Retirement is not just about saving

By Larissa Fernand |  20-04-20 | 
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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.

Someone recently forwarded me a 2016 article in the New York Times titled Thinking beyond money in retirement. In this article, a couple, both 57, accumulated a bountiful nest egg, but were grappling with the existential issue of retirement.

The person who sent it to me, joked: “The pandemic lockdown is giving me a taste of what retirement may be like, sequestered in my home with my spouse all the time.”

In the above mentioned article, the couple decided to employ the strategy used by financial planner George Kinder.

You need to envisage three scenarios and answer the questions.

You are financially secure. You have enough money to take care of your needs, now and in the future.

  • How would I live my life?
  • How would I describe a life that is completely and richly mine?
  • What would I do with the money?
  • Would I change anything?

You visit your doctor who tells you that you have 5 to 10 years left to live. The good part is that you won’t ever feel sick. The bad news is that you will have no notice of the moment of your death. 

  • What will I do in the time I have remaining to live?
  • Will I change my life? If yes, how will I do it?

Your doctor shocks you with the news that you have only one day left to live. Be aware of what feelings arise as you confront your very real mortality.

  • What dreams will be left unfulfilled?
  • What do I wish I had finished?
  • What do I wish I had been?
  • What do I wish I had done?
  • What did I miss?

While we take inventory of our portfolio, how about an inventory of our lives? Retirement is not only about getting that coveted sum of money.

When I met George Kinder in 2019, he challenged my idea of retirement. When does a housewife retire? When does one retire from being a parent? When does one retire from being the best person you can be?

For now, let us just stick with the conventional view of an individual retiring from his or her regular job. To better tackle this issue and gain a holistic perspective, here are a few basics to grasp.

Retirement is not a destination.

Retirement is not a one-time event.

Retirement is not a homogeneous phase.

We all plan for retirement. And it is crucial. How much must be the nest egg? How must the transition take place? Are you going to transition into it by going part time? Or are you going to pursue a hobby? Or are you going to make the switch to being a consultant? Or are you going to explore with a new career?

Professor Robert Atchley developed six descriptive phases of retirement that show it to be a transitional process over different phases. It is a new stage in one’s life, but a multi-phase journey.

Retirement in your 60s will be quite different from retirement in your 80s. Not only will your level of activity and dependence differ, but also the financial outgo. In the initial year, travel may take predominance. Later on, the focus might be on healthcare. Each phase will have its own opportunities and challenges and moments – death of a spouse, deteriorating medical conditions, travel, marriage of children, birth of grandchildren, and so on.

Hence, while you plan for retirement, don’t forget to also plan through retirement. What sort of lifestyle do you plan to maintain? How do you plan to spend your time? What do you really plan to do once you quit the 9-to-5 routine?

You need to approach it from different perspectives: existential, financial, emotional. There is the psychological and behavioural distancing of oneself from the workforce. But there is also the reality of new social roles, expectations, challenges and responsibilities. You must have clarity on what you are retiring from, and what you are entering into.

Maybe this lockdown is a good time to give thought on how you would like to spend your life when you no longer have to trudge daily to work.

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Ratnesh Dasgupta
Apr 23 2020 04:10 PM
 An eye opener article......
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