Retirement often involves making important decisions with incomplete information when the stakes are high. You won’t have everything figured out on Day 1. More likely, you’ll arrive at your ideal retirement through a process of trial and error. You’ll make mistakes. That’s unavoidable. The important thing is that you learn from them. How best to do that?
Ray Dalio is an investment legend on par with people like Warren Buffett. He owns Bridgewater, the largest hedge fund in the world. Ray has a saying:
Pain + Reflection = Progress
In other words, pain is a good instructor and a strong signal. According to Dalio, success is nice, but it just causes you to do more of the same. You don’t learn much from it. Pain, on the other hand, has a lot to teach you. Whenever you make a mistake about anything, you feel some sort of pain. There’s a message in that pain somewhere. It’s hard to see while you’re going through it, but if you reflect on it once it’s over, you’ll probably be able to see what that message is.
As you experiment with retirement, write down these pain points and think about them. What caused the pain? What should I learn from it? What would I do differently in the future? If you do that, you’ll come out with a principle that relates to the people, places, activities or philosophy of your retirement. That principle is the progress in the equation above. It’s the newfound wisdom that gets you a bit closer to your ideal life and retirement. The more you experiment, learn and iterate, the better your odds of having a happy, meaningful retirement. In some ways, you might even learn to enjoy the pain as an indication of progress. Again, Ray Dalio:
“Encountering pains and figuring out the lessons they were trying to give me became sort of a game to me. The more I played it, the better I got at it, the less painful those situations became, and the more rewarding the process of reflecting, developing principles, and then getting rewards for using those principles became. I learned to love my struggles, which I suppose is a healthy perspective to have…”
Memento Mori. In English it means: “Remember that you will die.”
This has been a tough couple of weeks for me. My mom died very unexpectedly after a brief illness. On January 29th, I met her for dinner to celebrate her 67th birthday. We had a wonderful time. On February 5th, she was hospitalized with what turned out to be a terrible infection. On February 9th, she was gone.
One week, we were talking, laughing and telling stories over a nice meal. The next week, in the small hours of the morning, I sat by her hospital bed, held her hand and told her I loved her as I watched her last heartbeat move weakly across the monitor. I don’t have the words to convey how jarringly painful that was.
Still, I’m grateful. Grateful to have had her as my mom. Grateful to have always had a wonderful relationship with her. Grateful to have made some new memories just a week before she died. And yes, grateful for the reminder of mortality. The Memento Mori. One of my favorite verses is Psalm 39:4.
“Show me, Lord, my life’s end and the number of my days;
let me know how fleeting my life is.”
I like that verse because I often need the reminder. I know I’m going to die, but I don’t always live like I believe it. Maybe some of you are guilty of that too. If so, consider this your reminder.
If you died today, would you go in peace without a single regret? Or would you, like most of us, feel bad about the things left undone or unsaid? The relationship that needs mending? The affairs that need to be put in order? Sit with those thoughts this week. Write them down. And then act. You know what you should do. So do I. The challenge is to make sure that knowing transitions into doing and believing becomes behaving. You and I have been given an amazing gift: Today. Use it wisely.
I recently played a game of travel roulette with my friends. We showed up at the airport at 5 am with no tickets and no plans and told the ticket agent we’d go anywhere warm. The only conditions were that the flight had to leave that morning and cost less than $500. After running through half a dozen potential destinations, we ended up with the last four seats on a direct flight to Phoenix. The trip couldn’t have gone better. We had a blast.
This post started out as a handful of lessons and takeaways from that experience. It included my thoughts on spontaneity, the declining cost of distance, the demystification of travel, the benefits of packing light, living a proactive life and allocating your resources based on your priorities. Then I erased all of that and instead decided to write about only one key takeaway: Relationships.
Many times during the trip, as we laughed and had fun, I thought to myself “It’s so great to do stuff like this.” After reflecting a bit more, however, that initial thought evolved into “It’s so great to have people to do stuff like this with.” In other words, the hero of the story isn’t the experience, it’s the people. The friendships.
In What makes a good life? I wrote about the Study of Adult Development that Harvard has been conducting for the last 80 years. The key finding of that study is that relationships and social connections are really, really good for us. Those with close relationships were happier, healthier and they lived longer than those who self-described as lonely or lacking friends.
Psychologist and author Susan Pinker has done research that resulted in similar conclusions. In her popular TED talk “The secret to living longer may be your social life” she discussed the importance of friends. She cited a study that attempted to answer the question “What reduces your chances of dying most?” You can probably guess where this is going. Here are the variables in the study ranked from least powerful impact on longevity to greatest: clean air, hypertension treatment, lean vs. overweight, exercise, cardiac treatment, flu vaccine, quit boozing, quit smoking, close relationships, social integration/interaction. Just like the Harvard study, this research shows that relationships are critical. Ms. Pinker went so far as to say that those who prioritize their face-to-face relationships over time create a biological force field against disease and decline.
Now that we know how important relationships are, each of us should do a little self-examination and reflection. How many close friends do you have? Are you proactive in making and maintaining your friendships? How is your relationship with your spouse, children and other family? How much time, energy and money are you investing in relationships?
All of this obviously has huge implications for your retirement. As I’ve said many times before, retirement is more than a math problem. Money is important, but so are relationships. Don’t take them for granted. They will affect how happy you are and how long you’ll live. Reflect on some practical ways that you can be more intentional with your relationships. Here are a few ideas:
- Focus on the little things. Small gestures can make a big difference. Send a card to say thank you or to let them know you appreciate them. Call to catch up.
- Look for ways to help. Bring a meal when a friend is sick. Be a shoulder to cry on when they’re going through a tough time.
- Organize activities. One way to strengthen bonds is through shared experiences and memories. Organize a book club. Arrange a movie night. Plan a trip.
- Be trustworthy and a good listener. Nothing will end a friendship faster than gossip, backbiting or a lack of empathy.
- Be quick to fix problems. Don’t let small issues fester. Admit when your wrong. Forgive when you’ve been wronged.
- Start a group. We have a close group of friends that we’ve been meeting with every Sunday night for the last 22 years. We had no kids when we started and now the kids outnumber us. We travel together, share meals together, laugh and cry together, pray for and support one another, and generally experience life together. We’ve been through the best and worst that life can throw at you and I wouldn’t trade them for the world. Having a friend is great. Having a group of friends is even better. Consider starting a group around shared interests, activities, life stage, beliefs or whatever.
- Lay the groundwork for retirement. If you’re planning on moving somewhere new in retirement, start visiting that place now to make new friends. Talk with current friends to see if they have any interest in landing there as well.
Note: For help accomplishing the things discussed in this article, you might be interested in my book and organization kit If Something Happens to Me.
It’s been a rough couple of months in the U.S. Devastating hurricanes. Wildfires. Nuclear tensions with North Korea. Charlottesville. Las Vegas. It’s all a vivid reminder that life is uncertain. Have you ever wondered what you would do if you suddenly became the victim of a natural disaster, terrorist attack or other unexpected event like a fire or earthquake? Would you know what to grab if you only had seconds to escape your house? Would your loved ones know what to do if they had to step in and manage your affairs? A little planning now can make a big difference later. Here are 5 key actions you can take to prepare for the unexpected.
Meet with Your Advisers: Having 6 feet of water in your living room is not the time to discover that you don’t have flood insurance. The emergency room is not the place to learn that you need a medical power of attorney. Your funeral is not the ideal time for your spouse to discover that you didn’t have adequate life insurance. Schedule meetings with each of your advisers and let them know that you are trying to disaster-proof your affairs. Ask them to help fill any gaps that exist in your current planning.
Prepare a Grab-and-Go Case: You should organize all your important legal, financial, and insurance paperwork into a file that you can grab quickly if you need to flee your house or your city. Consider including birth certificates, estate planning documents, financial statements, insurance policies (homeowner’s, auto, life, health), Social Security cards, contact information for all of your advisers (program it into your cell phone as well), a list of prescriptions you take, a copy of your driver’s license and some emergency cash. I’ll include a more comprehensive list at the end of this article.
Keep in mind that you may not be able to escape with your important paperwork. Many fires, for example, happen while the homeowners are away. To protect yourself, store backup copies of important documents in a safe-deposit box or with a trusted friend, relative, or adviser. As a general rule, don’t keep anything in your safe deposit box that you may need in an emergency, such as a power of attorney, because boxes are not usually accessible 24-7 and may be sealed temporarily after the box owner dies. It’s a good idea to keep copies in the box, but have readily accessible copies as well.
Prepare a Household Inventory: Recent hurricanes destroyed thousands of homes. Most homeowners will not be able to remember everything that was in their home when filing insurance claims. A simple household inventory listing your home’s contents, or a video walk through of your home, will help avoid this problem. Just remember to store the inventory somewhere other than your home.
Write a letter of instruction: Your will and powers of attorney are formal legal documents designed to put certain people in charge and give them instructions for handling your affairs. There are plenty of things those documents don’t cover, however. For those things, you should write an informal letter of instruction to your spouse or other heirs. The letter can contain things like your funeral preferences, passwords, a “To-do” list, recommendations on how to invest life insurance proceeds, how to disperse certain personal property or heirlooms not accounted for in the will, what to do with pets, or any other explanations or instructions that would help ease the transition through an obviously difficult time. It’s an informal document, so add anything you think might be helpful and periodically update it so it stays current.
Update Your Plan Annually: Change is the one constant in life. Make sure to review your affairs at least annually in order to make necessary updates. Some questions to ask include: 1) Has your marital status changed? 2) Has the value of your assets changed significantly? 3) Have you made any changes to your insurance policies? 4) Have you changed jobs? If you answer “yes” to any of those questions, you should meet with your advisors to update your planning.
Life can change suddenly. By investing a small amount of time and energy into organizing your affairs, you can gain the peace of mind and protection that comes from being prepared.
Document Storage Checklist
- Contact list
- List of checking/savings account numbers
- List of credit card numbers
- Recent statements for all investment accounts
- Insurance policies (life, homeowner’s, renter’s, auto, etc.)
- Will and/or trust documents
- Durable power of attorney for health care
- Durable power of attorney for finance
- Social Security cards
- Copies of birth and marriage certificates
- Passports and copies of driver’s license
- Computer and online user names and passwords
- Safe combination
- Safe deposit box keys
- List of prescriptions you take
- Emergency cash
Safe Deposit Box
- Copies of will or estate plan
- Copies of your powers of attorney
- A list of your insurance policies
- A list of your financial account numbers
- Originals of birth and marriage certificates
- Adoption papers
- Citizenship records
- Military service records
- Vehicle titles
- Real estate deeds
- Mortgage paperwork
- Loan agreements
- Stock and bond certificates
- Certificates of deposit
- Precious metals
- Valuable collectables
- Photographs, video and/or a written inventor of your home’s contents
With a Friend, Relative or Trusted Adviser
- Paper or digital copies of the documents in your grab and go case
- Contact information for you (email, cell phone, etc.)
- Instructions on keeping the data secure
- Contact list for your advisers and heirs should something happen to you.
“Having a secure shelter doesn’t make storms any less dangerous, but it does make them less dangerous to you.”
~ John Mauldin
I’ve helped many people transition into retirement over the years and when I ask a new retiree how things are going, the response is generally positive. That said, retirement is a huge transition and there are always unexpected feelings or emotions that crop up. That doesn’t necessarily mean that there’s something wrong with your retirement. It just means that you’re normal. So don’t be surprised if you feel one or more of the following:
The Problem: I feel guilty.
This is surprisingly common and I’ve seen it manifest itself in two ways. The first is guilt if you’re not doing much or making the most of your time. You finally have some free time and you struggle with how to use it. You feel guilty because watching T.V. or running errands doesn’t quite feel like sucking the marrow out of life.
The second is guilt if you’re doing fun stuff that your friends and family aren’t doing because they’re still working. I’ve actually had clients hesitate before responding to me when I ask “What did you do today?” The answer is “I went golfing” or “We saw a matinee and then went for a walk” but they are hesitant to say that because they know I spent my day behind a desk. When prodded, they say they don’t want to make others feel bad or come across as boastful.
For the first type of guilt, don’t worry! You’ll get better at it. You control a much bigger piece of your time in retirement and that takes some getting used to. Work hard to do things that leave you feeling happy and fulfilled, but keep in mind that not every minute of your day has to be spent bungee jumping or traveling. Sometimes the best way to spend a day is binge watching House of Cards on Netflix.
For the second type of guilt, just allow it to pass. Don’t become an insufferable braggart, but don’t feel guilty about enjoying your life either. You worked hard and made good decisions. Enjoy your time.
The problem: I’m second guessing my decision.
Buyer’s remorse is a real thing. Chances are you’ve felt it if you’ve ever bought a house or had to make some similar big decision and feared making the wrong choice. It can creep up after retirement as well and cause you to question whether you should have retired in the first place.
I have a client who has been dealing with this lately and she shared something that I thought was really insightful. She said, “Whenever I second guess my decision, I focus on why I retired in the first place.” Her choice would have been to work for five more years, but two things happened: Her mom was diagnosed with Alzheimer’s and her grandkids were all at an age when hanging out with grandma was just about the best the thing ever. If she had stuck to her timeline and worked for five more years, there’s a pretty good chance that her mom may no longer be around and her by then teenage grandkids will have priorities other than grandma. In other words, she gave something up, but got something far greater in return. There are pros and cons with most decisions in life. Retirement is no different. Keep that in mind.
The problem: I feel disappointed.
Most of us have an idealized view of retirement. Add years of anticipation to the mix or a personality that enjoys the structure and challenge of work and it’s not uncommon to feel a bit underwhelmed after entering retirement.
The best way to avoid disappointment is to retire TO something rather than FROM something. If all you do is subtract things—work, obligations, commitments—you simply create a void in your life. That void can open you to self-doubt, regret, lack of purpose and boredom. Nature abhors a vacuum. If you take something out, you need to replace it with something else (e.g. travel, school, a second career, hobby, etc.). The goal is not to do nothing. That just creates a void. The goal is to do what excites you.
And test those plans out before you retire. I most often see disappointment arise when a person has prepared for retirement using all lesson and no lab. In other words, all of their retirement plans are in their head or on a sheet of paper, and they haven’t spent any time actually testing and refining those plans. Reality can’t compete with 40 years of idealized assumptions.
The problem: I feel like a fish out of water.
No matter how prepared you think you are for retirement, you will probably still struggle. It’s a huge transition. The routine you’ve had for the last 40 years is out the window. That can be a bit disorienting for many people.
When talking with a client recently, she compared retirement to becoming a parent for the first time. “Before becoming parents we read books, painted the nursery, sought advice from other parents and bought all the cribs, carriers and countless other things that parents need. We thought we were totally prepared. And then we had our first child and all that went out the window. Retirement is similar. As prepared as you think you are, you really can’t grasp what it takes or what it will be like until you’re actually living it. Your experience will be totally different than the guy next door.” Great advice. Yes, there are tons of things that you can and should do to prepare, but the battle is always different than basic training. Don’t get discouraged. You’ll figure it out and get better at it with practice. Focus on living the life that you want to live. Imagine your ideal life and then work backwards from there to figure out the most direct path to where you want to be. Focus intently on the things that matter to you and throw yourself into them wholeheartedly. That kind of focus and tactical thinking will help you rapidly flatten your learning curve and smooth your transition into retirement.
Remember that retirement is not a date on the calendar, it’s a life stage that will last for years. Think back to when you first became an adult. Were you better at it at 28 than you were at 18? Of course. The same will be true with retirement. It might feel a little awkward at first, but you’ll get better at it over time.
In business, a sunk cost is a cost that has already been incurred and can’t be recovered. Economists tell us that we shouldn’t factor these costs in when making a rational decision about how to proceed. Since we’re human and hate losses, however, we often use these previous costs as justification to invest more.
The more we invest in something, the harder it becomes to abandon. To change would be to admit that those previous investments were wasted. That’s a tough pill to swallow, so we engage in what economists call a sunk cost fallacy or what psychologists call irrational escalation. You and I might more easily refer to it as throwing good money after bad. Or for my British readers, in for a penny, in for a pound.
Most of the discussion around sunk costs has to do with money, but money isn’t the only metric. Time is another resource we invest. So is effort. We invest those things in relationships, life pursuits, plans for retirement, a career. Sometimes those investments pay off and get us to where we want to be. Other times we realize, if given the chance to do it over, we would have chosen differently. In those cases, just like the business person should not throw good money after bad, we should not throw good life after bad. Or good time after bad. Or good friendship after bad.
The time, energy, effort and emotion we previously put into all those things are sunk costs. We shouldn’t use the fact that we invested badly as an excuse to continue to invest badly. Yes, changing course will force you to admit the mistake. That might cause pain, stress, confrontation or ridicule, but it will be temporary and you will have the opportunity to move forward in the right direction. If you continue in your error, you won’t have the short-term moment of pain as you admit error, but you will have the long-term pain and regret that comes from persisting in your error. Which is worse? The latter, by far.
It’s Monday morning. You’re starting a new week. Maybe you’re heading off to work. Maybe you’re already retired. Either way, be honest with yourself. Is there anything on your calendar this week that you’re doing, not because you want to or because you think it’s the right thing for you and your life, but because you’ve invested a bunch of time/money/life pursuing that path and you don’t want to admit failure? I do. This article is your permission to stop. If not today, someday soon. For today, at least make a decision if not an action. Decide “this is not what I want to do.” And then start figuring out exactly what it is you do want and what needs to change to make that a reality. In short:
- Admit your mistake. Choose temporary over permanent pain.
- Decide what it is you really want out of life.
- Have the courage to pursue that, regardless of what came before.