Are there principles and practices that–if understood and followed–can help you enjoy a more satisfying retirement?
At Christy Capital, we say an emphatic, “Yes!” In guiding thousands of people into or through retirement over the last two decades, our team has seen so many people flourish. At the same time, we’ve watched others struggle mightily. They can’t seem to find a deep sense of purpose in their post-career years.
In this three-part series, I want to share some observations we’ve made and offer a few ideas so that your next chapter becomes your best chapter.
The Modern Idea of Retirement
Because many of our clients are people of faith, some have asked, “Is the concept of retirement in the Bible?”
I’ve found one intriguing passage. It’s Numbers 8:23-26 and it talks about the Levites (Israel’s ancient religious leaders). The Levites began their service at age 25. Then, at age 50, the passage says they were no longer to perform religious duties in and around the Jewish Tabernacle. That’s the only reference I can find in Scripture that hints at anything close to the kind of retirement people practice today.
In America, retirement is a fairly recent concept. A handful of companies began offering pension plans in the late 19th and early 20th centuries. The Social Security program started in 1935. IRAs and 401(k)s arrived on the scene in the 70s.
But more significant than knowing the history of retirement is having a good grasp of its purpose.
The Purpose of Retirement
Retirement comes about in a couple of different ways. There’s planned retirement, where people have been with a company or the federal government for 30-35 years and they’re making retirement plans. They’ve even got a date set.
Then there’s what I’ve been seeing more lately: unplanned retirement. This is where companies lay off their older workforce or offer them buyouts.
Bob’s a good example. He’s 58 and never gave much thought to retirement. In his mind, stepping away from his career was at least 10 years away. Until the day he went to work and found out his department would be shuttered and his position eliminated in two weeks!
I’ve probably walked 30 people through some form of that conversation in the last two years. Most are okay financially. The first thing I tell these stunned folks is, “Remember, you don’t have to decide today what you’re going to do for the next 20 or 30 years. You can afford to take a few months to catch your breath and look at your options. You’re already dealing with shock; don’t put additional pressure on yourself. Take some time to regroup. And don’t make any rash decisions you’ll regret.”
I say this last thing because some are tempted in such moments to make hasty, emotional decisions they’ll later regret. Some have said to me, “I need to pay off my mortgage! That’s always been my plan–to have my house paid off at retirement.”
Being debt-free is an admirable goal, but consider: Where will that cash come from? Some want to dip into their retirement funds–which are earning 9-10%–to pay off a mortgage that carries a meager 2 or 3% interest rate. While being debt-free might feel good emotionally, it might be very unwise financially.
With an unplanned retirement, you don’t want to make a snap decision that could prove detrimental to your long-term plan.
Budgets and Schedules
When planning financially for retirement, I always tell people they need a workable budget. That’s my first recommendation.
I know “budget” is a dirty word for some. But it’s critical to have one–and it’s wise to write it down. I’ve met with engineers and rocket scientists–people much smarter than I. Even these brilliant folks struggle to keep all those budget numbers straight in their heads.
Plus, if you’re married, having a budget on paper can literally keep you and your spouse on the same page.
With a good budget, you’ll see (a) here’s the amount of money I need coming in and (b) here’s where that money is coming from.
My second recommendation is to live on that budget for at least three months before you retire.
This helps you get used to your new “retirement cash flow reality.” (And during this “trial,” you can put any excess income into savings, or use it to pay down debt.)
Concerning life planning for retirement, I always offer this reminder: Not only your finances, but your schedule will change once you retire. Instead of waking up and commuting to work, you’ll get out of bed and wonder, “What am I going to do today?”
Just as it’s smart to create a new budget, you also need to plan out a new schedule. This is huge. You need a good, clear sense of what activities will engage you socially, spiritually, mentally, and physically. Get that new schedule in place. And feel free to experiment with it.
Thinking creatively about retirement
Let me tell you a couple of stories.
Jim–that’s not his real name–had a very successful career, 40-plus years as an engineer. He retired once–then went back to work because he’s so task-oriented. He loves to stay busy. Now, however, he’s to the point where he’s ready to retire for good.
Part of our conversation has been, “What are you going to do with yourself? I mean, you can only travel so much. And there’s only so much grass you can cut.”
Well, it turns out that Jim has always loved swimming. And in his community, they were about to open up a new swim facility. He met with the manager of the facility and said, “I’m getting ready to retire, and I’d love to help out in any way possible.”
Would you believe Jim emailed me yesterday to tell me he has just completed his lifeguard certification? He’s going to be a lifeguard at the new swimming facility! He’ll teach swimming classes too. He’s really excited.
Jim’s a great example of the importance of planning a new schedule and being creative with that.
I had another client who worked as an air traffic controller. It’s a high-stress job–one of those careers where they force you to retire at a certain age. For about two years before his retirement, we would meet and talk about “what comes next?”
I found out that he and his wife were passionate about helping local nonprofits. But more than just personally donating money, they wanted to figure out a way to get others in the community involved in helping these nonprofits.
A little more backstory on this couple…they loved to travel. And during their travels, one of their favorite things was to visit coffee shops and bakeries and try different coffee beans and exotic pastries. Then, they’d come home and try to bake the goodies they’d tasted in all those faraway places.
As we discussed their retirement plans–and their passions for nonprofits and coffee and pastries–they came up with a wildly creative concept. What about a food truck that would sell great coffee and pastries? “We don’t need to make a profit,” they said. “Just enough money to pay our expenses. And on the bottom of each receipt, we can let patrons choose from a list of local nonprofits where they want the profits to go! And we’ll even let customers submit the names of other nonprofits.”
Today they take their food truck to different venues and locations throughout the community and their receipts have 10-12 local nonprofits listed on them. People love their food and coffee. And they get to pick the organization they want to support. Everyone wins!
This retirement venture (maybe we should call it an adventure) doesn’t feel like work to this couple. They’re doing something they’re passionate about. The entire community is involved and engaged. Local nonprofits are being helped. It’s been really fun to watch.
Seeing retirees come up with ingenious ways like this to use their retirement years is one of the best parts of my job.
Next time, I’ll share some more tips for a satisfying retirement–and tell you about another inspiring retiree.
