Over the past 25 years, I have helped a lot of people with their retirement planning. The one thing I know from working with so many people is there is no single universal definition of what retirement should be. 40 years ago, retirement was similar for most people because they retired at 65 and lived to about 72. Today, there is no such thing as a conventional retirement. Retirement planning is personal. Defining retirement is persona. If you think about it, Retirement can be anything you want it to be so the first step in retirement planning is to define what retirement is to you?
Couples may have different answers to the question
For couples, it's important to acknowledge that you may have different definitions and visions of retirement and that's not necessarily a bad thing. From what I see, successful retirement for couples will include time together but also time apart from each other. Sometimes differences can be very powerful because they represent things that couples can do when they need some “Me Time” or time away from their spouse.
For Liz and I, we definitely have some similar views but also some very different ones. From our experience, I believe the most important thing for couples to do is to talk openly about goals, dreams, wishes, fears and concerns. I find that couples may not agree on everything and that is not the problem. One key to success is simply being aware of the differences and respecting these differences.
Related article: Should couples plan their retirement together?
My personal definition of retirement has changed a lot
When I first started my career in the financial industry, I worked for a big financial institution and I bought into the concept of Freedom 55 or early retirement. Everything I read and all my mathematical calculations suggested that the earlier I started saving the earlier I could retire. The plan was to save about 15% to 20% of my gross income. I did that and more in most years. Back then it was easy to save because I was still living at home rent free and also working part time in the evenings. My definition of retirement was more about financial freedom than it was about lifestyle or the notion of no longer working. In fact, For the first 20 years of my adulthood, Freedom 40 was my plan as I focused on saving money and becoming mortgage free.
Related article: When is the best time to retire?
Today (25 years later), my life looks much different than it did 10 to 20 years ago and so does my definition of retirement. Financially, I am very proud of what I have accomplished. I've grown my net worth every year. I've never gotten into unmanageable debt problems. I have a growing, profitable, business which provides a good income and therefore a very good lifestyle. I don't stress about money.
Although all aspects of my finances have grown and improved over the past 25 years, so have my expenses. Today, I am married and together Liz and I have 4 boys. Probably the biggest influence on my retirement plan today is my wife and 4 kids. The bottom line is my kids are really, really, really expensive. We spend a lot of money on our kids: vacations, hockey, soccer, swim lessons, summer camps, french tutors, new clothes, food, housing, vehicles, etc. In fact, well over 50% of our expenses can be attributed back to having kids. If Liz and I had no kids, we would not only be saving more money but we could probably retire now in our 40's. That being said, I would never trade my kids in for Freedom 40.
Related article: How much will you spend in retirement?
What is retirement to me today?
Many have told me that kids get more expensive the older they get. You trade in the cost of diapers and child care for activities and food. Then you bear the cost of education and marriage. And even when they are adults, I hear they keep coming back. My youngest is 7 years of age. He won't be going into post secondary school for another 10 years so realistically, I can't even imagine the idea of retiring before 10 or even 15 years.
Traditionally retirement was about quitting work but the truth is I love my work and my business. Not only does the business afford us a good lifestyle, I also have lots of flexibility in terms of my schedule. Many days, I feel retired despite working. As a result, I've always thought that retirement will include some work. I know that may not sound appealing to some people but the truth is I don't care what people think. My plan is about me and my family. I have met lots of people over the years that feel retired because they have found the right work-life balance. That might be a different but good definition of retirement.
Related article: What is your retirement vision?
Although I work primarily because I love it and it allows me to live a good lifestyle, I also work because it's the right thing for my kids to see and learn. I want them to know you have to work hard to pay for a life and to earn a good income. I want then to know you have to get your education to establish your career. My kids are not without and they must learn that to live the lifestyle they have been accustomed to, they need to work hard.
Where my retirement plan may be similar to a lot of other people is I'd eventually like to spend more time traveling to warmer climates. I'm not sure about having a snowbird lifestyle but I would sure like to spend more time out of the Alberta winters. Although the dream of traveling more is real, I also know that I don't want to wait 10 to 15 years to do that traveling so my goal is not to wait till retirement to retire. I'll practice retirement along the way and as a result, I know my definition of retirement will continue to evolve and change. Who knows, I may look back 5 years from now and have a completely different retirement plan.
What's your definition of retirement?