Retirement is really kind of an interesting concept. In fact, “retirement planning” has only been around for a few decades. If you were born in the 19th century, you had quite a bit to contend with before even making it to retirement. People worked dangerous jobs, in unsafe conditions, and life expectancy was pretty short. In fact, had you been born in 1890, your time horizon was only 46-47 years! Think about it . . . we didn’t have antibiotics, no Food & Drug Administration, and spotty medical care. Most people worked until they died. That’s kind of sobering to think about, but it was the reality for a great majority of Americans.
“Old age” didn’t really become the norm until well into the 20th century. This was a result of many scientific advancements as well as a more affluent population due, to a great degree, to the quality of life enhancements that came about after the Industrial Revolution. And, with that came a corporate attitude change where employers and unions did much more to take care of their employees and members, and that extended to retirement benefits as well.
These retirement enhancements came primarily in the form of pensions – a promised income for life for a worker who was loyal to his or her employer. In fact, there were numerous companies where, if you were fortunate enough to get a job with them, you were pretty much set for life. Growing up in Rochester, New York, I saw this first-hand with Eastman Kodak. If you worked for Kodak, they really took care of you, and about a third of the entire workforce of Rochester was employed by Kodak!
But, in the late 70’s employers started to feel the costly affects of all of the advancements that had been made in medicine, health and wellness and, consequently, life expectancy. Pension plans were just getting too expensive! My grandfather worked until he was 65, retired with his pension, and was dead at 69. This was not unusual 40-50 years ago, but would be a statistical anomaly today, where people are routinely living into their 90’s and beyond.
So, here comes Congress with the solution – the 401(k) plan!
And, what this plan did, for the most part, was to replace the pension as the primary way for retirees to generate income. So, pensions quickly started to disappear in favor of this new savings plan that, while giving workers a tangible tax-incentive, squarely put the responsibility of making sound investment decisions on the employee! So, we went from a system where professional portfolio managers and actuaries made investment decisions, to one where the worker, with no formal investment training, was responsible for his or her own retirement plan!
So, it shouldn’t be too surprising that this is where the cottage industry of “Retirement Planning” was born. Financial advisors were now being engaged to help employees navigate the scary world of investing.
So, that brings us to today.
What does or will your retirement look like. Can you really play golf every day? Can you go on 10-12 vacations each year? Are you sitting on the front porch drinking mint-juleps and watching the traffic go by?
Or will you fill your time babysitting your grandkids, volunteering with a local charity, or working part-time to either help with the expenses or just to keep busy? Maybe you have some home projects that you’ve been putting off and you’re handy enough to actually accomplish them! Maybe you really like to get lost in some great books, or, my personal favorite, perhaps you would like to embark on a quest to get to every major league baseball stadium!
Whatever your definition is for a comfortable and rewarding retirement will take some planning. Obviously, you need to have a plan for your savings and investments (that’s where we come in!), but you will also need to have an idea of what you will do to fill up your time. Think about it like this. Assuming that you sleep an average of 8 hours a night, and that you carve out an additional 3 hours each day for meals, you will be left with over 90 hours each week to devote to something . . . and, in my experience, this is the real challenge for retirees.
How you choose to fill that time, whether recreationally, charitably, family-centered or doing some kind of part-time work, you ought to be deliberate about planning your calendar in ways that will not only challenge you, but that will feel as if it is a rewarding and satisfying use of your time.
We have just seen too many sad stories of people who retire just to sit in front of the television all day long, giving their golden years little, if any, meaning. It has been said that most people will spend more time planning for their annual vacation than they will planning for their retirement.
Let’s not let that happen to you . . . .