A different perspective on retirement

By Larissa Fernand |  26-08-19 | 
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About the Author
Larissa Fernand is Website Editor for Morningstar.in. She would like to hear from you and welcomes your feedback.

Retirement technically is used to refer to an event; the day you leave your job or hand over the reins of your business to the next in line.

It is not always the case of being pushed off the demographic cliff (your company policy forces you to retire by the age of 58, for example). You may be forced into it earlier than you thought when you were retrenched. Alternatively, you may have accumulated sufficient funds to retire early.

Whatever be the reason, retirement is NOT a number (the amount of funds you have accumulated), NOT an age (you could retire anytime), and NOT an event (it’s the starting of a new phase in your life).

Here are some valuable insights on retirement from various experts.

GEORGE KINDER of Kinder Institute of Life Planning

When I met George Kinder recently, I asked him about his views on retirement, and he threw back these questions:

When does a housewife retire?

When do you retire from being a parent?

When do you retire from being the best person you can be?

Since they were rhetorical questions, I asked him if he considered himself retired. His response: “I don’t know how to answer that. In some ways I have been retired for 20 years. In some ways I have only worked part time all my life. In some ways, I have worked 60-hour weeks all my life.”

Eventually, he articulated his stance on why the concept of retirement in our mind must change. “Retirement is a concept that comes out of our corporate and industrial structure. Where we are working a job until we become redundant to them. Otherwise, why would anyone retire from doing what they love?”

BARRY LA VALLEY of Retirement Lifestyle Center

Retirement is not a destination. People look at retirement like it's a deliverance, the pot at the end of the rainbow, and very quickly become disillusioned with that notion.

Many people believe that retirement is a new life, a third age, the longest life stage. In reality, it's a multi-phase journey. Each phase has it own opportunities and challenges and are marked by issues relating to health, death, travel, leisure, marriage of children, birth of grandchildren, and so on and so forth.

My advice is to remove the focus on money and start thinking about life issues. Start looking at retirement from an emotional perspective. Your life still has to have meaning so figure out what you value in life before you retire. Retirement is the opportunity to spend time on things that you love doing and are already doing.

You know what you are retiring from, but what are you retiring to?

DAN KEMP of Morningstar Investment Management

Retirement these days has become a much looser definition. Seldom do people just stop work and start drawing a pension.

Individuals must plan through retirement, not for retirement

. When doing so, remember that when we are thinking about a post-retirement pot, it really comes from a pre-retirement pot. So one has to really think about planning through retirement, not to retirement and then starting again.

ALLISON SCHRAGER of Life Cycle Finance Partners

When you think of retirement, what vision comes to mind? The hardest thing is deciding what to do after you quit working. Once your vision is in place, you can start with a roadmap.

Saving is easy. You divert some of your salary into an investment account, and hope that if the investments don’t pan out, the income you keep adding to it can more than make up the difference. There is less room for error after you retire; if you invest poorly or spend too much, there’s no way to replenish the pot.

Retirees must figure out how much they can spend, leaving enough to cover health expenses for the rest of their lives, however long that may be.

In retirement, your expenses are likely to change. You will spend more on healthcare, and less on things related to work, such as commuting and clothing. How you spend in retirement will determine how long your money will last, and whether or not you will need additional sources of income later in life.

KATHLEEN COXWELL of New Retirement

Once upon a time, long long ago…  we set a date and planned a big retirement party. You went to work one day and then never again. These days more and more of us have a different perspective on retirement date. Retirees today transition into retirement either by going part time for a few years or we find a retirement job.

Most make the assumption that we need to maintain our lifelong spending habits when we retire.  While this IS true for most of us, many people redefine themselves in retirement and can dramatically reduce spending.

We don’t need to keep the status quo when we retire.

What you need to spend to be comfortable while working and raising children might be very different from what you need to spend when you are retired.  And, if you retire somewhere less expensive than where you live now, then how much you need to have saved could be a very different number.

In conclusion…

Retirement is a lifestyle. A mindset. A process. A goal.

It might help to take the advantage of the services of a professional when planning for it. Just don’t take it lightly.

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Deepak Hegde
Aug 31 2019 11:46 PM
While I have nothing against the author, I really wish she gives examples from Indian context and also refers to Indian advisors. Every article of hers had examples in context out of India. While I understand the principles of investing remain the same no matter what the context, readers can relate to things more when examples are given in the Indian context. Also at present there are enough examples from the Indian context if the authors take the trouble of finding them rather than taking directly from the Morningstar international context.
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