Retirement is a Dirty Word!

August 17th, 2021 by Jim Allen

As I write this, we are approaching another Labor Day which is the unofficial end of summer. The end of summer traditionally marks a return to school, a change in the weather (But not in Southern California where our offices are located, as Labor Day is usually the start of our hottest weather), and soon our thoughts will turn to the upcoming holidays. The original concept of Labor Day was a celebration of the labor movement, but as times have changed, it is now more just a marker of a change of seasons.

Just like the meaning of Labor Day has changed, so has the meaning of retirement. About the same time Labor Day was established, America was changing from an agricultural economy to an industrialized economy. Typically, most farmers could never “retire” unless a family member assumed the physical tasks required to run the farm. But, as people moved to cities and became employees working in labor intensive jobs, they reached a point where they just couldn’t physically work anymore. Thus, retirement wasn’t by choice but by necessity. In addition, life expectancy was much shorter then, averaging between ages 50-55, so retirement was usually only a couple of years.

Now that our economy has shifted from industrial to technological, the ability to work much longer has grown as the need for physical labor has decreased. Plus, life expectancies are now well into the 80’s or longer. What this means is that retirement has gone from a maybe 2-year period to a potentially 25–30-year period. It can be pretty easy to fill a couple years of leisure time but can be very difficult to fill 20+ years. Consequently, the concept of being “retired” has to change for most people.

When most work was physically demanding manual labor, people were “retiring from something.” They were exhausted from the physical grind and their health and life expectancy suffered. So, retirement was transition from working to what we now call the “slow go” or “no go” years of life.

The problem for modern “retirees” is that they have a fairly long period of what we call the “go-go” years immediately upon retirement. We find that many people who retire are not prepared for this long stretch of idle time. In this situation, retirement needs to be a transition from what you are currently doing into a transition to what you would like to do next. To do this successfully requires almost as much planning as the financial aspects of retirement planning. The problem for many people is they just don’t know what that “transition to” is for them. Going from working full time to having 7 days of Saturdays can be a very difficult transition, and you can expect to have to fill 20+ years of Saturdays every day.

Here at Anchor Bay, we feel that helping our clients with this part of the retirement transition is just as important as getting them to financial independence. The concept of retirement is outdated, and we must help you shift your mindset from the transition from your current occupation to what your next stage of life is going to be. That can take many forms including: an encore career, volunteering, going back to school, starting a business, traveling, consulting, new hobbies, or all of the above. For your transition to be successful, you will need to find your future purpose. This is why envisioning your next “transition to” is the first step in our MoneyLife process.

As you start to think about what your “transition to” will look like, consider some of the following:

  • Develop a social network outside of work well before the transition. Your interactions with co-workers will likely slow or stop once you retire.
  • Do a trial run. Try taking a few months off to see if you are ready to stop working.
  • If you love what you do, don’t stop. Nobody says you have to retire, maybe you can just change how much or how you work.
  • If you don’t love what you do. Figure out what you would love to do. Start thinking and planning for that encore career.
  • Try new hobbies and activities. Most people won’t want to golf 5 days a week – diversify your activities.
  • Enjoy your transition while you are physically and mentally able. Design a retirement vision that incorporates extra spending during those “go-go” days of retirement. Saving your money for a rainy day isn’t always the best approach.

Our philosophy is that true retirement is just those “no-go” years very near the end of life. Retirement is a concept that should not be looked forward to but should be postponed as long as you possibly can. What we used to call retirement is now really just your next stage in life and our role as your financial advisor is to help get the most out of that phase both emotionally and financially. We specialize in helping people transition from working into their next stage of life.

If you would like a complementary Transition consultation, please contact our office to schedule an appointment. In addition, don’t forget to attend our webinar on Maximizing Social Security on Wed. Sept. 15th at 6 pm. You can register on our website.

Jim Allen, CFP, ChFC, EA, CDFA is President, Sr. Advisor and a Principal at Anchor Bay Capital. In addition to his 30+ years of financial planning experience and his professional credentials, he holds a master’s degree in Financial Planning and is a former instructor in the CFP program at the University of California Irvine. He is also the co-author of the book “The Tools & Techniques of Charitable Planning.” Jim can be reached at [email protected]