Early retirement without a plan ≈ poverty, addiction or an early death.
Don’t we all wish for retirement happiness?! And if we could, how many of us would like to retire early?
However, you’ve got to ask yourself, in the image of your retirement dream is that a luxury beach retirement you see out there? Or, are those two early retirees living hand to mouth in some dingy, cheap coastal outpost?!
For most, an early retirement increases the probability of a decline in standard of living, increased chances of addiction and/or an early death.
The retirement happiness model, requires informed, early and comprehensive planning.
The traditional milk-run retirement model
It is not called retirement-planning for nothing. There is a delicate balance of variables that determine the age at which to retire to achieve retirement happiness.
In my youth, we were raised on the standard milk-run retirement happiness cycle. Start early childhood education as soon as your parents could get you off them as your life-support system. Get into primary/elementary school at the standard age – not a year too early or a year too late! Know what you want your career to be and concentrate on those subjects through high school. Go to university to be a doctor, lawyer or teacher – an architect was a new age profession back then! Get a job with a fancy multinational or set up a private professional practice – if you failed then you became a civil servant, ready to toil working your way up the ladder until you eventually gained political influence and power.
You were to spend 17 to 23 years studying and then 40 – 45 years working. You would then retire to your little farm in the country with your little retirement nest egg. This would be regularly disbursed from the company you had sweated for, or the government who had slave-driven you for 40 years. In your working years, you would have been frugal and prudent. Evidenced by saving consistently every month and never living beyond your means. Every loan you took was carefully planned, only for the acquisition of appreciating assets. Repayment within your means was non-negotiable. You would all robotically acquire a farm to give you a secondary income starting in your middle years of employment and to keep you active in your sunset years. That was the traditional model for retirement happiness.
The age 61 retirement-planning jackpot
David Blanchett’s, of Morningstar, conducted an analysis of 12 survey years of the University of Michigan’s Health and retirement study. This research finds that the most accurately hoped for and materialised age for retirement is 61. Thus, this is the best planned for retirement age, as all the variables of earning years + savings + debt repayment + remaining living years + annual living spend have been best taken account of.
Past age 61 the failure to reach expected retirement age increased for about half the population; this on average by a half year per year past 61. This immediately exacerbates the situation. It puts a greater strain on the ability to meet post-retirement financial needs.
The Millenial early-retirement dream
Many of us in the workforce now aged between 20 and 40, aspire to this millenial retirement happiness dream.
I once interviewed an extremely high potential young man, a year removed from university. He was brash and brimming with bravado! I must say that yes, his charisma and robust confidence have him great chances for success. But that was until I asked him his career ambitions. He wanted my job within a year, my boss’s job within 2 and to be a Managing Director within 5 years! I couldn’t help myself and said, ‘you gotta be kiddin’ me!’ But no, no,no: he was stone cold serious.
Millenials believe in short-term reward. Their expectation cycle is much tighter than Gen Xers. As I scrutinized him, I couldn’t help but think that (if you remember my piece on cats and dogs) in these alternate species’ lifespan thinking; ‘he’s neither a cat nor a dog…he’s a rat!’ Not just 1 year is like 7, but 1 year is like 30!
The generational peers of Millenials are Mark Zuckerberg, Rishi Shah, Evan Spiegel and Bobby Murphy. They feel that they can emulate the accomplishment of these peers, maybe on a smaller scale. Early retirement is not a far-fetched dream in the mind of a millenial – but is it a dream or a potential nightmare?
Decline in standard of living
For any millenial or even Gen Xer thinking of early retirement, I have 3 names for you: Michael Gerard Tyson, Dorothy Hamill and Johnny Unitas!
A Millenial’s retirement happiness planning will be derailed without competent financial planning, tax advisory, cashflow and debt management. The continued obligations they will have to close family members will present even more challenges. Most people must therefore cut back on their standard of living in retirement, when their incomes decline. With increased lifespans today and earlier curtailed income, even with the best planning a Millenial or Gen Xer, early retiree who wants to retire by 45, must now stretch retirement savings out for 40 years instead of the traditional 10 years.
Most of us will not adequately manage all the planning elements above. A Millenial’s poor planning in their working years will make their retirement years put Moses’ years of meandering in the wilderness look like child’s play. Buckle down Millenial and Gen X buddies and extend your work life for another 16 years, why don’t you!
Addiction
A person’s motivations for early retirement are often not based on a firm foundation of logic. Anti-retirement heroes like David Goodall, Anthony Mancinelli and Mastanamma would never say: ‘Oh, I want to travel and see the world!’, or ‘I want to have time to relax and do the things, I don’t have time to do now.’, or ‘I hate the drudgery of work. I can’t wait to stop working.’, or ‘I want freedom to do the things that I want to do.’
What do our anti-retirement heroes have in common? They are all centenarians who have continued their life’s working passion well past the traditional retirement age, as doctors, barbers and cooks.
Retirement ≠ addiction
Retirement ≠ addiction. In fact, the research shows that retiring later in life reduces your likelihood of alcohol overconsumption or recreational drug abuse. Age is indeed a moderator for addiction. So age, retirement and addiction must neither be automatically associated nor correlated.
Early retirement in itself is not bad. Poorly planned early retirement, at an earlier age increases addiction risk.
Those who are challenged with the risk of addiction are retirees of a younger age than standard. When one retires early the risk of increases for boredom and a rudderlessness to set in. This is probably the aversion that our anti-retirement heroes have for ceasing their life’s work and passion. For Millenials and Gen Xers, this means that they have many more years to endure this sloth. Not only this, but their very DNA and stereotypical practices of their group identity put them further at risk for post-retirement addiction.
Numerous studies indicate the positive correlation between retirement at an earlier age and both alcohol and drug abuse.
Early Death
It doesn’t just end there.The reasons one may meet their premature death due to early retirement are not just the degradation of your body. These other reasons are inextricably linked to early retirement without a concrete plan.
Research has established this correlation. These factors that contribute are psychological, leading to physiological decline and ultimately an early death. Based on Sheirisa Ngo’s 3 key factors, these manifest as:
- Sedentary lifestyle: When someone lacks positive, diverse stimulation in taking retirement relaxation to the extreme. Sedentary activities like knitting or couch surfing can then lead to the fatal physiological effects.
- Depression: It’s not just the loneliness that leads a person to depression that can kill them. It’s also the loss of self-esteem from losing the pride and esteem that used to come with their work.
- Worry: Our active, working lives are filled with objectives, activities and challenges that keep us stimulated and focused. Even a focus on charitable work and our ambitions for our life’s good deeds will keep us similarly engaged. Retiring into a void however, will empty our mind for total occupation by worry. One then begins to think more of their mortality, which then leads to the psychologically and physiologically fatal issues.
Retirement happiness
I must stress that I am not making a blanket condemnation of early retirement. Just do it with a plan and enable yourself to continue to be actively pursuing your life’s dreams, loves and passions, well into your sunset years.
The retirement happiness solution is therefore simple to map out, but has a high level of difficulty in it’s implementation:
- Seek informed retirement planning advice at the beginning of your work life. It’s never too early.
- Plan and start saving early and comprehensively, with a contingency plan for any challenges or bumps along the way.
- Keep age 61 in mind. Any diversion from this requires a contingency plan…or extreme good fortune.
- Keep active, physically and mentally into your sunset years.
- Sustain your family, friendship and community connections and dedicate yourself to them more as you age.
- Don’t worry about what you can’t control. Place your destiny in that aspect into the hands of your higher power or to fate.
And for us dog lovers, it’s the best time to spend actively with your dogs. They truly are good for the soul!
