Retirement Planning

from Jeremy

So many of us are working day by day with a long-term wish to retire bubbling under the surface of our regular lives.  We want to be free from our jobs, but are often disheartened by the common wisdom that we have to work until we’re 65, at which point we may or may not have the necessary funds from which to maintain our current lifestyle.  Jan and I are here to reinforce the argument that the common wisdom is bullshit. We don’t need to work until we’re 65. In reality, all we have to do is change our expectations and we can retire far earlier. 

We’re not the first to challenge this dominant philosophy on retirement, which is why we used the term “reinforce” in the previous paragraph.  There is a growing community of advocates for early retirement (Your Money or Your LifemrmoneymustacheGoCurryCrackerMadFIntist, just to name a few) ; most espousing the same philosophies of how to achieve this utterly achievable by anyone goal.  We’re going to add our own elements for the Life is Comfy crowd because although we love the resources we mentioned, and follow them regularly, none of them speak directly to us and our way of living. 

As we talk about in our ABOUT section, we believe that we should be who we are, test our biases, change our life as appropriate, but do so within an area of comfort, rather than through extremes. Many of the early retirement crowd tend to take extremes, which for them may be awesome.  Yet, when we looked at similar paths for ourselves we found that the extremes just did not fit in with our life goals.  No sense in being extreme in something unless it allows you to be who you want to be and live the life you want to live. 

The first question we recommend you ask yourself is: What kind of life do you want? Would you like to: 

  • Work for others 

  • Work for yourself 

  • Not work at all 

Until you can answer this question, it’s not worth reading the rest of this post or looking at the worksheet below.  This question is key to realizing what path makes the most sense for you and for your retirement planning.  Unless a financial advisor, certified financial planner, or simply your cousin the accountant who you talk to about your future plans asks you this question first, it may not be worth listening to the rest of what they have to say either because what advice they give you will not be in line with the life you want to lead. 

So, what kind of life do you want? 

Great, now that you know what kind of life you want, let’s delve deeper. 

If you want to work for others because there is an organization that you love to work for and you don’t see yourself leaving it, then fantastic! Do all you can to be the best person you can be to help that organization flourish, demonstrate your utility, and achieve the job satisfaction and outcomes you desire.  

If you want to work for yourself, then you need to know what kind of work you love that you can get paid to do.  This is a whole process in its own right, but luckily for you one we’ve talked about in Declaring Your Life Purpose. In that post we’ve offered up a free worksheet to help you figure this out for yourself pretty quickly. Go check it out now, we’ll wait. 

If you’d like to not work at all, awesome.  The only question we recommend you then ask yourself is what do you love to do so that you won’t get bored off your . . . ?  Many people approach retirement without any idea of what they’ll do once retired.  We do not advocate taking this path.  Even if all you want to do is lounge on a beach someplace in the Caribbean for the rest of your life while people bring you endless Pina Coladas, chances are you’ll eventually want to crack a book, visit a kid somewhere, or possibly share your experience with others.  You’ll want to have some of those things lined up before pulling the retirement plug, or at least be open to discovering them once you’ve had a break from the daily grind. 

So, now that we’ve asked you what you want your life to be like, we’ll let you in on the planning we have for ours. 

Jan: Ok working for others, prefers to work for herself, but honestly that Pina Colada (well, maybe lemonade) lifestyle sounds pretty good! Keep the family and friends (and occasional lasagna around) and I’m happy.  There’s a lot I’d like to give back, whether that’s through work or volunteering. 

Jeremy: Wholly and utterly want to work for myself and would go insane if I tried to do nothing.  I have a million (ok, honestly I have no idea how many) ideas of projects I’d love to do in my life and the key thing holding me back is scarcity of time.  I’d like to focus on the few from which I gain the most joy, and hopefully over the course of time begin to return a modest (very modest!) income to support a lifestyle of self-sustainment through personal creativity. 

Joshua: Play! Just Play! Usually having something to do with sand, a sand box, excavators, and other construction equipment.  We’ll see where this leads over time. 

Jan and I love our kid, and will soon enough hopefully be offering and providing that love to a second child.  We want to spend as much time with these kids as possible, raising them ourselves rather than relying upon someone else to raise them for us. We also love creating new things.  Each in our own way, we’re artists, offering our art to the world.  We want to be able to focus on that creation once we are financially independent. Therefore, our ideal retirement is based around spending time with our kids and creating art for the world. That Pina Colada will have its rightful place, though! 

How much do I need?

Now, ask yourself, what does it take to get to where you want to be from where you are now? In order to answer this question, think about what skills, money, practices or routines, as well as following you need to achieve the outcome you desire. What education would you need to get the skills required?  What money do you need to save to have what you’ll require? On the other side of that coin, what kind of lifestyle can you live now to improve the chances of achieving that monetary outcome? Then, look at how you currently conduct your day, spend your time, and your preferences for the life you want.  Are you living now as you would like to live?  Are you practicing the habits that will get you to where you want to be?  Are your routines, (which we offer advice about developing in Routines Are Fluid), the kind of routines that will build your preferred life? Are you developing the 1000 true fans that you need to support the lifestyle you want, whatever it is that you choose to create? 

 The Money Part

Once you know what you need, then you can work on developing your skills, money, practice, and following through education (self-taught, through courses, or with mentors)financial planning (through systems like using Betterment and Personal Capital), Practice (through developing routines), and developing a following (check out Tim Ferris and the Art of Manliness as two great examples of how to do this! We’re not talking about their content, although that’s high quality, but rather what they’ve built and how.  They are great examples of creating a following to support their goals.) 

In order to figure out how much you’ll need in terms of money, you may also find it valuable to consider this question: Where geographically do you want to be? Most of the world is far less expensive than the United States in which to live.  Your money requirements can differ greatly depending on whether you’d prefer to live in the United States, live abroad, or have a life that combines the two in some way.  If you’re open to living outside of the borders of the United States then chances are you can push forward the point at which you’ll be able to support yourself financially.  If you’re not willing to leave the U.S., then possibly finding parts of the country that are not as expensive as others will help you achieve your preferred lifestyle sooner.  If none of that sounds good, and you want to live it up in Manhattan, San Francisco, or Washington D.C. then simply being realistic about your monetary needs will allow you to avoid frustration as you wait a little longer to achieve your financial freedom. 

How much will it cost for you to live in any of the places you’d like to live?  Great resources for this include NumbeoInternational Living magazine, and salary.com’s cost of living calculator. Check them out for the places you’d like to be.  Chances are you’ll discover new places you haven’t even considered yet.  Again, we’ll wait.   

What you're doing now

Great, so now you know what you want to do, maybe have a few ideas of where you want to be and how much it will cost to live your life there.  Isn’t that awesome!  Let’s check into what you already have, do, and know that’s taken you any distance on the path toward your preferred life. Personal Capital is an awesome tool for figuring out what you have financially.  It’s a free app, as well as website.  You will be contacted about using their advising service.  This service may be for you, it may not.  Feel no obligation to use it.  Yet, the free program is fantastic for figuring out where you are financially, plugging in numbers into their Retirement Planning tool, and seeing how your plans stack up with reality. 

Beyond the financial, though, what are you already doing that takes you down your path.  If you want to work for yourself, are you building that business? If you want to do nothing, are you getting that lounge chair ready? Again that Pina Colada is sounding really good right now! 

From where you are now, how far do you need to go to get to where you want to be? 

- On the financial side, how much do you still need to save to live where you want to live on the savings and earnings you expect? 

- On the working side, what more do you have to do to develop the business you want to build?

- On the lounging side, how far are you from that beach or golf course? Knowing this gap, you can now work to address it. 

There are a ton of great ideas on how to save more money, invest wiser, and spend less on MMMMadFIintist, and Personal Capital

For the non-monetary side of this gap resolution, talk to others who’ve taken this path, listen to podcasts like Startup if you want to start a business, or find ones that make sense for you.   

Some suggestions on gap resolution include: 

Develop a Side Hustle out of your business idea.  Get it launched, start doing it, and build it as you’re working your regular job. At the point at which it provides what you need to live, say goodbye to your regular job. 

In terms of education options, consider free online providers such as CourseraKhan Academy, and others. Also, reach out to your local Small Business Development Office to take free classes with them. 

Tracking Progress

Look into the gaps that exist between where you are and where you want to be.  We recommend developing a realistic perspective on how long it will take to address that gap.  Then, add some time to that, as nothing happens as fast as we expect.  Building yourself a timeline, ideally with milestones along that time-frame so that you know if you’re on the right path going forward, allows you to regularly measure your progress against your goals, and adjust accordingly so that you don’t show up on your expected day of financial independence finding yourself far short of your anticipated goal. 

When setting up that timeline, consider some alternative paths toward the desired outcome you seek.  You could build that awesome app that goes viral.  Or, you could launch that kick-ass blog everyone wants to follow.  Yet, are there other ways to get to where you want to be that would make you happy?  Consider testing the paths you think would work to find the one you enjoy most that is most effective in getting you to where you want to be. Not being wed to a single path will allow you to develop the life you want without the heartbreak if what you specifically want to do does not work out as you expect. You’ll build in resilience for your plan, making it far more likely that you’ll hit your goal on or around the time you expect to. 

To sum up: 

  • Decide what kind of retirement you want. 

  • Where do you want this retirement? 

  • What does it take to get to this retirement? 

  • Where am I now? 

  • What gaps exist that I need to address? 

  • What paths exist to get to where I want to be? 

  • What timeline, milestones, and adjustments can I make along the way to ensure I get there? 

If your are a Life is Comfy subscriber (click here to become one), you have access to a handout you can use to answer these questions for yourself.  Chances are, if you’re honest with yourself about what you want and your needs, you’ll find that unless you specifically want to, no one should have to work until age 65.  People retire in their 30’s following this path.  Jan and I came to it a little late, so we’re looking at our early-to-mid-40’s, which still isn’t bad.   

We’re happy to help any of you work this out, if you have a hard time working it out for yourself.  Please ask questions in the comments.   

What kind of retirement do you want?  Where will you live?  Can we visit?  Will you have Pina Coladas?