Sam Sivarajan is an independent wealth management consultant and the author of two books on investing and decision-making.
Are you ready for retirement? Nearly half of Canadians recently surveyed aren’t, saying they lack sufficient savings and plan to work part-time in their retirement years to make ends meet. A U.S. survey last year found Americans were even more pessimistic, with just 22 per cent confident they will have enough money to maintain a comfortable lifestyle, down from 26 per cent the previous year.
None of this is surprising or new. Financial planning for retirement has received a lot of attention in the media in recent years, and planners have warned of the dangers of not adequately preparing for post-working life. The dramatic increase in interest rates that began last year has only exacerbated concerns.
At least the issue is being talked about. There is another issue around retirement that is equally pressing, but rarely discussed: People are now living decades past retirement age, yet little attention is paid to planning how they will spend those years.
“Over the past century, we’ve created the greatest gift in humanity – 30 extra years of life – and we don’t know what we’re going to do with it.” This was the sage observation by Dr. Joseph Coughlin, the director of the AgeLab at the Massachusetts Institute of Technology. Think about it – our grandparents were lucky to spend a few years enjoying their retirement years. Many people can look forward to 20 or more years.
Most of us spend 30-plus years working 40 or more hours a week. Work accounts for 50 per cent of our waking hours – it is our intellectual stimulation, a large element of our social network and a huge factor in our sense of purpose.
During those working years, many of us dream about how we will indulge our outside passions in retirement. But how many golfers – even the really avid ones – want to golf five days a week, 12 months a year? For those keen travellers, how much travelling can one do before tiring of living at airports and out of suitcases?
The reality is that most of us plan our working lives, some of us plan our financial lives, but almost no one is planning their retirement lives. Of course, for much of history, people just worked until they died. So, Dr. Coughlin is right – this is a gift. But do we know how to use that gift wisely?
Consider recent research which suggests that the quality of our social relationships has as much impact on our mortality as more traditional factors such as smoking or drinking. Or that the phenomenon of quiet quitting – doing the bare minimum – is a reflection of people feeling disengaged at work; less than one-third of U.S. workers (and probably similar numbers in Canada) feel engaged at work. We need to be engaged – at work and in retirement.
All this creates even more urgency for people to give due consideration to what life in retirement looks like. Advisers and educators are well positioned to encourage people to consider questions such as what a typical day/week/month should look like in retirement? What activities will I engage in? With whom? Where? What steps am I taking now to make this transition as seamless as possible? What social connections am I building that I will maintain in retirement? What activities or hobbies am I cultivating that I enjoy and can continue in retirement?
Some advisers are having these types of conversations. And there are now programs available like the Modern Elder Academy, What’s Next?, and others that help people think through what to do with their extra time: a community that allows people to engage, discuss and discover their third act.
Still, more needs to be done. Financial planners, advisers and wealth management firms should lead the charge to help their clients ask these questions and think through the answers. After all, having a financial plan is very important. But so is knowing what that money is meant to help you do.
As the Stoic philosopher Seneca said: Living is the least important activity of the preoccupied man; yet there is nothing which is harder to learn … Learning how to live takes a whole life.
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