By Cory Shepherd
The concept of retirement that has become part of our cultural mindset has developed into moving away from something (the 9-5 grind) rather than moving toward any specific meaningful condition of life. If you are craving some peaceful years as you age, but your primary motivation for retiring is that you get to stop doing what you are doing now, then you are charting a path fraught with problems.
If you ask 10 people for the typical retirement age, at least 9 are going to tell you age 65. Have you ever wondered where that age came from? Our idea of “retirement age” developed after the advent of Social Security. The Social Security Administration (SSA) began its work in 1935, and at that time 65 was the earliest age to begin receiving benefits. Most of us haven’t been alive long enough to remember that before the 1930s, the word retirement was much more commonly used in relation to the family horse and the forecast for that horse was not optimistic. Before the SSA, the average American didn’t have the same bright future of retirement that so many financial ads paint for us now. America then saw only 15% of private companies offer pensions, and only 3% of Americans receiving government pensions. Though author Roald Dahl was British, the depiction of Charlie’s four invalid grandparents sharing a bed in Willy Wonka and The Chocolate Factory paints an accurate visual for early 1900s America.
Social Security was an answer to a specific problem: providing a lifeline for aging Americans, who had no other alternatives to sustain themselves past the end of their ability to work. If you are in a career that requires physical use of your body, you may well be charging toward a corporeal deadline. If you work in a field that is more mental, you may have flexibility on that end date, but your brain or body may still choose not to cooperate sooner than you would like. In either case, if you have become a highly skilled and valuable contributor in your field, that feeling of being valuablecan be hard to opt out of, especially if the exit is forced.
As one example, physicians often have a hard time thinking about retiring, because so much of their self-image has been built around helping others. There are more than a few examples of physicians retiring from their practice, only to go immediately back into per diem work several days a week. They are doing the same work, just at a slower pace and on their own terms. This is an example of the new vision for our lives: not to “retire” ourselves from useful service, but to redesign our lives to have the most of what we want and the least of what we don’t.
Instead of trying to change the definition of retirement, we need a different flag to fly. It might make sense to consider Definite Financial Independence (DFI) as a new target. DFI simply means that you are no longer reliant on a paycheck to support your lifestyle. Said another way – the capital at work on your balance sheet is now able to replace your physical labor. The reality is most of us will not stay healthy, active, and vibrant into our elder years without finding some kind of highly engaging endeavor to dive into. Whether that is volunteering for a cause they believe in, mastering a new craft, or getting paid to do something they would have done for free; the happiest retirees are doing more than they were when they were working.
The powerful secret lies in moving the focus away from what you are not going to do, towards the question “If I didn’t need to make sure a paycheck arrived every two weeks, what would I do with my time?” Once people start asking those kinds of questions, they are often surprised to find that they start to figure out how to live more and more of a non-paycheck dependent life now, even while they are still working.
DFI is not about dreaming of one day down the road when we can live the good life. DFI is about answering your own questions about what a good lifemeans for you, and wading deeper and deeper into the engagement and fulfillment of your ideal lifestyle as you move into the future.
The most favorable outcome is that people who spend time now to figure out what their happiest, most fulfilled version of the future will look like, the more they tend to discover ways to have that future happen sooner than they ever thought possible.
Cory Shepherd CFP®, ChFC® is President of Sound Financial Group, a financial advisory firm and a subscriber to MyPerfectFinancialAdvisor