November 2017

The Five-Minute Retirement Plan

Author: Kent Thune

What is your definition of retirement? If your definition includes something about saving money, the end of employment, or age 65, you may need to rethink your definition.

For most people, retirement is defined by the government, mass media, the financial planning industry, or some combination thereof. To find out where your current definition of retirement came from, check your answers to a few more questions.

How old must you be to retire? If the answer is 65, you’ve been trained to think this by the government’s age requirements for receiving income from Social Security. According to Ameriprise Financial, more than half of people say they expect to work past age 65, but less than 15 percent of today’s retirees kept working that long. That means 85 percent stopped working prior to 65.

What does retirement look like? If you envision a grey-haired couple smiling at each other, sitting on the beach and watching the sun set while sipping on fruity cocktails with little umbrellas in them, your vision of retirement has been defined by some form of media. You probably don’t need any statistics to prove this highly marketed retirement image is not completely accurate.

How much money do you need to retire? If you heard that you need to save and invest enough money that can produce 80 percent of your pre-retirement income by paying out 4 percent of your total life savings (increased each year by the rate of inflation), for up to 30 years in retirement, you’ve been listening to the average financial planner. The so-called 4 percent rule is one of those rules of thumb that is increasingly less applicable for investment income in retirement.

How does one achieve the goal of retirement? If you are thinking of retirement as the biggest and most important financial goal—one that for most people is also one of the most physically and emotionally taxing efforts of a lifetime, working in various unsatisfying and stressful jobs and sacrificing many meaningful life events along the way—retirement has been defined by a combination of almost every source you can imagine, other than yourself.

Hopefully you are beginning to detect a pattern here: The conventional definition of retirement can be misleading at best and at worst the greatest tragedy of your life. If you don’t want retirement to be defined by the government, mass media, the financial planning industry, or some combination thereof, you must define it for yourself.

But how does one go about defining retirement without allowing external influences to shape its meaning? A good place to begin is by following a few simple rules or guiding principles to help shape your thinking. One thing to remember is to keep money and finances out of the definition.

Don’t think of what you want to do for money; think of what you want the money to do for you.
Remember that life is not about making money; money is about making a life. To do this, think like a philosopher, not a financial planner. Successful retirement planning is more about perspective, self-awareness, authenticity, and behavior than it is about money. As the nineteenth century existential philosopher Friedrich Nietzsche said, “He who has a Why to live for can bear almost any How.” Focus on your “why” and the “how” can come later. Meaning must come before money!

If you need some inspiration for crafting your definition of retirement, look up a few corporate mission statements. These are the overriding philosophies or visions that define why a company exists. The most effective mission statements mention nothing about how the company will achieve its goals; instead they use just a few words to guide their purpose. For example, Walt Disney’s initial mission statement was “To make people happy.” His vision didn’t say anything about animation, theme parks, or interactive experiences. Those are details. Its mission was to make people happy. Similarly, your definition of retirement need not include any wording on how to accumulate money.

Perhaps the most important guiding principle in defining retirement is to keep it simple. Don’t overthink it. Once your creative juices are flowing, try spending just five minutes or less coming up with your definition. Often the first thoughts that come to mind are the most authentic. Yes, your initial retirement plan can take just five minutes to complete!

So, your five-minute retirement plan is actually a mission or a vision. The planning elements of investments, taxes, insurance, estate plans, and Social Security projections come after the initial vision that is your plan.

To reiterate, conventional retirement plans often lack a vision. They focus solely on financial facts and figures without any guiding philosophy unique to the individual for which the plan is created.

That’s why they can present problems for you. There’s no life in them. This is also how retirement plans can become an ironic tragedy: People mistakenly think that they must be slaves to achieve freedom. They willfully commit themselves to a figurative ball and chain for most of their lives so that they can spend the minority of their lives in financial freedom.

Perhaps the biggest problem with the word retirement is that it has an abstract meaning to most people, which is to say that its definition is so generalized and universal that it has almost no meaning at the individual level. The definition can also be reworded in so many different ways that it can become misleading or even useless. For example, as of this writing, a Google search for the phrase “retirement definition” produces 117 million results. Which definition is correct? If you would be satisfied with the number one search result, it would be “the action or fact of leaving one’s job and ceasing to work.”

If ceasing to work is required for retirement, what happens if the most meaning in life comes from serving others? What if your definition of retirement revolves around the idea of doing what you love? It’s possible, then, that retirement can come to you at almost any age—the moment you find a career that aligns with your purpose. And if that dream job doesn’t pay well, your retirement would require some financial savings, albeit much less than the conventional retirement plan would assume. Can you see how the lack of a personalized definition of retirement can lead you down the wrong path, to say the least?

After careful thought, you may begin to see that the ideal retirement plan may best begin with the question, “Who am I?” rather than the conventional “How much money do I need?”

Retirement is not something that you buy; it’s something that you live. So, your retirement planning won’t begin by reading a book or by talking to a financial planner; it will begin by careful reflection on what makes you live.

Kent Thune helps people define retirement for themselves as the owner of a Hilton Head Island investment advisory firm, Atlantic Capital Investments, and as a personal financial counselor to service members on Parris Island. You can follow his musings on mind, money and mastery of life at or on Twitter @ThinkersQuill.

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