You May Have Saved For Retirement But Are You Prepared?
I was once told by a professor of mine that I should never save for retirement. “Enjoy the first 65 years to the fullest. Don’t spend them saving for the last 10″. As a highly impressionable student I took this literally and didn’t start saving for retirement until later than I probably should have. Even though I follow the “rules” now and max out my 401k, I’m still not entirely sure if this is a good thing. Let me explain.
I finally understand what my professor was trying to say. Retirement should not be about the day you can finally “do nothing” with the rest of your life. My professor had no plans to stop working. Why? Because he would never want to stop interacting with young people and participating in their development. At an advanced age, when most of his friends are at home alone (retired), he has a group of young individuals listening to his every word. My professor may not have saved enough to retire but he is definitely well prepared for the years of his life when most people are retired.
So what is the point? You need to save for retirement AND prepare for it. How do you prepare for it? Certainly at a minimum you need to figure out what you are going to do during those 15-30 years. It’s not likely you can climb Mount Everest at the age of 80 or go scuba diving with sharks in the Bahamas. You need to do all of that before you retire. i.e. now. You certainly can’t climb a mountain for years so there is no excuse to say you couldn’t take off a month to do it now. Do you want to spend more time with your kids or grand kids? Do it now. They’ll be adults by the time you retire and the opportunity will have passed. If you want to retire on a tropical island, try it out now for a week. You might lose your mind watching planes fly over your hammock all week long. If you start to do all of the things you are “saving” for retirement now; you’ll quickly realize that you’ll probably exhaust all of those things within the first few months of retirement.
So what do you do? My strategy is to fool myself into thinking I have no retirement fund. I put the auto-deductions on, invest in a target date fund and forget about it. I don’t even include it in any assets or accounts I can easily log-into. I don’t want the peace of mind it creates. I want to prepare myself to continue earning and being relevant well into my “retirement years” by doing things I enjoy. So what do I enjoy? This is a pretty personal question that each of us have to answer for ourselves. I enjoy writing so maybe I’ll write a book. To do so I need to find out what it takes to write and get a book published. I need to start prepping now. I also like teaching but don’t necessarily want to teach in a school. Maybe I’ll provide consulting services in my chosen profession. A variety of clients will keep me from getting bored plus I’ll get to teach and pass on the knowledge acquired over my lifetime. The thing is, you don’t just start “consulting”. You need to build up a potential client list, make connections and figure out how the consulting industry works. There is no better time to do this than while you are in the working world before retirement.
Most people remember that they need to figure out how to pay for expenses when they stop working. What they don’t think about is what they’re going to do with all their free time. You need a budget for that too. Prepare for it, have a smooth transition and get the most out of your life. Don’t divide it into two sections.