KEY TAKEAWAYS
- Even in retirement, purpose is an important part of happiness and fulfillment.
- Retire into something; retiring with a plan for the future will increase your chances for being happy.
- Purpose may not only make you happier, it might allow you to retire earlier (compounding the happiness!).
Retirement often conjures images of escaping a long-tenured job, possibly one you’ve burned out from, and retiring into a life of leisure and relaxation.
You might not realize that the modern notion of retirement is a relatively new creation in human history. As recently as 150 years ago, government-funded retirement did not exist. In 1889, German Chancellor Otto von Bismarck first instituted a government-paid retirement subsidy as a solution to the high youth unemployment that was plaguing Germany. The idea was to pay workers 70 years and older to leave the workforce, creating jobs for younger, unemployed workers.
At the time, the average lifespan in Germany was 70 years. The retirement age was set exactly to that age so that German “Social Security” was only paid if you survived longer than the average person.
The American version of retirement funding was implemented in 1935 when the Social Security Act was signed into law by President Franklin D. Roosevelt. The Great Depression was raging, forcing America to create a social security system for poor, elderly citizens. Since the entire economy was in shambles, and very few jobs were to be had, the Social Security age was set lower than 70 to provide benefits to more unemployed citizens. The age was therefore set below the average lifespan and workers could start collecting Social Security at age 65.
Fast forward 87 years and Americans are living much longer. And many of us would like to retire much earlier, for example the FIRE movement: Financial Independence, Early Retirement.
But the scary current headlines, such as rampant inflation, a volatile stock market (which is normal by the way), and fear mongering stories about social security running out of money, cast doubt on our ability to ever retire with or without social security.
I’ll never be able to retire
Let’s squash that thought right now: with proper planning you can, and will, be able to retire. Depending on when you started saving and how much you started with, your degree of difficulty may be higher, but you will be able to do it.
But what does “retire” look like? Will it be the classic Mai Tais-on-the-beach vision of retirement? If it is, that will certainly require a pile of cash in addition to Social Security, but you can still do it. At WJL, we can help. But is this vision of retirement really what you want? Will it make you happy? Fulfilled?
It may seem terrible, but there are some benefits to the classic, pre-Bismarck no-retirement model. The first, most obvious one is that by continuing to work you don’t need to save quite as large of a pile of cash because you will continue generating part of the income needed to survive. The second is by continuing to work, the work provides you with purpose.
Purpose
Purpose is not talked about enough retirement planning, and its importance is underappreciated, even by retirees themselves. But as Agent Smith from the Matrix movie franchise reminds us, we all need purpose.
Most successful people spent years mastering a craft. Being a successful doctor, engineer, accountant, teacher, programmer, or business leader required them to dedicate years learning the craft in college and then 30+ years practicing it in the real world and acquiring mastery. Over that time, for most people the craft has become intertwined with their sense of who they are, their very identity, the basis of their zeros & ones (keeping the Matrix analogy going). Separating the person from the craft can be painful, if it’s even possible. And does it need to be?
With proper planning, the craft, the mastery painfully acquired over many years, may not only provide a more fulfilling retirement but may also provide a path to an earlier retirement—on your terms.
What does retirement really mean?
Do you really want to retire and do nothing? I love Netflix but even Netflix runs out of content. I love a good nap even more but there are only so many naps to be had, I’m not Garfield.
If it is dread of going to your job again that is driving your desire to retire, maybe all you need is a longer than normal vacation to find out whether the burnout you are suffering from is permanent or temporary.
More likely though what is happening is the result of age and maturity. The hours and other demands of your current position may have grown past the available life energy you have left to dedicate to it. There is a younger person right behind you hungrier than you are to work those 60-hour weeks and play corporate politics. You’re older, wiser, and don’t need that crap. There is more in your life now than only your job, experiences with friends and family have increased in importance.
But do you really need to go from all-in to all-out?
Vacation & Vocation
The best explanation of a good retirement was described to me as finding the balance between vacation and vocation. Vacation is not just travel and beaches, it is your entire life away from work. Vacation includes time spent with family, hobbies, exercise, sleep. It’s great stuff, and it is hard to find people who don’t want more of it, but even these activities do not fill every need. What may be missing is purpose.
Purpose is what gets us up in the morning, it’s what drives us. Although purpose may go underground when you are in a burned-out state, it’s probably the reason you went into that major in college. It’s why you started that career all those years ago. Somewhere along the way, however, corporate nonsense, paperwork, meaningless policies, or something else caused you to lose connection from why you loved your craft in the first place.
A fulfilling retirement enables you to balance the “vacation” part of your life with vocation. It could be a 50/50 deal. Or it might be 90 percent vacation and 10 percent vocation or the other way around. What’s important is finding the mix that is most fulfilling to you, one that will lead to your perfect retirement.
Retirement on Your Terms
Prospective retirees often have a narrow view of retirement. They focus only on accumulating a certain level of financial resources or reaching a target retirement age. They retire without putting effort into considering what is next and how they want to live. Sure, they might have planned an amazing trip to Europe or purchased that beach house they always wanted, but what then?
The trip ends, the beach house becomes just another maintenance item. What’s life going to be like after that? There is only so much putzing around you can do before boredom drives you insane.
A more sure path to a happy retirement is putting in time before retirement to think about what provides purpose in your life and incorporate it into your retirement plans. For many professionals, it might be as easy as going part time, scaling back to your ideal mix of vacation/vocation. Doctors and dentists, prime examples of this approach, often reduce their hours so much it can be extremely frustrating for patients to get to see them (I had a dermatologist who must have been close to 90 years old and was still working).
Cutting back work might not be an option for everyone, such as public school teachers. But they may be able to continue teaching in a more limited role at a private school, work as tutor, or find a position as an adjunct professor.
Post-retirement work does not need to be tangential. A corporate business executive in manufacturing might decide what she liked most in her career was mentoring. She could transition into business coaching for startups or career coaching for recent graduates.
These are examples of ways to generate income to take years off your retirement age and achieve fulfillment. Imagine moving your retirement up 5 to 10 years while increasing your focus on exactly what makes you happy. And in a role you can do as long as you are able to!
These are just a few possibilities. Only your imagination limits you.
Purpose on Purpose
Regardless of your interest or income targets, make sure you retire into something. Use this opportunity you have ahead of you well. With smart financial planning focused on financial independence, you may be surprised at the options you have for living a fulfilling life in retirement (and how quickly you can get there).
At WJL Financial Advisors, we can put together a personalized financial plan (including help working on a purpose) that will help you reach your goals. If you’re interested in hearing how we can help, give me a call at 215-880-1892 or email me at sean@wjladvisors.com.