What Does Retirement Look Like For YOU?

Have you ever yearned to reach a milestone only to feel ambivalent soon after reaching it? My daughter recently got her learner’s permit.  She is constantly asking to drive the car as she prepares for taking the driving test.  Her anticipation is palpable.  It is a joy to see her excitement.

Most of us remember finally being licensed to drive.  There was a thrill of freedom that came with driving.  A goal was reached, and nothing stood in our way.  Of course, that thrill diminished over time and for most of us, it is merely a means to an end.

I have written previously about the importance of goal setting.  A focus on establishing goals has helped me achieve much of what I have wanted in life.  I do not regret that focus, but I have recently come across a different approach that I wanted to share.

In the book, Atomic Habits, the author James Clear provides a sensible process for self-improvement.  The book came out in 2018, but I only recently came across it.  In it, Clear provides a means to develop good habits and shed bad ones.

The idea is to shift from purely focusing on goals to developing systems.  Put simply, “It’s the Destination, not the journey.” (I was unaware until I googled it, that this is a quote from Ralph Waldo Emerson’s Self-Reliance.)  This idea of systems versus goals is gaining some traction with more thought leaders expanding on it.  To elaborate, goals are a result you want to achieve.  A system is a process that leads to those results.

So how does this apply to retirement? Well, it may be the key to creating a pleasant and productive life post-career.  The mythical state of retirement was the proverbial gold watch, a pension and sitting in a rocking chair.  The new paradigm seems to be a mix of work, travel, hobbies, projects, and time spent with friends and family.

The average person in the U.S. lives 20 years after retirement.  Obviously, depending on many factors, but that can easily extend lifespans into the nineties. To be able to achieve that in comfort and security will take a good deal of planning in your pre-retirement phase.

First, you should be taking of advantage of employer-sponsored retirement plans (401k, 403b, etc.).  These pre-tax investment vehicles are a great way to build wealth over the course of your career.  Secondly, you should also contribute to a personal Roth or contributory IRA.  The type of IRA will depend on individual circumstances.  Finally, I also recommend building additional wealth by saving into a brokerage account.

The combination of the above along with Social Security (if you are eligible) will allow you to create a wonderful lifestyle in retirement.  I prefer to save and invest, as if Social Security does not exist.  This discipline will be rewarding with a significant portfolio.  Of course, the biggest key is to start early.  By that I mean, teenage years or twenties.   There is a dramatic difference between beginning in your twenties versus your forties.  Do not wait.

I do not want to depend on Social Security, but I have confidence the government will not allow it to fail.  I know there are plenty of doomsayers about the future collapse of the program, but even this government cynic cannot imagine either party risking it. With lifespans increasing, that would be a lot of senior citizens marching on Washington with pitchforks.

So, what now? I think a critical factor is imagining your retirement.  I have seen too many people unprepared for this new stage of their lives.  The system they have lived within is gone.  Without the structure, there is a stagnation that will soon set in.  I believe it is important to spend a good chunk of time designing your day.  Find the thing you enjoy doing, build in exercise and volunteering.  Some may enjoy continuing to work.  If you love your job, why leave it if you do not have to?

To learn how an independent, fee only advisor and a CERTIFIED FINANCIAL PLANNER™ professional can help you, please contact me.  Feel free to share with others and make suggestions for future articles: peter.oneill@fiduciamwealth.com