How to Decide When to Retire
Now that we’ve covered the stressful situation of applying and interviewing for a new role, it’s time to slow things down with a relaxing topic: planning for your retirement. What? That’s not a relaxing topic? Maybe you’ll feel better about the future once you read some tips and tricks in today’s article.
Question: How do you know when it’s time to retire? Answer: When you have enough money. Boom. End of article.
Not so fast buddy. There are a lot of factors to consider besides whether or not you’ll be able to afford things. Don’t get me wrong. That is a very important factor. Never underestimate the power of being able to afford to take care of your significant others. We’ll go through the main considerations one by one and hopefully by the end you’ll feel better about your plan (or at least know which questions you need to answer before you create your plan). This isn’t a comprehensive set of questions. I’m sure each of you will think of more nuances when the time comes to move to your next phase.
How much do you enjoy working? Some of you chuckled reading that (who enjoys work, are you kidding?), but I’m betting another group of people nodded. There are actually people in the world who enjoy working every day. Unless your company mandates a retirement date/age, then you could keep working as long as you want to. You may get asked to take on more advisory and honorary roles as the young whippersnappers start leaving your skill set in the dust, but you’ll be around. Talk with your management about what you want to do. It’s no guarantee, but at least they won’t assume that you want to flee out the door at 65.
Why are you working / who are you working for? No, not your boss. I mean the people you support with your salary, so your kids, your family, charities, organizations, etc.. Do you have the resources you want to have to keep that support going? Alternatively, maybe you have been waiting for the day you finally get to tell your 45 year old son that they’re cut off. How comfortable are you trimming that support so you can ensure you take care of yourself for potentially decades? That may sound daunting, but remember the support doesn’t have to be financial. Retiring could mean you have time to volunteer at that organization (possibly as a super fancy board member). You’ll have time to babysit (once in a while, let’s not go nuts here) to let your kids do what they want to do. Think about what you want to, and can afford to do and make that your plan.
What will you do once you stop your current role? Seriously ask yourself the question. After the first relaxing week of not opening your inbox, what does the next week look like? I know several people who have retired in the last 10 years, and they all had the same advice: make sure there’s something to look forward to each day. Doing nothing at all sounds very appealing right now, but it won’t sound appealing on day 78 of nothing to do. Some of you are thinking “well I’ll go be a greeter at Walmart if I get bored/need benefits”. I’ve lost count of how many times I’ve heard that phrase. What’s your backup plan if Walmart doesn’t need a greeter (or if you’re terrible with people)? The cliché we’ve all heard is someone asking, “what’s your dream job and do that when you retire”, but they don’t ever talk about the pay scale for a role that tests couch cushions and remote controls while someone brings you pizza. Make sure that whatever your next step is that it has the fulfillment (financial, mental, whatever) that you’ll need.
Who are you when you aren’t working? Not the vacation version of you, but the full time non-work version. For the majority of people using LinkedIn, their jobs are places where they can compete and win, or dig into tough analytical puzzles, or boss people around. Do you have an alternative outlet for the sense of accomplishment those tasks bring you today? You can boss around your kids for a while, but not forever. Can you live without the status of being an executive vice president with travel perks? My wife can attest that I need to keep my brain occupied, so when I’m bored I either start doing things that don’t need to be done, or I start talking her ear off. Before I retire, I have to have a few different outlets to solve problems and stay creative. Spend some time considering who you are and who you want to be. You’ll have to live with yourself for (hopefully) a long time after retirement.
Who will you complain about your significant others to? Your coworkers patiently listen to your tales of family woe today and give you vague responses like “oh that’s terrible”. And then you think you feel better. Who will be your new venting sponge post retirement? I recommend spending a year or two before retirement breaking yourself of the venting habit. Yes, that’s difficult, and No, I’m not dumb for suggesting it. How great would it be if instead of complaining about your spouse, you talked to them about what was getting your goat. Important word there is talking, not yelling. Get your goat back and minimize the need for a venting sponge. (If anyone out there makes cleaning products, I will happily license the phrase “venting sponge” to you).
How much do you want to leave to your kids? It’s a bit of a morbid math exercise, but the formula is basically how much you saved to live until a certain age, and if you pass before that age then your kids could get half of what’s left (thanks Uncle Sam). The hard core capitalists are pointing at their screen right now and shouting, “Nothing! My kids need to take care of themselves like I did!” That is certainly an option. It’s your money and you get to decide what to do with it. My advice is to discuss it with your kids while you’re still around to make your wishes known (Big shocker — Philip’s advice is to talk to people). Nearly all parents want their kids to be successful (especially the one with that 45 year old son who thinks Minecraft is a career), and you might be able to help them financially more now than 20+ years from now when they’re all grown up. Stay wise — if they’re terrible with money, then a loan may do more harm than good. The point is to help your kids with your resources, so figure out the best way for that help to look.
So back to the original question — how do you know when it’s time to retire? Answer: When you know that you’re ready to stop doing what you’re doing, when you know the people you care about will be okay without your salary, and when you are comfortable with your mental and financial future. I agree, that is vague. So is the definition of what retirement is “supposed to be”. Don’t let the financial advisors scare you with a sky high retirement $ amount — they’re mostly following a narrow set of guidelines & assumptions, and your retirement can be whatever your imagination and bank account will allow. You spend your career carving out a unique place and a name for yourself. Why should your retirement be anything standard?
-Philip
