BLT: When do you plan to retire and why?

1. What does retirement actually mean?

“Retirement: The action or fact of leaving one’s job and ceasing to work.”

– Source: OED

Thoughts from around the table:

* Retiring from what? Retiring from work, or retiring from life…?
* Retirement could be a millstone or the freedom to do what you really want.
* I’d define it as retiring from gainful & profitable employment…it’s not a question of being inactive…
* I’d be worried about retiring and losing my identity and sense of purpose.
* Everybody seems to want to use their hobbies to make money in retirement, but when a passion become a a business, it becomes stressful all over again!

“Age doesn’t matter; an open mind does.”

– Tim Ferriss

Myself, I’m always surprised how people forecast and plan for retirement on a linear basis, with nothing ever changing. From experience, certain life-changing events such a resource can drastically alter the amount of resources you have to play with:

“Divorce – it’s like having your genitals ripped out through your wallet”

-Robin Williams

2. Why retire?

“The question you should be asking isn’t, “What do I want?” or “What are my goals?” but “What would excite me?”

– Tim Ferriss

Again, thoughts from around the table:

Because my partner retired and she seemed like she was having far too much fun!
I’ll retire at 66, the state retirement age; my father retired at 63 and died when he was 67.
Because at some point, I won’t have the energy or commitment to make a difference in my job.

So, perceptions about the ‘what’ and the ‘why’ of retirement seem to be inextricably linked.

3. The IFA question

“The golden years become lower-middle-class life revisited. That’s a bittersweet ending.”

– Tim Ferriss

The IFA in at the meeting table (no, not the elephant in the room!) told us the following was his opening line when talking to prospective clients about their retirement planning:

“If I were to slide a cheque over the table to you for £x [think of a generous amount!]… what would you do?”

The most common response is not to resign and walk away from walk altogether, but usually to carry on doing what doing but not for same people.

This leads us onto the question, ‘How much money do you need to keep on doing what you want to do?’

Traditional wisdom dictated that men should retire at 65 years old, since they’d be dead within 10 years, therefore retirement used to be a period of golf, gardening and general stagnation, but all on a rather nice final salary pension….so not too stressful.

Nowadays however, with life expectancy predicted to top 100 years old in some (more affluent) hotspots, there are different considerations to take into account, namely:

• What ‘work’ would you continue doing in retirement (35 years is a long time to garden!)
• How can you fund yourself for 35 years without an annuity [note: you would currently need around £1m to buy an annuity of £2,500 per month].

Whilst the concept of retirement is a long way off for millenials, these are the people who should be worried – student fees, arriving late on the property ladder, and a different attitude to saving (lattes being more important than pensions), all mean that these will be the people least able to retire…maybe it’s a good job the retirement age will be a lot higher by then!

“Money doesn’t change you; it reveals who you are when you no longer have to be nice.”

– Tim Ferriss

4. Book – The 4-Hour Workweek, Tim Ferriss

You may have noted the ‘retirement-type quotes scattered liberally throughout this blog; these are from Tim Ferriss’s best-selling book.

It deals with what Ferriss refers to as ‘lifestyle design’ and argues against the traditional ‘deferred’ life plan in which people work long hours with few breaks in order to save money for their retirement.

Ferriss is a big fan of outsourcing, using time better to become more productive, and has other interesting ideas such a taking mini-retirements throughout the year.

Some of his insights: