Retirement on my mind
Thornton recently sponsored the King Edward Bay Ladies Open Stableford. I managed to lose only two balls, came last and got drenched on the way round – Jools (our Thornton director/golfing expert) tells me this game is meant to be fun; I’m sure it is for an eight-time Island Champ!
I was happy with this, though, as I am still new to golf, and I’ve not nearly practised enough over the summer to expect to have improved.
Anyway, why am I telling you this? Taking up golf was a conscious move, a proactive step to support my eventual retirement from rugby.
Even at the amateur level, you get to a point where you realise your playing days are numbered, and it can be a hard reality to take. I started worrying about what I’d do with my time without the team and purpose (in a sporting context).
When they first come to us, many clients’ primary objective is retirement. I’ve spotted so many parallels between my recent experiences and our clients’, that it inspired this week’s insight!
Utpal Dholakla, Ph.D. of Psychology Today, identifies four different ways to think of retirement:
-Retirement is a Goal
-Retirement is a Lifestyle
-Retirement is a Process
-Retirement is a Mindset
Each has its pros and cons. I want to focus on two – Goal and Lifestyle.
This thinking is the one that we have all been conditioned to think like.
If we think of retirement purely as a goal, then we have a clear and measurable objective. We can easily judge if we have succeeded; we can create budgets and cut spending to save as much as possible. Retirement is when we can afford to stop working.
Working because you want to, not because you have to, is undoubtedly an excellent long-term objective to focus on, but there are other things to think of outside of the financials.
If this is our only goal, what do we do when we get there? Life doesn’t stop there, so what is our purpose?
Studies have shown that people with a greater sense of purpose have lower mortality and less incidence of cardiovascular disease. They also experience less loneliness and make better lifestyle choices.
This approach considers retirement a change in habits and a shift away from a work-focused lifestyle.
It doesn’t mean that you have to stop work. You may continue because you want to keep working, reduce your days in your current role, do something completely different, or spend time helping others. This could be a non-exec director role, a mentorship, paid consultancy or simply volunteering for Junior Achievement or something similar.
Or, you might stop work and fill your time with travel and hobbies – I’ll let you decide whether golf should feature!
Whatever this new phase looks like, it will be different, and such a change in routine and habits can be hard to adjust to.
Working with a Planner can help.
Effective financial planning combines all four mindsets but mainly draws on these two.
Thinking about or designing your desired future lifestyle is the first step. Working with a planner to shape a version of the future that looks appealing and provides purpose, happiness, and a sense of well-being.
This will look different for everyone, so the cost of this future life is different.
Financial Planning uses assumptions to ‘price up’ this lifestyle and creates a goal. This is where those spending and, more importantly, savings budgets come in.
The benefit of using a Planner here is that you can realistically balance the importance of enjoying life now, with the need to fund the future. It’s a pragmatic way to determine if you want to give up X now to be able to do Y in future – a planning exercise can test your commitment to your future self and what is really important to you.
More valuable, though, is the ongoing relationship.
Part of being a Planner is also being an ally – to support you through this Lifestyle adjustment – it’s a significant change to live off capital and reduce or stop earning.
We also act as a sounding board for ideas, providing an impartial perspective and technical expertise to help you optimise financial decisions.
If you want to make a goals-based plan for a meaningful/purposeful ‘retirement’, please get in touch.