Ok, I will admit, that was a pretty clickbait-y title. But if you are here, it worked, right? Just hear me out- most people are so focused on retiring from something, but never think about what they are retiring to. You may hate your job or your boss1, and spend all your emotional energy fantasizing about the day you no longer have to deal with that asshole. You save and invest for decades, building up a helluva nest egg. Then the day comes. You flip off your boss and coworkers on your way out the door2. Now what?
I’m sure you have some plans. You’re going to travel the world and play golf 4 days a week. You’re going to spend more time with your grandkids. Great! I had a couple that came to me a while back that did the same thing. Guess what? They were fucking bored after a couple years. So one started doing part-time consulting in the industry he retired from, and the other opened a coffee shop. Now they are happier than they have ever been. Granted, they don’t want to be un-retired forever either, so a lot of our conversations revolve around what the next chapter looks like.
For most people, though, retirement looks very different. The average retiree spends 4.6 hours a day watching TV3, and is otherwise sedentary and disengaged with the world. Their health and mobility slowly slips away, along with their mental acuity. They escaped the rat race, only to find the cheese at the end of the maze doesn’t taste as good as they hoped4.
So, what do you do? First and foremost, focus on your health and fitness. But don’t wait until retirement or a health event, do it now. The more active and healthy you are during your working years, the more so you will be in retirement, and the better you will feel. I competed in bodybuilding in my 20s and was in great shape. But since starting Leetown 7 years ago, I have poured all my energy into getting the firm off the ground, and really let myself go. Now my fat ass gets winded just looking at stairs. It is going to take a lot more effort to fix that than it would have to prevent it in the first place. Don’t let that happen to you.
Second, and I believe most importantly, find work that you don’t have to get away from. Damn near everyone that comes to me says they want to retire at 60. I think financial independence at that age is a damn fine goal to strive for, but the truth is, the work you do has an impact on the world, and can provide meaning and purpose in life5. This may mean switching careers, starting a business, or just volunteering more. But doing something is always better than doing nothing6.
Third, save 20% of your gross income. This is easier said than done if you have kids7, but that is the approximate savings rate you need if you want to retire with the same lifestyle at age 60. As a rule of thumb, half of that should go into retirement accounts, and half into a taxable brokerage account. Why? Because you might want to use some of that money before retirement. You may want to take a sabbatical, or finance a business purchase, or whatever8. If you save more than 20%, have a plan for it. I did a one-time plan for a woman that wanted to take a 2 year sabbatical in South America, which required an entirely different style of financial planning. Super cool.
Fourth, be honest with yourself about the things that actually make you happy. Then focus on those things, not just in retirement, but throughout your entire life. This will bring more clarity to your financial decisions. Maybe you take a sabbatical and travel the world at age 50 rather than waiting until retirement. That will probably mean you have to work an extra year or two, but your health might not be good enough at 65 to enjoy it like you do now.
Lastly, think about the ways you can impact the world and the people around you. I chose my career because I wanted to have a deep, genuine impact on my clients’ lives. Most of what I do does not feel like work9, and I never plan to fully retire. I still practice what I preach, and save 20% of my income. But I am not doing that just for retirement, or to accumulate wealth for its own sake. I am doing it for the freedom and flexibility it gives me, and for the impact I can have with it later in life. I have some pretty big charitable goals. I’m not saying you have to as well, but maybe your work is more meaningful than you think. When you do finally turn off the lights in your office for the last time, think about what else you are going to do besides golf and Caribbean cruise ships. Those things are important, but helping others is ultimately what makes us happiest.
Kyle Thompson, MBA, CEPA
Founder/Lead Advisor
The content contained herein is intended as education and entertainment, and does not constitute investment, tax, or legal advice. Please consult the relevant advisor before making any decisions. Additionally, any opinions expressed here are solely those of the author, and do not represent the opinion of Leetown Advisors or its affiliates.
1 Or everyone.
2 Or maybe you are the boss, and you flip off your employees!
3 https://money.usnews.com/money/retirement/slideshows/12-ways-retirees-spend-their-newfound-free-time
4 Which is disappointing, because cheese is one of my favorite things.
5 This is why I have such an issue with the FIRE movement (Financial Independence, Retire Early).
6 Don’t get me wrong, relaxing is important, too. You don’t need to be a workaholic to have a meaningful life!
7 Those things are expensive!!
8 There are other tax advantaged reasons to use a brokerage account as well. More on that another time!
9 Still hate the administrative stuff though.
