21 Apr What does it mean to retire?
There seems to be a running joke about me that I’m not privy to. I was asked to speak at a conference about “retiring in your 30s “(and when I left BlackRock, eFinancialNews wrote this about me). Yes, like a retiree, I’ve had to tap into my savings. Yes, I’ve blurred the lines around “work,” but if measured as time away from family, it’s in the zone of 60-70 hours a week. I fail to satisfy most of the conditions of early retirement, with one exception. If I actually were retired, I’d spend my days in almost an identical manner.
What does it mean to retire?
I have a suspicion (with zero proof) that retirement is a concept created by the financial services industry, as a means of selling lots of products (the equivalent of a Hallmark Holiday, like Valentine’s Day). The story goes: some time between age 59 1/2 and 65, poof life begins– travel, golf, hobbies, friends. Call me skeptical, but I think that it behooves us to think a bit more deeply about what retirement entails and how we should adapt our lives as we approach this phase. (Not to mention that our extending lifespans have serious repercussions on our assumptions about investment returns and social security/pensions.) So what’s so awesome about the the current flavor of (age 65) retirement?
Freedom and flexibility. It’s the ultimate Half Baked moment. That annoying boss of yours – well they can shove it. No one’s going to tell you where to be, what to say, and how to dress. Oh yeah, and goodbye corporate email and Monday morning meetings.
More time with loved ones. We all (working moms in particular) want to spend more time with our kids, friends, and families. And with freedom, comes more time to do so. But I wonder, when I turn 65, our daughters will be 35 and 32 (and fingers crossed, there’ll be grandkids). I pray that they’ll still want to spend all their time with us, but let’s face it – they’ll probably be in the throes of their own adult lives.
Travel. This is a big one, as it ties directly to having flexibility and freedom. But one should also keep in mind that travel isn’t a guaranteed cure for the mind.
Nourishing your body and mind. Whether it’s golf, meditation, yoga, Ironmans or contemplation, we all have those activities that require time and that we’ll get to – one day.
Hobbies and intellectual pursuits. If you’re reading this, curiosity and learning are a source of richness in your life; this could include taking an art history classor learning a new language.
Considering impact/legacy. This is a tricky one, with high variance amongst different individuals. Some people care deeply about this, while others DGAF. What mark do you want to leave on this world?
The snazzy chart below shows how one may distribute their time across these activities in a pre- and post-retirement life.
Beware of the cliff
The second, and bigger question is, can you consider ditching the “cliff” in this chart? Or more bluntly, are you willing to “borrow” from your retirement to spend more time in the other buckets? And by borrowing, it could be as simple as changing roles, being on the road less, forgoing a promotion, taking a sabbatical, or (if you have some savings) maybe even taking a break. There certainly are risks in this approach, but as you recall financial security can be confusing (and we have a tendency to catastrophize). After all, doing a mic-drop at age 65 feels somewhat arbitrary.
Dollar dollar bill y’all
As if this weren’t confusing enough, let’s throw in a little financial math – the present value of a dollar. If you were offered a dollar today or one in 30 years, you’d obviously pick the one today. (Using a 5% discount rate, that future dollar is worth 23 cents today.) Why? Well, risk and uncertainty. I’m touching lots of wood right now, but 30 years from now is a long friggin time – a lot can happen. And personally I find planning for the future, while remembering that much of life is beyond our control to be one of the hardest dualities to hold. As Frank Ostaseski beautifully says, Have a Plan, Hold it Lightly.
A funky interview question
As part of its interview process, Airbnb asks the question “If you had ten years to live, would you take this job?” I tend to avoid premeditation malorums (i.e. meditations on death, HT @andrewjtaggart) and many find this question symbolic of the God-like arrogance of Silicon Valley. But put Airbnb aside for a moment and think about the question – it may shed some clues as to what retirement may look like for you. Ten years is long enough that spending all your time in one category (family, travel, hobbies) would probably be excessive. So then what?It’s a useful canary as to what tweaks you may want to make in your life today. But as the Present Value formula indicates, don’t wait to ask the question. It surely make life today richer.