Graduation, first job, marriage, having kids, divorce, death of a spouse, becoming a grandparent. These are all major life events that receive a lot of attention. We throw parties, showers, weddings, and funerals to mark these milestones. We formalize them with legal documents. We write articles, how-to’s, and self-help books about them. The rhythm of our lives and our society is centered around them. But there’s a very important life event that gets less attention. It’s retirement.
Retirement is more than a transition from the daily grind to a life of leisure. It is a major turning point in our relationship with money. For decades we save and invest, watching as our pile of money grows. In retirement, we must flip a switch and begin spending down hard-earned assets. The good habits we formed while working and saving turn against us and inhibit our ability to enjoy the fruits of our labor.
Is the goal to die with the largest pile of money? I hope not. That would mean missing out on great experiences and purchases. Those dollars represent missed opportunities to spend quality time with family and friends. Missed trips to visit grandchildren. Missed meals at restaurants. Missed second homes in your favorite places. Missed bucket list items. Missed chances to purchase the things that bring you joy. Even missed charitable donations if your estate plan doesn’t include clear instructions. Are all of these things worthy to be sacrificed for a number on a piece of paper? After all, we are not Egyptian pharaohs who can take our riches to the afterworld.
But making this shift in mindset isn’t easy. It requires learning a new skill; the ability to spend without feeling stress or anxiety. This is a skill set that has never before been required of human beings. Humans developed systems of trade and money to ease the transfer of goods and services. We built on that system to encourage investment in corporations and the financing of governments. Now that human creation, the monetary system, is relied upon to support our spending needs for the final chapter in life. We do not have a body of academic work or ancient wisdom to draw upon to guide us. We are building this plane in mid-flight.
Until the latter part of the 20th century, retirement was a forced necessity. We worked until we could no longer perform the duties of our jobs, and we died shortly thereafter. Today, millions of retiring Baby Boomers realistically expect to live for two or more decades in retirement. Longer life expectancies present a major retooling of our societal norms and expectations. One of those will be the ability to spend down retirement assets.
Retirement is more than a transition in our relationship with money. It is a major shift in our sense of self. The work that has defined our lives for decades begins to fade from view. Everything about life is different after retirement, down to the minute details of the daily routine. I think it is important to ask yourself, who am I without my job, without my career? And more importantly, how will I spend my time? How will I spend my days, weeks, months, seasons, and years once the routine ends? These are vital questions for anyone contemplating retirement. For many, the allure of endless days on the beach or in the garden loses its luster quite fast. The risk of becoming bored is a real and unexpected risk that many retirees face.
Recent retirees often experience a sense of malaise after the initial joy wears off. Work provides an embedded community of people to interact with on a daily basis. The loss of this community is a surprise to many who thought of water cooler talk as a necessary evil. It is important to piece together a new community of friends and family members in advance.
I could go on, but I’ll leave you with some final thoughts. Retirement is one of the biggest transitions in life. It is a transition that requires much more attention and thought in order to help people succeed in it. Is there anything more depressing than sitting at home all day while watching cable news while your portfolio grows larger and unspent? The time to plan not only for retirement but what you’ll do during retirement is now. Spend it wisely, but please, do spend it.