Hi everyone! Long time no talk. I hit pause on my writing for a bit to focus on some big changes in my world. As many of you know, in addition to my writing, I work as a financial planner. Toward the end of last year, I decided to go out on my own and start my own financial planning company. It’s something I’ve thought about doing for a long time, but never pulled the trigger.
Then last year I thought, what better time to do it than during a pandemic induced global shutdown! Seriously though, I’d been with my previous company for 25 years, enjoyed the people and the work and made a good living. It was a tough decision to move on, but it ended up being one of the best decisions I’ve ever made (more on the new company at the end of this article).
I’m sure many of you have faced similar forks in the road or are maybe even contemplating one right now. So for my first article back, I thought I’d write about the best advice I got and lessons I learned as I contemplated the change and then took the plunge. Hopefully, it will help some of you
Don’t let fear make your decision. Pretty much anything you do in life that’s worthwhile and difficult will get you out of your comfort zone. In other words, it’s going to scare you. That fear is a good indicator that you should be paying attention. It’s a reminder that you should consider your path carefully. Just don’t give it veto power over your decision making. If you let fear make your decisions, you’ll never do anything worthwhile. Choosing unhappiness over uncertainty is often a bad choice.
Sometimes you’re not ready to do it until you’re ready to do it. When I told my brother about my decision to start the company, his first response was “It’s about time.” Then he laughed and said he was only kidding. He’s a successful business owner and he said looking back on it, he wasn’t ready to start his business until the day he started it. Had he started it 6 years or even 6 months earlier it would have failed. As I said before, don’t let fear hold you back, but also don’t start before you have the things you need to make it work. Timing is important.
Sometimes the only difference between a huge success and the status quo is just a willingness to say yes. I have a friend who coaches founders of very successful organizations. He told me it’s easy to look at these people and think that their success is a direct result of their skills, hard work or brilliance. Truth be told, he’s often surprised by how normal they are. What they have, however, is a willingness to try. When the time came where a decision was required, they said yes and took the risk. You don’t need to be Albert Einstein or Elon Musk to succeed at something. You just need to put your yes on the table.
Sometimes the best time to do something is when things look their worst. When I talked to my dad about it, I asked if I should wait because of all the uncertainty surrounding the pandemic. He thought about it for a second and then told me the story of when he started his business back in the early 70s. The economy was in terrible shape and he’d just been laid off. Unlike me, he didn’t have much choice about what came next. No one was hiring and he had a growing family to feed, so he started his own company. Looking back on it years later, he realized that was the perfect time to start. His opportunity was greatest when he said yes to something that everyone else was saying no to.
Sometimes older is better. We tend to venerate youth and think of our 20s and 30s as the ideal time of life to take big risks. That’s not always the case. Yes, as you get older you have more responsibilities and more at stake, but you also have more skills, wisdom and life experience. When discussing my situation with a close friend he said “You’ve been doing this for 25 years. There are very few corners you can’t see around.” It’s easy to get complacent and play defense later in life, but truth be told, that’s often a great time to go on offense.
Get comfortable with discomfort. As we age, we often get comfortable. We make more money. We upgrade our house, cars and lifestyle. We get settled into a career. As this happens, we’re less willing to rock the boat. Less willing to take risks. More willing to compromise. Sometimes our fear of discomfort can keep us from doing something that we need to do. If you take a big risk or make a significant change, I can almost guarantee that you’ll go through a period of discomfort. There will be stress, uncertainty, long hours and a big learning curve. But there will also be growth, excitement, challenge, fulfillment and payoff.
Focus on taking the next step. A big change often means a long To-Do list. Don’t get distracted or overwhelmed. Just focus on what’s next. 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 that can be broken down into a series of logical steps. Each day ask yourself: “What’s important now?” What’s the next step that needs to be done to advance the process? Whatever that is, that’s your focus. Not the 500 other things on your list.
Accept Reality. Sometimes an option you’re considering depends on someone or something else. If you’ve tried that door and it stays closed, however, that’s probably a good indication that your way forward is on a different path. Give thanks for the clarity, accept reality, make your decision and move forward.
Don’t burn bridges. Ever. If change takes you someplace new, leave on good terms. Act honorably. Be transparent. Wish everyone well and move on.
How about you? Is there a change you want to make or a new adventure you want to pursue? There’s no time like the present. Don’t talk yourself out of it just because it’s scary or because you’ve had a few birthdays. Decide what you really want out of life and then start taking those plans very seriously.
About the new company
In my financial planning practice, I focus almost exclusively on retirement planning. For 25 years, I did that work at another company and then did all my writing about retirement in books, newspaper articles and at this website. I always thought it would make sense to do those things under the same umbrella, so when I made the switch, I jumped through the hoops necessary to turn Intentional Retirement from a publishing company into a financial planning company. You won’t notice much change going forward. I’ll still post articles regularly at the site and there’s no cost or obligation to follow along. That information is general in nature, however, and is not intended as advice for your specific situation. If you enjoy the articles, but want to do more detailed planning for your retirement, now I can likely help with that as well. Just reach out to me at Intentional Retirement HQ and we can talk further. No pressure obviously, but feel free to touch base if you’d like more information. Thanks for following along. Like I mentioned earlier, the transition went amazingly well and I’m settled into a new day to day rhythm. With that in the rear view mirror, I’m looking forward to writing more regularly again and I’m excited for the new adventure.
A quick housekeeping item. As a result of the changes described above, I had to make a few updates to the site’s Terms of Use, Disclaimer and Privacy Policy. Feel free to review them when you have a chance.
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).
Hi all. Life got busy and Part 3 of my series on simplifying your life and executing on the things that are most important to you is taking a bit longer than expected. I know. Ironic isn’t it? Anyway, that post will be up soon. Meanwhile I wanted to give you a few quick thoughts on some recent research related to when we expect to retire vs. when we actually retire.
Expectations
When do you plan to retire? If you said mid to late 60s, you have a lot of company. Most people plan on working until then. Here are the specifics. According to the latest iteration of the EBRI Retirement Confidence Survey, 75% of people said they expect to work until at least age 65. A full 38% expect to work to age 70 and beyond. When asked why, some gave lifestyle reasons and some gave financial reasons. In other words, for some it’s a choice. They don’t need the money, but they enjoy the challenge, engagement and structure that work provides. For others it’s a necessity. They need the money. The paycheck (and in many cases the healthcare) they earn from working longer is an integral part of their retirement funding strategy.
Reality
Do those expectations match up with reality? In a word, no. In addition to tracking when people expect to retire, the EBRI study also tracks when they actually retire. And as you may have guessed by now, most people retire much sooner than expected. The study found that 76% of people retire before age 65 with the median retirement age at 62. Almost 40% retire before age 60 (vs. 9% expected) and a scant 4% work to age 70 and beyond (vs. 38% expected). When asked why, some said they decided they didn’t really want to work after all. Others had a health issue or were the victim of downsizing and were forced to quit sooner than expected.
Regardless of the reasons, when expectations and reality are so far off, it causes problems. It reminds me of something Mark Twain once said: “It ain’t what you don’t know that gets you into trouble. It’s what you know that just ain’t so.”
What if you retire earlier than expected? You’ll need to figure out how to bridge the healthcare gap until you’re eligible for Medicare. You may need to claim Social Security early and take a permanent reduction in benefits. You will need to fund your lifestyle for several years more than expected. You’ll need to find other ways to fill your time, find purpose and get social interaction than heading to the office. Those are some serious issues. So as you plan for retirement, outline what you want and what you expect, but always be asking “What if it doesn’t work out that way?” Have a contingency plan. Be ready to pivot or call an audible if necessary. Then if expectations and reality diverge, you’ll be able to adjust and keep your plans on track.
Have a great week! As I mentioned earlier, Part 3 will be on the way soon. Also, we’re heading to Iceland in a few weeks to do some exploring, so I’ll probably write a post on that that includes some stories as well as some of the tools, tricks and strategies I use for planning trips. Until then, stay intentional and touch base if there’s ever anything I can do to help you.
Based on the huge response to my initial “Mini-Retirement” post, I think I can safely draw two conclusions:
#1: There are A LOT of you who don’t buy into the “save the best for last” philosophy of retirement. No surprise here. IR readers are all about living intentional rather than conventional lives.
And…
#2: While you love the concept, some of you are a little uncertain how to make it work for you. In other words, the “want to” is there, but the “how to” is a little fuzzy.
The comment I heard most went something like this: “I love the idea, but I don’t think I could make it work because of my job.” Fair enough. I’m fairly attached to my paycheck too. The good news is that living an interesting life and doing meaningful work aren’t mutually exclusive. If you want to make it happen, you can. Below are some ideas to get you thinking how.
Making mini-retirements work with work.
Note: Not every idea will work for every person, but I’ll bet there is more than one thing on the list that will work for you.
Take the easy wins. Many of us have a certain amount of paid vacation and sick time each year. Some companies even allow you to bank unused time year after year. Rather than spreading those days out in one or two day increments throughout the year, take it all at once. For many, this idea alone will be enough to move mini-retirements from pipe dream to possibility.
Rearrange your hours. Some jobs have a great deal of flexibility. Others are a bit more rigid and follow a basic formula of trading time for money. For those with the latter, your employer’s primary concern is that you’re putting in the hours and doing the work.
A full time job is usually 2,000 hours per year: 40 hours per week for 50 weeks with a 2 week vacation. What if you flipped that equation and worked 50 hours per week for 40 weeks and then took 12 weeks off? Not sure your employer would go for it? Propose 43.5 hours per week for 46 weeks and then take 6 weeks off. Or even 41.7 hours per week for 48 weeks and then take four weeks off. With any of those options your employer is paying you exactly the same amount of money, you’re working exactly the same amount of hours and you’ve got time each year for a mini-retirement.
Ask for your raise to be paid in time off. Companies have been watching their pennies pretty closely since the meltdown in 2008. Consequently, your boss might not be very receptive if you ask for a raise, even if you deserve one. You could probably improve your odds if you ask for that raise to be paid in time off instead of dollars. It’s a win-win. The company keeps a lid on expenses and you get more time off.
Optimize your schedule. Many of us have jobs where we’re not doing the exact same thing day in and day out. There is an ebb and flow to our tasks and responsibilities. We have busy times and slow times throughout the year. Times that require a lot of face to face interaction and times where any old computer and phone will suffice. My job is a lot like this. It gets busy and interactive during client reviews or when I’m doing seminars, but summers and holidays are usually dead. It wouldn’t take much for me to rearrange my schedule so that the things I need to be present for are all concentrated in certain months and the things I can do remotely are shifted to a mini-retirement month. This is a good option for those who want to take extended time off while still maintaing momentum at work.
Batch tasks. Improved productivity means that you can do the same amount of work in less time. If you have one of those jobs that is more focused on completing certain tasks rather than putting in certain hours, batching can be a big help. Most of you probably already use batching when you do things like pay bills. Rather than grabbing your checkbook every time you go to the mailbox, you save up that month’s bills and then pay them all at once. Are there parts of your job that you can batch in order to be more efficient? Once the work is done, what’s keeping you behind your desk (besides inertia)?
Use technology for location independence. For many of us, our jobs are perfectly designed for the people who did those jobs 10 years ago. We commute to a special building and then sit in a fabric covered box (cubicle) so we can use a computer and a phone (sounds glamorous!). Technology has made the building and the box, if not obsolete, at least less important.
We still need the computer and the phone, but technology like Skype, Go To Meeting, wireless internet, cloud computing, instant messaging, Google Voice and collaboration software (e.g. Asana, BaseCamp) have made it possible for many of us to do some or all of our job from just about anywhere (a.k.a. location independence).
Being gone for a year might not be realistic, but would it be possible to take a month or two off and use technology to keep up with important projects and deal with urgent issues even while you’re gone?
Negotiate a remote work agreement. According to Forrester Research, more than 34 million people work remotely. That number is expected to hit 63 million by 2016. I’m skeptical that most bosses would be ok with you working in your pajamas from home 365 days per year, but if you combine this idea with one or more of the previous ones, I’m guessing that a reasonable boss would be willing to allow you to work remotely for a fixed period (say 6 weeks) and only count part of that time as vacation.
Sacrifice. All of the options up to this point involve still getting your paycheck. If you didn’t find something on the list that works for you, maybe it’s time to take more drastic action. This could include taking unpaid time off or quitting/changing jobs altogether. Obviously, that’s a little more painful because it involves change and sacrifice, but I think it’s important to ask yourself this: “If my current job keeps me from living the kind of life I want to live, should I really stay there for the next 10, 20 or 30 years?” If the answer is no, a change may be in order.
Putting it into practice
Anytime you’re trying to wrap your mind around something that is unconventional and complicated, it’s helpful to know that it’s possible. That’s why it’s been so encouraging to me this week to hear how some of you are working to make mini-retirements a reality. There’s the couple planning to move to Spain for a year with their kids. There’s the family who, after reading my initial post on mini-retirements, read it aloud at the dinner table and had a mini-retirement to New York booked by the end of the week. There’s the friend who is consistently updating me while living in the Congo for three months as a volunteer for Mercy Ships. These stories and more are good reminders that, with a little planning and effort, we don’t need to defer our dreams until “someday.” I hope you’ll join in with the rest of us. Feel free to leave a comment or question on the site and touch base with me if there’s ever anything I can do to help.
Late last month an advertising executive (a real life Mad Man) named Linds Redding died of esophageal cancer. After being diagnosed in 2011, he would regularly write about the disease, his treatments and his thoughts on life at his blog.
Earlier this year he wrote a post called A Short Lesson in Perspective in which he reflected on how wholeheartedly he had thrown himself into his career over the years. As he rapidly approached the premature end of his life, he wondered aloud if it was worth it.
His insights and conclusions were so raw and honest that I wanted to excerpt a small portion of his post below so that you and I could reflect on our own priorities as we live life and plan for retirement. One day (hopefully not soon) we will be where Linds was when he wrote that essay. How great would it be if we could heed his words of warning so we could look back on our life with pride, satisfaction and few regrets?
A quick note: Linds refers to something called “The Overnight Test.” When creating advertising campaigns, he and his team would often let ideas simmer overnight. If it still seemed like a good idea the next day, they would say that it passed “The Overnight Test.”
From A Short Lesson in Perspective:
“Countless late nights and weekends, holidays, birthdays, school recitals and anniversary dinners were willingly sacrificed at the altar of some intangible but infinitely worthy higher cause. It would all be worth it in the long run…
This was the con. Convincing myself that there was nowhere I’d rather be was just a coping mechanism. I can see that now. It wasn’t really important. Or of any consequence at all really. How could it be? We were just shifting product. Our product, and the clients. Just meeting the quota. Feeding the beast as I called it on my more cynical days.
So was it worth it?
Well of course not. It turns out it was just advertising. There was no higher calling. No ultimate prize. Just a lot of faded, yellowing newsprint, and old video cassettes in an obsolete format I can’t even play any more even if I were interested. Oh yes, and a lot of framed certificates and little gold statuettes. A shit-load of empty Prozac boxes, wine bottles, a lot of grey hair and a tumor of indeterminate dimensions.
It sounds like I’m feeling sorry for myself again. I’m not. It was fun for quite a lot of the time. I was pretty good at it. I met a lot of funny, talented and clever people, got to become an overnight expert in everything from shower-heads to sheep-dip, got to scratch my creative itch on a daily basis, and earned enough money to raise the family which I love, and even see them occasionally.
But what I didn’t do, with the benefit of perspective, is anything of any lasting importance. At least creatively speaking. Economically I probably helped shift some merchandise. Enhanced a few companies bottom lines. Helped make one or two wealthy men a bit wealthier than they already were.
As a life, it all seemed like such a good idea at the time.
But I’m not really sure it passes The Overnight Test.”
As some of you may know, I write a column on retirement for the Omaha World Herald. Today’s column was an open letter to the Class of 2012. Since many of you have graduates in your life, I thought I’d pass it on so you could share it with them. Here’s a link:
Also, each month I post a quick summary of the new articles at Intentional Retirement for anyone who may have missed something. May’s articles are below.
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