One of the most common financial planning goals is retirement. “When can I retire?”, “How much can I spend in retirement?”, etc. It is easy to forget that the entire concept of “retirement” is a modern invention, created by industrialization. Before the 20th century, the average person simply did what they did until the end of their lives (which also came much earlier).
Modern “progress” created an entirely new phase of life and the financial world, businesses, and governments created the means to provide streams of income after leaving the workforce. In the early decades, this task was made simpler due to the fact that most folks only lived a few years beyond the age of 65 (the age determined by governments, employers, and Wall Street to be the trigger for benefits).
Fast forward only a few decades and our medical and social advances have increased our life expectancy dramatically, without corresponding adjustments to pensions, social security, and other savings plans. Five or ten years of retirement has ballooned to 25 or 30, and beyond. The visual of sitting in a rocking chair on the porch for 30 years doesn’t hold much appeal. So the new era of financial planning is focused on making the most of this financial independence phase, and what it looks like for each unique individual.
Rather than a sudden, complete exit from the workforce, many now choose to simply reduce hours, or even start new careers. Capturing the benefits of social engagement, as well as financial rewards, but having more flexibility to travel or be with grandchildren, to pursue a special hobby, or increase community volunteer work.
Part of the financial planning process is visualizing what an ideal day or week might look like, and thinking through lifestyle adjustments ahead of time. Having special goals during retirement, not just retirement itself. Enabling good financial stewardship to and through the point where work becomes optional. Financial independence, not just retirement.
Are you ready for that kind of planning? I am!
