Stop me if you’ve heard this one before: a worker burns both ends of the candle to retire at 65, only to die shortly after – or even before – that magic number. Finance experts caution us to set sustainable work-life balances, then tell us how to turn our hobbies into monetized “side hustles” in the same breath. Whether it’s because of rising living costs, social media-fueled FOMO, or the fear of financial precarity, many of us push ourselves into stressful, passionless overwork.
Decades of that work stress can exact a physical toll, especially if we neglect our bodies and mask the stress with food, alcohol, or hours of streaming video. And when we retire and stop moving altogether, the consequences of all that stress catch up with us, like Wile E. Coyote risking a glance down after running on thin air over a chasm. The antidote to working yourself to death for the carrot of retirement at age 65 may be to reconsider what retirement means. I don’t believe the notion of retirement as a “permanent vacation” is the best way to frame the sunset of our working careers. For that matter, the financial realities of Gen-X and millennial workers may rule out that glossy, travel brochure image of retirement as a life of beachside indolence.
Instead, think of retirement as a change in your career and an opportunity to expand your passion. That can mean starting a new business, volunteering, or down-shifting your current capacity at work to spend more time with family. The exact shape a passion-based retirement takes will be up to the individual.
How do you make it happen? I believe there are three components to opening the door to a passion-based retirement: lifestyle management, asset management, and financial life management.
One of your biggest retirement obstacles, of course, is runaway consumer debt. With interest rates on the rise, the undertow of credit card debt will drag away the gains of your retirement portfolio. And without a cushion of emergency savings, an unexpected expense could erase your progress in lowering your unsecured debt if you’re forced to cover it with a credit card.
If you’re paying down debt, you know that it is long and thankless work, but reducing your overhead today means you have more financial freedom in the future. Other cost-reducing lifestyle adjustments to consider might be living with family or finding ways to telework.
Broadly speaking, this means having a portfolio aligned with your appetite for risk and positioned to make the most out of fluctuating markets. A big part of asset management is also managing your emotional relationship with money. How would you react if another market correction erased a fifth of your wealth? A do-it-yourself investor can hamstring their retirement potential all too easily by giving in to market panic. A financial life manager with designations reflecting rigorous education and a commitment to the fiduciary standard can help an investor stay on the right path.
Financial life management
Are your life and money both headed in the same direction? Financial life management means keeping an eye on the big picture. After all, you don’t (or shouldn’t) accumulate wealth for its own sake. It’s fuel to expend on what you want out of life – or when life doesn’t go to plan.
An advisor who is well-versed in the financial life management ethos can guide constructive conversations about your vision of retirement. When should you start to “downshift” into your next act? What if your passions change, or something unexpected happens? When you focus on financial life management, you align your financial goals with your priorities and passions.
That alignment is key to living the life you want, both today and in the not-so-distant future.
Paul Bennett, Ph.D, CFP®, is the managing director of United Capital’s Great Falls office. He is the author of the newly-released “The Money Navigator.” You can find him on Twitter at @paulbennettphd.