I’ve worked with many clients over the years who decided to retire early. Sometimes that was a great decision, other times it resulted in some unexpected challenges. Below are some of the pros and cons I’ve seen with early retirement. Consider them carefully as you decide when to retire.
Time control. During your working years, you don’t control large chunks of your day. If you retire early, however, you shed those demands and have much more flexibility and opportunity to use your time to do the things you really want to do.
Health. Generally speaking, the younger you are, the healthier you are. If you retire early, you get to take advantage of the fact that you’re still healthy and active.
Open doors. In The Funny Thing About Time, I discussed how time closes doors as we get older. The kids grow up and move away. You lose a spouse or other loved one. Your physical health changes and you’re not able to do that trip you always wanted to do. Retiring early means that more of those doors are still open.
Better relationships. One of the advantages of having more time is that you can prioritize relationships. During our working years, we’re less proactive with relationships. It’s a side effect of less time and more obligations. Early retirement changes that calculus. And since relationships are key to a happy life, retiring early can be a huge advantage.
Less stress. This one is pretty self-explanatory.
Potential opportunity for a second career or passion project. Some retire early because they are ready to leave work/career behind. Others still want to work, they just want to do something they enjoy or are passionate about without having to worry about what it pays. Retiring early can give you that opportunity.
Age difference with other retirees. I have a client who retired early and moved to a private community in Florida. He was the youngest resident by several decades. You can feel a little out of place if you’re 50 and everyone around you is 70. This is obviously more of an issue if you move to a destination geared toward retirees.
Guilt. I wrote about this in 4 Unexpected Emotions in Retirement. If you retire early, you can sometimes feel guilty because you’re doing fun stuff while your friends and family are still working. This can make conversations awkward as you talk to each other about your day, priorities, etc.
Money. The sooner you retire, the less time you have to save and the longer your nest egg needs to last. If you are considering early retirement, be sure to work with a trusted adviser to create a detailed retirement plan with a high probability of success.
Comparison with peers. Alas, comparison with others continues even in retirement. Your friends and co-workers will likely be a little jealous of your newfound freedom and you’ll likely feel a bit green when you hear about their promotions and raises. You might even second guess your decision to walk away from the challenge and status your career. The best way to guard against this is to do things in retirement that provide purpose and meaning.
Social Security. Your Social Security benefits are based on the assumption that you will continue to work until full retirement age. If you retire sooner, your benefits will be a little lower. Likewise, if you decide to claim your benefits early (rather than waiting until full retirement age) they will be reduced. You can retire early and still wait to claim your benefits, but that means that your portfolio will need to do the heavy lifting until you file (see my point on money above).
Health insurance. If you retire before becoming eligible for Medicare at age 65, you’ll need to get a health care policy that bridges the gap between your employer policy and Medicare.
Timeline vs. Pie Chart
Regardless of when you retire, you’ll be faced with tradeoffs. If you wait, you get more money, but you lose time and health. If you retire early, you sacrifice a bit of money, but you’ll be healthier and have a much longer runway to enjoy retirement. You need to decide what’s most important to you.
One piece of advice I can give you: Don’t save the best for last. Retirement should not be a timeline where youth is 0-20, working years equal 20-65 and retirement is 65 plus. Instead it should be a pie chart divided between time you control and time you don’t. Retirement is using whatever time you control now (whether that’s 10%, 50% or 90%) to live the life that you want to live.
Because retirement is a time filled with fun, travel and leisure it is easy to make the pursuit of pleasure your orienting principle. That would be a terrible mistake. There’s nothing wrong with pleasure, but it must exist in the context of something deeper. Let me explain.
Meaning vs. Pleasure
I’ve written before about Viktor Frankl. He was a psychiatrist and holocaust survivor who wrote the book Man’s Search for Meaning about his time as a concentration camp prisoner. Frankl founded a school of psychology called Logotherapy (literally “meaning” therapy). He believed that striving to find meaning is the primary motivational force in humans. This was in contrast to Freud, who believed that the pursuit of pleasure was the driving motivation.
I’m in Frankl’s camp. In my experience with retirees, those who focus on meaning often have a deep sense of satisfaction, purpose and happiness. Pleasure is a welcome byproduct of their pursuit of purpose. Alternatively, those who can’t find this deeper sense of meaning often self-medicate with pleasure. Pleasure with no greater purpose eventually feels hollow for most people. So how can you orient your retirement around meaning?
How to find meaning
According to Frankl, there are three different ways to find meaning in life. I’ll list those below and then relate them to retirement.
Through projects or work. All of us are designed to do something meaningful and productive. Retirement doesn’t somehow remove that need, it just means that you no longer have to base your choice on how much something pays. Maybe that means working part-time in a field that’s always interested you or volunteering for an organization you’re passionate about. Or maybe it’s running for your local school board or working on a big community project. Whatever it is, find something that will engage you and leverage your time, treasure and talents. What people really need, according to Frankl, is “the striving and struggling for a worthwhile goal, a freely chosen task.”
Through experiences and relationships. Retirement (and life) is at its best when we have loving, healthy relationships with friends and family and we are engaged in meaningful pursuits.
Through challenges or suffering. This one might seem a bit counterintuitive at first, but if you think about the times in your life that made you who you are, that taught you the most, that filled you with pride and a sense of accomplishment, my guess would be that a lot of those times grew out of a significant challenge, heartbreak or tragedy. Frankl believed that we should welcome challenges and suffering, not because they’re fun, but because they can often bring meaning and growth. He knew that we can’t always control our circumstances, but we can always control our response to our circumstances. That from a guy who was in a concentration camp and found a way to redeem his suffering and use it as the soil from which he grew his philosophy, vocation and life’s meaning.
“Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom.” – Viktor Frankl
So as you move toward retirement, absolutely plan on doing fun and interesting things. Splurge on yourself. Be a little selfish. Just don’t treat the pursuit of pleasure as your ultimate goal. If you do, you’ll likely be disappointed. Instead, seek meaning and you’ll likely find pleasure and happiness as well.
When it comes to retirement, you absolutely want to dream big. Just don’t forget how important it is to eventually get those dreams off the drawing board. Here’s a simple framework that can help. It’s called the 4 Disciplines of Execution (4DX for short) and was developed by several people at FranklinCovey and discussed in their book by the same name.
Discipline #1: Focus on the wildly important
The authors of 4DX write: “The more you try to do, the less you actually accomplish.” It you try to do too much, very little gets done and the things that you do, don’t get done well. Concentrate your efforts on a few wildly important goals so you can do them well.
It’s up to you to choose what “wildly important” things to
focus on when it comes to retirement. Here’s
my suggestion, informed by almost 25 years of helping people plan for
retirement: Focus on money and meaning. The
money will help you sleep at night (and fund the type of retirement you want). The meaning will give you a reason to get out
of bed in the morning.
Discipline #2: Act on lead measures
Once you identify your wildly important goals, you need to
measure your progress toward achieving them. The authors of 4DX suggest there are two types
of metrics you can use to measure your progress: lead measures and lag
measures. Lag measures track the thing
you’re actually trying to achieve. In our
example above, having enough money to fund your retirement was one of the
goals. A lag measure would look at
whether you’ve reached that goal.
Unfortunately, that comes too late to be helpful. Instead you want to track lead measures. Those are the behaviors that eventually lead
to successful lag measures. So in our
example of money, lead measures could be things like 401k contributions,
savings rates or investment returns.
Discipline #3: Keep a compelling scorecard
“People play differently when they’re keeping score,” the
4DX authors write. The scoreboard brings
out our competitive spirit, drives us to stay focused on lead measures and
gives encouragement when we see progress toward the ultimate goal(s). Returning to our example, maybe your scorecard
tracks each pay period that you were able to save a certain percentage of your
income. Or if you’re tracking meaning,
maybe your scorecard tracks every time you have a date night with your spouse,
take a trip or work at learning a new hobby.
Whatever your lead measures, keep a scorecard to track how you’re doing.
Discipline #4: Create a cadence of accountability
In the final discipline, the 4DX authors say that you need to put in place a “rhythm of regular and frequent meetings of any team that owns a wildly important goal.” Depending on your goal, that “team” could just be you or it could include others like your spouse, financial adviser, friends, children, etc. Meet regularly with whoever has a vested interest in the outcomes you’re trying to achieve so you can track your progress and hold each other accountable.
Dreaming without doing is a recipe for disappointment. The 4 Disciplines of Execution will help you
turn your retirement plans into reality.
Quick Note: I recently posted a video to YouTube on the 8 Habits of Successful Retirees. If you haven’t seen it yet, you can click the link to watch it and click “Subscribe” to see future videos.
When I heard about the fire at Notre Dame Cathedral in Paris
I, like everyone else, was extremely saddened.
I’ve been inside the church before.
Looked at the beautiful stained glass.
Listened to the choir sing.
Marveled at the ornate structure and priceless artwork. I’m happy I got a chance to see it, but sad
for the loss to the French people and future generations of visitors.
As I was thinking about it last night, however, another thought came to mind. The cathedral survived for 800 years and it was a shock to see it go. You and I will survive for only about 80 years and the end won’t really be a shock because we all know our time here on earth is limited. Someday, you and I will be the “lost cathedral” that those around us mourn. Subtract your current age from 80 and that’s about how much time you have. Some a little more, some a little less. Really understanding that should give you a sense of urgency and cause some important changes in your life. It should change your perspective, your actions, your relationships, your willingness to reconcile, your worries, your fears, your priorities and any number of other things. Don’t let that lesson pass without internalizing it and applying it in your everyday life.
“Show me, Lord, my life’s end and the number of my days; let me know how fleeting life is.” – Psalm 39:4
P.S. If you’re interested, here’s an article I wrote a while back on my trip to Paris.
In January I wrote a lot about health. You can’t be unhealthy—mentally, emotionally, physically—and have a great retirement. While that’s true, it’s also true that you are fighting a losing battle.
No matter how much kale you eat or how many marathons you
run, your body is gradually breaking down.
Mine too. In science, this is
called entropy. Everything is moving
from order to disorder. You can slow the
process through your actions and decisions, but you can’t stop it. How should this affect how you live?
First, don’t let it depress you. Yes, your time is limited, but to paraphrase Seneca, you have plenty of time if you use it wisely. Second, stop waiting. Delayed gratification is overrated. Decide what you really want out of life and start taking those plans very seriously. Retirement isn’t about how many birthdays you’ve had or whether or not you punch a time clock. It’s an intentional way of living that prioritizes freedom, fulfillment, purpose and relationships. It starts today and is an incremental process of aligning your lifestyle and actions with your highest priorities.
Bottom line? Do
everything you can to get and stay healthy, but don’t stop there. Make the most of those extra years. Start today.
“We have two lives. The second begins when we realize we only have one.” – Confucius
Happy New Year! It’s that wonderful time of year when we all get a blank slate and a chance to make a resolution or two. That got me thinking about actions and aspirations. What if I told you that my goal for 2019 was to become an Olympic swimmer, but I never got in the pool? Or if I said I wanted to write the great American novel, but never bothered putting pen to paper? How confident would you be that I’d reach my goal? Not very, right? That’s because most people realize that major accomplishments require major effort. You’re not going to achieve an exceedingly rare outcome by putting forth a mediocre effort. Said another way, your actions need to match your aspirations.
How about this one: What if I told you I want to retire someday. Big deal, right? Actually, it is. We take it for granted because it has become so ingrained in everyday life, but when you think about what retirement really is, it’s a wonder anyone can do it. Retiring is like saying: “I want to quit my job tomorrow and never work again, but I want to be healthy enough and have enough money to do fun and exciting things and also maintain my standard of living for 30 years or so.” Seriously?! I think most of us have a better shot at the Olympic team.
The 1% Life
I recently saw a video of writer/speaker/businessman Gary Vaynerchuck talking to a young man who was describing the kind of career he wanted—meaningful work that paid handsomely but gave three to four months off each year for travel. He was lamenting that it wasn’t happening and asking for advice. Gary asked him several questions that made it pretty clear that, aside from daydreaming, the kid wasn’t putting forth much effort to get his dreams off the drawing board. This was Gary’s response (and I’m paraphrasing): Look, you’re asking for a 1% life. In other words, a life that is so unique and amazing that only 1% or less of the people in the world get to experience that. What you’re asking for is ridiculous and you’ll have to do ridiculous things to have any hope of making it a reality. So you’re asking for this 1% life, but you’re not really doing anything to achieve that. If you want a 1% life, you need to do 1% things.
To borrow Gary’s phrase, retirement is a 1% life. And if you want to make that 1% life a reality, you need to do 1% things. And I’m not just talking about money. Finding meaning is pretty darn hard as well. There are plenty of retirees who are cash rich and lifestyle poor.
Unfortunately, we often treat retirement like it’s a 99% life that happens to everyone as long as you make a few 401k contributions and maintain a pulse. It’s not that easy. You won’t reach your retirement goals by simply having a certain number of birthdays. It takes financial stewardship, intention, hard work, effort and sacrifice. It takes deciding what you really want out of life and taking those plans seriously. It takes being proactive. It takes experimenting and practicing so you can refine your plans and get good at actually doing stuff. It takes building into your relationships and working on your marriage. It takes eating right and exercising so you can maintain your health. All of those things are in your control, but they’re not necessarily easy. But neither is retirement. It’s rare and unlikely. It’s a 1% life. Are you doing 1% things to get there? Stick around because I’ve got a ton of stuff coming your way this year that will help. Here are two that you’ll see in your inbox soon:
January Health Articles
I don’t care how much money you’ve saved, retirement won’t work without your health. Take care of yourself so you can get out there and enjoy life. Follow along at Intentional Retirement during January and I’ll post several health-related articles and resources to help you start the year off right.
Sometimes you just need a little inspiration. A muse, if you will. With that in mind, each Friday in 2019 I’m going to send out a quick list of the coolest and most interesting things I’ve found that week relating to retirement.
The list might include trip ideas, articles, products, quotes, retirement tips or anything else that looks interesting or inspiring. The goal is to give you a quick dose of motivation as you head into your weekend. Keep an eye out for the first one in a few days.