Imagine that you’re playing a game of Charades and you’ve been assigned the task of communicating the process of retirement planning using only a series of gestures. Do you reach for your imaginary calculator and frantically punch numbers into thin air while transmuting the imaginary results onto your imaginary blackboard? Recognizing what a lousy hand that you’ve been dealt, do you secretly wish that you’d have drawn the stroke-victim card instead?
Retirement planning is difficult to portray in a parlor-game format precisely because it involves so many things, both financial and non-financial, known and unknowable, and within or beyond our control. Before engaging in the mother of all Big Data number crunching exercises- or hiring someone to do it for you- take a moment to consider what a day in the life of your retired self will look like.
A good place to start is to think about what you like and don’t like about your work, whether you want to stop working entirely or just reduce your workload, and what degree of control you have over the decision. Is engaging in a new hobby or career something that you’re passionate about? Perhaps you prefer to focus on causes that are important to you or want to use your time, energy and expertise giving back to others. Will your family and friends be supportive of your decision, and what will you do with your newly found leisure time? For those in good health with in-demand skills and sufficient resources, there may be many options to consider, while others will be constrained by factors beyond their control. Invest some time considering how you’d like to spend your retirement, even if you feel that you have little choice in the matter. I can attest that truly creative solutions to seemingly insurmountable obstacles have resulted from this simple exercise.
Thinking about retirement can also result in helpful insights that may be uncomfortable to consider but are nonetheless important. The recent increase in so-called “Silver Divorce” illustrates the importance of maintaining healthy long-term relationships. Does the prospect of spending more time with your partner excite you, and do they share in your enthusiasm? How will your social networks change if you stop working? In our frenetic and increasingly interconnected lives, our work may provide more than an income, it may serve as a big part of our self-identity, and our social networks are often connected with our profession to a degree that our parents might find hard to comprehend. How we spend our time and with whom is a reflection of our values, your future self will likely exert a lot more control over how their day is spent. Your time is currency, spend it wisely.
A calendar can be a useful tool in helping your future self to allocate your time. And it’s a tool most of us are making extensive use of already. Perhaps to our chagrin. To make this exercise feel less chore-like and more empowering, think of your day as one large block of time and allocate units of time to desired activities and pursuits. Two hours playing tennis on Mondays and Thursday and four hours three times a week volunteering is less imposing than attempting to allocate every waking moment of your day. Consider which activities you’ll do with your spouse or partner and which you’ll do by yourself or with others and whether you both have a sufficient network to support your planned lifestyle. If you intend to reside in multiple locales, think about how you’ll allocate your time in each place and how changes in health or disruptions to your social networks will affect your day-to-day life. It’s a lot to consider, but after you’ve spent a few days on this exercise (not all at once, please) go back to your calendar and get a bit more granular in assigning specific blocks of time to your various activities. Be sure to leave enough unscheduled time for yourself- embrace your inner flâneur, dawdle, loiter, linger or lollygag- you’ve earned your free time, and holding a little back for yourself will probably make you a whole lot happier.
Of course, all of this assumes that you have the time, energy and resources to live a day in the life of your desired future self. But what if you don’t, or think you don’t? You may find yourself with an irresistible urge to begin crunching numbers, but before attempting to confirm your pessimism or quash your fears, consider how you might turn an avocation into a vocation and in which facets of your life you retain control. A lifelong passion may become a business or part-time job, the skills you’ve acquired in one field may translate nicely to another. The ability to delay retirement or work on a part-time basis is often the most effective strategy available to those nearing retirement age that find that they haven’t saved enough. Shortening your retirement horizon by just a few years, or augmenting your retirement income with some enjoyable part-time work can make a world of difference. Those in poor health and with limited employment opportunities- whether part-time or otherwise- may face some truly difficult choices, however, even in the most dire cases, there are often choices available that will result in a less bad outcome. Give some thought to the options before stifling them by attaching a numerical value. You may come up with some surprisingly creative ideas.
Before closing the chapter on a day in the life of your future self, give some thought to your general health and how your specific health care needs will affect your lifestyle. Those nearing retirement will be asked to make important and often irrevocable decisions, the success of which is influenced by the health status and expected longevity of you and your spouse or partner. When to collect Social Security benefits, how much money can be withdrawn each year from investments, the form of a pension benefit you elect (if indeed you’re fortunate enough to be tasked with making this choice) and how best to plan for a long-term care event are just some of the many important decisions that are directly influenced by your health and potential longevity. Although few of us would wish to be burdened by knowing the exact date and cause of our death, useful tools such as the living to 100 calculator combined with robust health screenings with your doctor can provide reasonable longevity estimates and help identify variables that may put you at higher risk for chronic care or an early death. Identifying these risks and planning as best you can for them may help reduce stress and give you a greater feeling of control over how you spend your time and money. Any number of strategies are available through the financial planning process to address your own specific set of retirement risks, so understanding where to focus your effort and resources is a helpful result of good planning.
A successful retirement income plan involves many things, but like most Big Data projects the output is only as good as the underlying assumptions. Spending a little time pondering your future isn’t dilly-dallying, it’s time well spent.
John Male CFP®, RICP®
The Gassman Financial Group
G&G Planning Concepts, Inc.
9 East 40th Street, 5th Floor
New York, NY 10016
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