might say, seems a bit grassy and in wont of wear. Live within your means. Give generously. Save for the future. Steward those resources wisely.
Perhaps not surprisingly, my advice on finances (and pretty much everything else) encourages you to take the road less traveled. Sure, doing so will be difficult and take discipline, but it will ultimately lead you to a place of peace, security and comfort.
Quick note: I’m in the process of redesigning the Intentional Retirement website. If you have any thoughts or suggestions on ways to improve it or make it more helpful to you, please hit “reply” to this email and send them my way. Now on to today’s article…
Save more or work longer?
One of the first things I do for new clients is create a detailed retirement plan based on their unique circumstances. This helps us determine if they’re on track financially for the type of retirement that they want. Sometimes this exercise produces smiles. Sometimes not so much.
If a plan is falling short, there are many ways to get it back on track. You can save more, change your allocation, work longer, work part time, change your Social Security claiming strategy, get out of debt, spend less in retirement or downsize to a smaller house. The effectiveness of those options varies.
The most obvious tactic is to save more, but the power of saving diminishes as you approach retirement. Why? Because each new dollar has fewer years to compound. A dollar saved at 25 becomes about $22 by retirement (assuming an 8% annual return and retirement age of 65). A dollar saved at 55 only becomes about $2 by retirement.
A recent report from the National Bureau of Economic Research illustrated this point by showing that saving another 1% of your salary each year for 10 years is only as effective as working for a single month longer.
To explore this idea further and look at the effectiveness of different tactics, I thought it would be interesting to look at an actual retirement plan and see which changes produce the biggest results. Below is a short video of me working through a plan and testing potential changes to improve the overall success rate of the plan (If you have trouble viewing the video, click through to our site and click on the YouTube link).
Quick note: This past week I’ve been up in Sequim, Washington visiting family and enjoying the great outdoors. Today we meet up with some friends and drive south toward California where we’re going to be hiking and camping along a rugged section of coastline called The Lost Coast. Cell reception will be spotty, but I’ll try to post some pics and videos to our Facebook page and (newly created) Instagram page. Tune in if you want to see some beautiful scenery or are just interested to see if I get eaten by a bear. Now on to today’s post.
The traditional definition of retirement contains 4 key elements:
Work status (not working)
Money (you need millions)
Idealized pursuits (take those millions and buy a vineyard)
Not surprisingly, I’m not a huge fan of that definition. Among other problems, it puts you on the deferred life plan. You push your dreams off until “Someday” rather than living life to the full now. Not only that, but it doesn’t give you much 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. Ten years is not enough.
Seneca did a good job pointing out these shortcomings over 2,000 years ago:
You will hear many men saying: “After my fiftieth year I shall retire into leisure, my sixtieth year shall release me from public duties.” Are you not ashamed to reserve for yourself only the remnant of life? How late it is to begin to live just when we must cease to live!
A better definition
My definition takes a different approach and attempts to deal with the problems I mentioned earlier. It has evolved over the years and will likely continue to do so as I live, learn, test and refine. Here’s my 10 word definition of retirement:
A system for living that optimizes for freedom and fulfillment.
Let’s unpack that for a minute:
It’s a system… I mean two things by this. First, it’s a system in the sense that it’s a set of connected parts forming a complex whole. Retirement has a ton of moving parts that need to work together to produce the results that you want. Those parts include things like money, relationships, pursuits, Social Security, Medicare, health, housing and insurance to name a few. Those parts work together in a complex system. If the parts work, the system works. If one or more parts isn’t functioning properly, the system breaks down.
Second, retirement is a system in the sense that it involves a set of principles or procedures for doing something. Your retirement should involve actions that you do on a regular basis with a reasonable expectation that doing them will get you closer to the life you want. Read this for more.
For living… There are no qualifiers here. It’s not a system for living once you hit 65 or have a certain amount of money in the bank. It’s a system for living now. Today. Retirement is not a life stage that you automatically arrive at after a certain number of birthdays. It’s an iterative process that starts today and evolves as you proactively work to gain more control of your time and then use that time in very intentional ways. Read thisfor more.
That optimizes… Your system should be optimized to produce the results you want. Otherwise it’s a bad system. It should move you efficiently and effectively toward the life you want. Fortunately, optimization is a natural byproduct of the iterative process described earlier. Rather than waiting until “retirement age” to figure out what you really want out of life (and wasting some of your best remaining years in the process), you’re testing and refining now.
For freedom… You can have all the plans in the world, but if you don’t have the time and money to get your dreams off the drawing board, then what’s the point? So yes, money is an important ingredient to a successful retirement to the extent that you use it to buy your freedom. Just remember that your goal isn’t to have more money for money’s sake. Your goal is to have a better life. Ralph Waldo Emerson said it well: “The desire of gold is not for gold. It is for the means of freedom and benefit.”
And Fulfillment… Retirement is more than a math problem. Yes, you need money (as we just discussed), but don’t forget about meaning. Money will help you sleep at night but meaning will get you out of bed in the morning. You need both to have a fulfilling life doing the things you want with the people you love. So decide what you really want out of life and then get very intentional about making that vision a reality.
How about you? I’d love to hear how you define retirement. Feel free to share in the comments. Have a great weekend!