Why do we need to be sure? Maybe it is a need to believe, trust or accept what we cannot change. Knowing it is going to be OK is a never-ending quest. The scene in ‘Finding Nemo’ comes to mind; when Dory let’s go of the whales’ tongue and takes the plunge while Marlin hesitates. Marlin wants to be sure, but Dory knows you just can’t be.
Many of us lean towards Marlin, seeking security. We want to know what the outcome is going to be or at least be prepared for what might come to pass. We ask for references, we look for user reviews, we buy insurance for the events that could happen. We take a measure of comfort in all these activities with the hope that we have done all we can to control the road ahead.
However, we try, we are only creating a false sense of security around most of what happens to us in life. It starts early when we think that an education is going to secure a job and therefore a steady paycheque. Once that is accomplished we hustle for approval from the hierarchy of power at work to ensure we don’t get cut because then we would have to hustle even more to find a new job. All the while we hope that whatever meagre amounts of money we can manage to save will eventually turn into a retirement, someday.
Perhaps there are other, more well-adjusted people who don’t feel this way. Those who love their jobs so much that they don’t need to retire because the job does not feel like work. I’m of a mind that these people are lucky and rare. And a more skeptical side of me wonders if these people are held up as examples by a power structure that would rather have most potential consumers working long after they need to, in jobs they don’t like. After all, if lots of people leave the workforce and stop buying so much stuff, what will happen then?
The habit of being a consumer kind of needs to be reevaluated as we plan for retirement anyway. It is not feasible for most of us to want or need to be the same kind of consumer in retirement. In this reset of spending on wants versus needs, we can find the freedom and the cash to retire earlier. Retirees have more time to find the best deals and they often like the challenge of doing so. They don’t have to orient their lives around peak prices in anything, they can take advantage of living outside of the rush.
What could life be like when you can take advantage of the benefits enjoyed by retirees? The trick in planning for something you have never done before is knowing what that looks like. If you have never researched all the different ways you might save money in retirement, how can you properly budget? There might also be the worry that some things in retirement will be more expensive. Perhaps you are the lucky one that has great employer benefits which are free and useful. Most experts will advise caution here. In other words, the savings in retirement will seem quite small relative to working year expenses. Added to this typical wisdom, most people do not have a detailed account of what they spend pre-retirement.
Keeping track of expenses and completing a detailed budget is the work of the most boring person at a dinner party. This youthful disregard for ‘that kind of thing’ is how some people end up planning for retirement. When an advisor suggests they need to create a detailed budget they break out in hives. They want to retire and have their new life be better than it was during their working years. When they think about reducing their expenses they run for the hills. Instead, they will rely on a calculation of their current income, reduced by a certain percentage. That could be fairly accurate, or not. For certain, some types of expenses have to reduce in order to pay for new ones.
To my way of thinking, if certainty is a quest, knowing your numbers would be job number one. I can’t imagine having faith in a financial plan without knowing the details behind the budget categories. Then you have to trust the industry benchmarks regarding inflation and interest rates. You also have to implicitly trust those who you are paying for advice from. All types of estate planning will require different experts and these people are invaluable. They can help with all sorts of strategies for maximizing returns and minimizing tax over time.
If you have the financial plan and still don’t feel sure, then what? Isn’t that an interesting conundrum? I mean, you have saved for decades for this moment and it doesn’t feel like how you thought it would. You are at one of the biggest adult transition moments and this great achievement feels like a moment of insecurity, perhaps even fear. Other than a financial advisor, you might have very few other resources at hand to shepherd you into the next phase of life. And you may be the only person at your company taking this step, especially if you are retiring early or are selling a business.
Retirees turn from saving to spending, from having a regular paycheque to not having one and this change in situation can cause unexpected feelings in some people. I’m curious how this happens though. My paycheque has been digital for decades. I don’t see money going into my account. On certain days the balance increases and on other days bills are paid and it decreases. I would presume that retirement withdrawals will feel exactly the same. Sure, my investment accounts will be gradually getting smaller, but maintaining a healthy cadence of looking at those balances is always necessary. Especially in market volatility, watching the ups and downs can be very anxiety inducing. People with defined benefit plan pensions will still have a regular paycheque coming in, albeit smaller than during working years.
Maybe the issue of uncertainty relating to finances and retirement security comes from how people feel about money. This is often called our ‘relationship’ with money. What an odd turn of phrase. I’m not in a relationship with money. Money does not control me and nor do I really control it. I like it when there is more money at the end of month than I had anticipated, but that could also be a failing of the budget. There are always two sides of this equation. Money is coming in and going out, it is a flow. Money buys things, some of which are quite necessary and others which are luxuries. The trick is being clear about what is a must have and what is a nice to have. What has been budgeted for and what is not in the budget. We don’t run deficits at my house anymore.
When I was younger I spent far too much time looking around me and wanting to keep up. It was not limited to certain types of comparison. I wanted a nicer house, a nicer car, a better job with more pay, the latest fashion, and luxury vacations that everyone else seemed to be taking. Over the course of a couple of decades, I did not move, I got an electric car, I got a job with more pay, I went backwards in clothing and vacations were done on the cheap. We saved the extra money we could have spent on various other things. Retirement became the quest and I was not wanting it because someone else had it. Other than older relatives I didn’t even know anyone who was retired. I wanted freedom and was willing to forgo a lot of what I once coveted in order to graduate out of my corporate career.
Now as I am on the cusp of moving into retirement, am I sure of my future? No, not really. I can’t predict what will happen, even when the world was less turbulent. As an investor, am I sure I won’t run out of money? No, not really. I’m pretty confident in the plan but if the plan turns out to be completely wrong then we will need to be flexible and resilient. But to spend any time worrying about this is where a healthy yearning to be sure about things turns into neurotic behavior. That is not a place I tend to inhabit.
What is curious to me is how little time or effort is spent on being sure about the emotional side of retirement. How will this newfound resource of freedom be used? This is what I have been spending most of my energy thinking about. This is personal stuff. No advisor can build me a fancy spreadsheet for how this should look over time. No withdrawal plan is required. Maybe it is the personal nature of this part of the retirement plan that keeps the public content limited. The digital natives coming up will no doubt take over this topic and splash the internet full of it. But, for now it is rather quiet.I’m absolutely sure that I am more than ready for the freedom to craft my own weekly schedule. I’m sure I can more than fill my days, no question. I’ve got loads of things on my ever-growing list. It would take me years just to read the books on my shelf, even if I did nothing but read books. I’m surely not turning into an obsessive person either. I like a good balance. I am sure that I want to live in better harmony with the seasons of nature, steward the land I live on and listen to my body. I am sure I will figure out whatever I don’t know, if and when I need to know something. For the rest I won’t worry.
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