The
word “retirement” is taking on a completely different meaning in the 21st
Century from what it meant in our parents’ day. Back then, retirement referred
to the day you stopped work, and life thereafter looked pretty much like going
on holiday till you grew old and frail.
As
we enter what is called the Third Chapter (for me it is certainly NOT the final
chapter; I am saving that till I am old and frail), we Boomers are
finding that we still have plenty of energy, and imposing a cessation of work
feels like trying to stop our lives mid-stream.
A Road Map Concept
I
recently discovered Steven Covey’s book, 7 Habits of Highly Effective People,
and it was the first chapter that resonated with me.
He
talks about paradigms as road maps. For example, the road map we were given by
our parents for retirement is one where you stop working, take on a life of
leisure, and finally grow old and frail, and then die.
As
50% of Boomers are expected to live to 100, which is 30–40 years after the
conventional age of retirement, this road map isn’t going to cut it for us,
because we are going to get very bored and run out of money. Therefore, we need
to change the map – or as Covey says, “shift the paradigm.”
Our
new map for retirement should include work in some form, though not necessarily
in the traditional sense. As I see it, we are going to continue “working,” but
in a different manner.
We
may work for income or we may work for recognition or simply a philanthropic
sense of contribution, but we will spend part of our weeks in structured
activity.
Shifting Our Work Mindset
This
will require 3 shifts in our way of thinking about work:
How We Define Work
As
we were working our way up the corporate ladder, we tended to look for the best
job with the best income and then tailor our lifestyle to our earning capacity.
In retirement, it tends to work the other way around.
We
calculate the income required to sustain our lifestyle, and then we mould the
job to suit these criteria. We also need to include a category where we do NOT
work for monetary reward. Many retirees find volunteerism liberating and
invigorating, if they can afford it.
How We Calculate the
Income Needed
In
my retirement coaching practice, I help
people understand that they are no longer working to save money for retirement.
Most
people have a retirement income of some form – either a pension, a state grant,
or interest from investments – so you need to calculate the shortfall between
what retirement income you can expect, and your monthly budget. This is what
you will need to earn.
For
example, John can expect $1,500 per month in retirement income. He is currently
spending $2,000 per month to maintain the lifestyle to which he is accustomed. He
would also like to add in an annual holiday costing $1,000.
John’s
shortfall of $500 per month totals to $6,000 per year. Adding in the holiday,
the sum grows to a total of $7,000 per year, or $585 (rounded) per month.
How We Choose to Work
If,
for example, John wants to work as a life coach in retirement, charging $50 per
session, he needs to find a minimum of six clients who he sees fortnightly, in
order to cover his expenses.
He
can choose to meet with three clients per week all on the same day or he can
choose to scatter the appointments. To simplify the example, I have not
factored in the extra expenses he would incur to run the business.
The Part Time Switch
When
I first retired, the big “a-ha” came when I realised I no longer needed to work
full time for a salary. Covey talks about the “a-ha” moment as being that
moment when the paradigm shift occurs.
As
a retiree, you can tailor your work to bring the income needed to supplement your
retirement income, so that you can sustain your standard of living.
What do you seek in retirement? Leasure time or something else? Has
your mindset shifted yet? How did that change occur? What did you learn in the
process? Let’s have a conversation!
