November 2015

Do What You Love: The New Retirement

Author: Kent Thune

What is retirement?

In America, retirement too often refers to the latter years of life where the retiree has escaped the hellish workforce and has survived decades of sacrifice to graze in the proverbial pastures of relaxation and travel, and to complete whatever bucket list items have yet to be crossed off.

The formal definition of retirement, according to Webster’s online dictionary, is “an act of ending your working or professional career.” Therefore retirement is simply a social norm or convention. Perhaps more accurately it is a financial concept disguised as a necessary personal quest and achievement.

But if retirement is defined as “doing what you love,” money becomes much less of a necessity. In different words, retirement need not be purely accomplished by financial means. It can be defined by what you do instead of what you have.

Retirement planning in the days of our parents and grandparents consisted of what was called “the three-legged stool.” The three legs were Social Security, Pension and Savings. But today’s “stool” is missing at least one leg, and a second leg has a figurative crack in it.

Is the savings leg enough to fully fund the retirement plans of today and tomorrow? Will today’s workforce be able to save enough to retire? If money is the only means of reaching the retirement planning pinnacle, the answer to these questions, for most people, is “no.” But the questions sure have made their way into countless financial media headlines and marketing brochures, attracting loads of profits into the coffers of banks, brokerage firms, and insurance companies. So the only people on the planet who have a reason (although not always a good one) to see retirement planning as purely a financial pursuit are the people who make money and finance a profession.

When forming a retirement plan, in simple terms, the typical advisor will start with the client’s current household income then come up with an inflation-adjusted amount needed at the projected retirement age. In order to reach that required retirement income amount, the advisor will tell the client how much more he or she needs to save (usually a higher rate than the current one) and an annual rate of return on investment that is needed to produce the required retirement savings.

For many people it is necessary to save at least $1 million to retire. For some, this number may be closer to $2 million, especially if they are still decades away from traditional retirement age and have little or no other sources of retirement income, such as Social Security and a pension, to supplement the savings.

According to, the median amount of retirement savings for people ages 33 to 44 is $61,000. With this nest egg, assuming a healthy 7 percent annual rate of return on their investment portfolio, a person needing $1 million to retire would have to save more than $800 per month (about $10,000 per year) for 25 years to hit the goal. With inflation or changes in lifestyle, that nest egg might need to be even bigger. Who can save $10,000 or more per year for 25 years?

If more money managers and financial planners could offer complete advice to their clients, they would go beyond the conventional financial planning that says to increase the retirement savings rate (usually beyond what is affordable), or to invest more aggressively, or to delay retirement until the magical financial goal is met. Put simply, advisors would better serve clients that money is not the only means to retirement.

Fortunately, the baby-boom generation, and increasingly the younger generations, are realizing (either out of choice or by necessity) that working in retirement is more rewarding and more achievable than financing it completely through savings.

In his book, The New Retire-Mentality, author Mitch Anthony studied retirees to capture their ideas of what retirement is to them. He found that 93 percent of Americans state that they should be able to go on working at any age if they are still capable; 64 percent indicate a desire to move back and forth between work and leisure.

“By an overwhelming majority, retirees have decided that the best reason to keep involved is because of the vitality, energy, and perspicacity that work arouses. They have recognized the enjoyment that work brings even if part of their motive is the need for money,” Anthony said.

Therefore the “new retirement plan” can be the one that includes more than just the traditional savings vehicles, such as Individual Retirement Accounts (IRAs) or the 401(k); it can and must also include the goal of doing what you love. Part of this new kind of plan is to know how to qualify or train for a new-chosen career and how much it will pay. Then you will know how much savings you will need to supplement that income in your retirement.

In different words, career planning is a crucial aspect of retirement planning today. Some advisers and planners call this “life planning.” Rather than striking fear in the minds of clients by saying, “You may need to work longer and delay retirement to make your money last longer,” they can say: “You could retire sooner if you consider looking and planning now for full- or part-time work that you enjoy, even if it pays less than your current job.”

In essence, this process will have you place meaning before money and purpose before planning. Instead of feeling anxiety when a financial planner tells you, “Double your savings rate now or you’ll never retire,” you can begin planning and preparing for a life of doing something you love, which is the essence of retirement.

If you are currently years away from the conventional, financially accomplished retirement (or you are in retirement now and looking for supplemental income and/or more meaning in life), you can begin the research and education now to find a career or line of work that is rewarding beyond financial means.

When you love what you do, you’re not really working—you’re retired.

Kent Thune is a money manager who “retired” at the ripe age of 37, when he started his investment advisory firm, Atlantic Capital Investments. Thune is also a free-lance writer and is currently working on a book to be published in 2016. He teaches his clients and readers to keep meaning before money and purpose before planning. You can follow his musings on mind, money and mastery of life at or on Twitter @ThinkersQuill.

  1. I am pleased to hear a financial manager see the larger picture about retirement. Great line: “It (retirement) can be defined by what you do instead of what you have.” As a psychologist I encourage clients to go one step further and think about who they ARE (or will be) in the later part of their lives.

    Thanks, Kent

    — Paul W. Anderson, Ph.D.    Nov 2, 12:31 pm   

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