Canadian Finance Blog

Retirement Is About More Than Just Money

Posted: 05 Oct 2010 02:00 AM PDT

I've been writing about retirement for a long time but most recently, I was asked by the HRIA (Human Resource Institute of Alberta) to write about the non-financial side of retirement planning. I dug into the vault and summarized some great retirement lifestyle articles. Here's what I wrote along with links to some of my past articles.

When you hear the word retirement, what do you think of? If you were to get a retirement plan done, who would you go see? Would you go to a bank? A financial advisor? Most people would, because we can't help but relate money and retirement together. Because of that, there is a real financial bias when it comes to retirement planning. Most of the information about retirement comes from the financial industry. Think about it, when you ask people if they have prepared for retirement, most people immediately assume you are asking if they've saved enough money.

Although money is important to retirement it is not everything. If you don't believe me, think about people in your own lives that you know who are retired successfully and happily and they don't have millions and millions of dollars in their bank account. In my 20 years in the financial industry I have also worked with people who have lots and lots of money but are not happy in retirement. Why is that? It's because a successful retirement is about more than just money.

The best years of your life

So what's it going to take to make retirement the best years of your life? If it's not just about money, what's it about?

For me, successful retirement is about the harmonization of two issues – money issues and lifestyle issues. Far too often these two issues are not in sync. For example, too big a lifestyle and not enough money. If you think about it, how can you really know how much money you need if you have no idea what lifestyle you want? If you want to travel as a retirement goal, there is a big difference between traveling to the coast for a few week versus taking a two month trip to Europe first class all the way. It is critical for people to understand that you cannot properly plan for retirement without some consideration for lifestyle issues. It's not just about how you spend your money, it's also about how you spend your time.

Retirement is changing

Retirement has changed a lot over the past 30 years. 30 years ago people retired at 65 and statistically lived till 72. Retirement happened literally because you were old. Times have changed. People are not only retiring earlier but they are also living longer. Retirement is no longer about sitting on the couch and watching TV. Retirement today is about keeping busy doing what you love to do.

Society has put into our heads the notion that we should all strive to retire early – Freedom 55. What many people have discovered is early retirement is not all that it's cracked up to be. The upcoming retirees will be the healthiest group of retirees in history. The 55 to 65 year old of tomorrow will still be young. While golf and tennis and naps have their places, they’re not enough for most boomers. They will be capable of so much and the last thing they want in retirement is to become bored, depressed, take little pills and die grumpy. As humorous and blunt as this may be, it is a real risk!

Building a Retirement Vision

So how do we prevent boredom from happening? Many people go back to work. That's a new trend in retirement too!

The starting point of a retirement plan is to develop a retirement vision. When someone asks you “What are you going to do when you retire?” do you know the answer? In our retirement workshops one of the things we teach people is the importance of having an answer to this question. It's about developing a retirement vision. The clearer your vision, the better the planning process will be.

Have you ever tried to do a jigsaw puzzle? What’s the most important piece in a jigsaw puzzle? Some would say the first piece. Others would say the corners. Some have even said the last piece. For me, I think the most important piece is the picture on the box. Think about it. Have you ever tried to put together a puzzle without the picture on the box? Where would you start? The puzzle is not impossible without the picture on the box but it sure makes things a whole lot harder and more time consuming. Think of the picture on the box as the vision.

Building your retirement vision

Here are some thought provoking questions to help you build your retirement vision.

Business Card. When working, the business card is often used as a quick identifier. Far too often, people who identify themselves by their work lose their identity once they stop working. So ask yourself, what would your business card look like when you retire? For Rein Selles, founder of Retirement Challenge, he has a business card that says his title is Captain. On this card is a cartoon of Rein sailing on his boat. This tells you a little something about Rein and his retirement dream.
Eulogy approach. In this exercise, answering a few questions about your eulogy will help you with your vision by giving you a better sense of who you are and what is important to you. Ask yourself these questions. If you were to write your eulogy, what would you say? What would you want to be said? If you were to write your eulogy 10 years from now, what would you want it to say?
Retirement Activities Brainstorming. Part of establishing a retirement vision is to get a sense of what kinds of things you plan to do in your retirement. In other words, what are you going to do with your time? In this approach, you want to brainstorm different activities. For example, what is your retirement wish list? What do you plan to do with your time in retirement? If you want to dig a little deeper, you may ask yourself what activities you enjoy now. You may also ask yourself what you enjoyed in the past but you are no longer doing now. And finally, you might add what new activities have you always wanted to do but have not done yet?
The last third of your life. If you think about it, retirement is just another phase in your life. Retirement is a third of your life so what are you going to do with it. So ask yourself this question “If you knew you only had 10 summers left, what would you do with those summers.” This exercise really gets you to think about what is important and how to prioritize all the things you want to do. Are you doing the right things with your time?

The message here is really simple. It is much better knowing what you want to do in retirement than not knowing. The clearer your vision, the more likely you are to live retirement as the best years of your life. Be prepared, plan ahead and make your retirement a little more predictable.

Retirement is a life within a life

What's it going to take to make retirement the best years of your life? I suspect it has something to so with waking up every morning excited about your day and time is flying by because you are having so much fun doing what you love to do. If that's the case, what do you love to do? And if you've truly figured out what you love to do, then what's stopping you from doing that today?

They best way to plan for retirement is to live as though you are already retired! Are you living the best years of your life and still working? Do you know people enjoying life to it's fullest and yet they may not be rich?

Money is important but so is health, relationships, hobbies, personal challenge, intellectual stimulation, work, religion and spirituality.

The best time to retire is when you're ready and believe it or not readiness has less to do with money and more to do with lifestyle. The key is to have something to retire to. We all retire "from" something but not everyone retires "to" something. That's why vision and planning is so important.

Retirement Is About More Than Just Money originally appeared on Canadian Finance Blog on October 5, 2010.