To optimize something is to “make it as perfect, effective
or functional as possible.” That’s a
good goal for retirement. After all, you
only have one shot at it, so make it the best it can be. Here’s how to optimize your life for
retirement.
Control your time. Think of life as a pie chart that is divided into time you control and time controlled by others. The goal is to gradually shrink the piece of the pie that is controlled by others. The smaller that piece becomes, the more “retired” you are. The more time you control, the more you can focus on the things you want to do rather than the things you have to do. How do you control more of your time? The primary way is to be financially independent, so make sure your finances are on track.
Optimize your location. The American Enterprise Institute recently published a study on how location affects happiness. They concluded that people who live closer to the things they want to do are happier, more involved, more satisfied with life and less likely to be lonely. Kind of a no brainer, right? If you love to ski, live close to the mountains. If you want to spend time with your kids, live in the same city. And the study found that proximity works for small things too. If you live near a multitude of amenities—the coffee shop, gym, community center, restaurants—you’ll likely get out more, feel less isolated and be happier.
Hack your health. A hack is a trick or method that increases efficiency. I have a friend who recently started a physical therapy practice that focuses on prevention rather than recovery. I think the idea is a brilliant hack. Similar to the dentist, you go in twice a year for evaluation and a checkup. He takes some baseline measurements and looks for problems. Then he asks what types of things you like to do (e.g. hike, ski, golf, garden, run, tennis, etc.) and gives you exercises that will allow you to do those things for as long as possible. I like to hike, so we’re working on leg strength, balance, joints and endurance. The idea is to keep me healthy and active doing the things I want to do for as long as possible. How about you? What types of things do you want to be able to continue doing as you age? Schedule some time with a local physical therapist and ask them to help you optimize your health for the lifestyle that you want to live.
Be specific. At the risk of sounding obvious, you have a much greater chance of accomplishing a goal if you know exactly what it is you want to do. If you want your retirement to run smoothly, make specific plans.
Take some at bats. One of the biggest mistakes I see some people make is that they constantly defer their dreams. The best advice I can give you today is to start taking some at bats. Right now. Even if you’re not retired. Especially if you’re not retired. The worst that can happen is that things don’t work out and you get rolled a little bit, so you dust yourself off and try something different. Ironically, that’s also one of the best things that can happen, because that failure is feedback. It turns out we’re pretty terrible at knowing what’s going to make us happy. The more stuff you try, even if you don’t end up liking it, the better idea you’ll have of what’s important to you, who’s important to you, what you like, what you dislike, what makes you happy and what you’re passionate about. That makes you more self-aware so you can design an optimized life that takes you where you want to go.
Be a system thinker. 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, healthcare, distribution planning, tax planning, 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. To optimize your life for retirement, make sure that each part of that system is working as it should. Some parts you’ll be able to handle on your own. For other parts, you’ll likely need to enlist the help of people like your accountant, financial adviser or doctor.
Simplify. As you take more control of your time and plan your transition into retirement, make a “Stop Doing” list. Certain things will no longer be relevant to your new plans. Go through all your activities, obligations and commitments and decide what needs to go. Once finished, your schedule will be much less cluttered and you will be able to use your time more efficiently. Do the same thing with the physical clutter in your life.
Retirement is not a one size fits all proposition. By focusing on the items mentioned above and
tailoring them to your unique situation, you can optimize your life for the
retirement that you want.
We just wrapped up Labor Day Weekend here in the U.S. That is the unofficial end of summer and it
means we only have four months to go before we finish up this year and start a
new decade. That’s plenty of time to get
a few things done and finish the year strong.
Think about any financial, investing, lifestyle, relationship, health or retirement goals you had for 2019. How have you done so far? How can you make the most out of the next four months? Focus in on one or two areas where you’d like to make progress before year-end and get to work. Maybe that’s making a written retirement plan, increasing your savings rate or making a plan to finally get debt free. Maybe that’s repairing a relationship, starting a new workout program or learning a new skill. Maybe you’ve reached your health deductible for the year and it’s a good time to schedule that procedure. Or maybe it’s time to plan that trip (always a good idea). Think about how good it would feel to finish the year with a few major items checked off your To-Do list. Think about how much progress you could make in 2020 if you ended 2019 with solid momentum.
Part of my job here is to help people avoid
complacency. To push you to have a tough
conversation with yourself about what you really want out of life and to
encourage you to take those plans really seriously. Consider yourself pushed. Touch base if there’s anything I can do to
help. And props for everything you’re
doing so far. The fact that you’re
following along at this site tells me that you’re no slouch. Saving for retirement and being intentional
with life are not easy tasks. Most
people don’t do it. You’re in that small
minority of people who are laying the foundation for their future through
discipline, hard work and good stewardship.
Well done! Keep up the good
work. Finish the year strong.
The markets had a great first half of the year. Stocks were up. Bonds were up. Both U.S. and International markets were up. Everything seemed to be working. Unfortunately, the second half has had a rockier start. And given the headlines (e.g. trade war, weakening international economies, excess debt loads, inverted yield curve, etc.), that volatility could continue for a while. Given that, I thought it would be a good time to scroll through the archives at Intentional Retirement and review a few past articles on how to deal with volatility, keep your emotions in check and make sure your retirement plans stay on track. Even though they were written during past periods of volatility, the lessons are just as relevant today.
Hi everyone. Sorry it’s been kind of quiet around here. I’ve been in summer mode and haven’t done much writing. I just got back from a hike with my daughter through the High Divide – Seven Lakes Trail in Olympic National Park (see above pic) and the hike got me thinking about some of the research I’ve read on surviving in the wilderness.
A common thread running through most survival stories is the
idea of decision drift. Most times you
don’t just make one terrible decision that puts you into a “Do or Die”
scenario. Rather, you make a series of
small decisions that get you further and further from where you need to be
until you come to the sudden realization that you are lost or in trouble. The sense of panic that accompanies that
realization often causes people to make more irrational decisions that get them
deeper into trouble.
Decision Drift and Retirement
Decision drift isn’t exclusive to back country hiking. It can affect you on your path to retirement as well. Most of us do a pretty good job avoiding those colossally bad decisions that can derail our life. We’re less good at those myriad small decisions that seem unimportant at the time but, when taken cumulatively, can derail our life or get us far from where we want to be. Those decisions can greatly affect our relationships, health, financial well-being and opportunities and we often make them without a lot of intention because:
We think they’re unimportant
We feel pressured or tempted
We’re temporarily willing to compromise
We’re unclear on what we want
We haven’t considered the consequences
We failed to decide so someone else is deciding for us
All of those little decisions/indecisions can quietly lead you away from the life you want to live. You wake up one day and realize you’re lost. You ask yourself: “Where am I? How did I get here? Whose life am I living anyway?” Avoid that sinking feeling by recognizing that those little decisions are big. Pay attention to them and course correct as needed. Never forget that most decisions – big or small – are directional. They lead you toward certain things/people/experiences/opportunities and away from others. Don’t take them lightly. Be intentional with your decisions so they take you where you want to go.
Deciding when to retire isn’t always easy. Most people just base it on their birthday, but there are other factors you should consider as well. In the video below, I’ll give you seven signs that you’re ready to retire.
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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.
Pros
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.
Cons
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.
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