The Five-Minute Retirement Plan

"Man acts as though he were the shaper and master of language, while in fact language remains the master of man." ~ Martin Heidegger

Can you quickly define the word, "retirement?"  If you can't come up with a coherent definition within thirty seconds, then the answer would be, "No."  If you can, in fact, define retirement quickly, clearly, and concisely, then where did the definition originate?  Is it your definition? Or does it originate from an outside source, such as "conventional wisdom" at large?

The quote of the day features Martin Heidegger, who was a controversial, yet brilliant, 20th century philosopher that placed an emphasis on language as the vehicle through which the question of "being" could be unfolded.  He is certainly not the first philosopher who has warned of (and complained about) the inadequacies or sometimes complete falsehoods of language and the words that we use to communicate ideas. 

In the realm of personal finance, "retirement" is just one of countless words that should be defined by the individual and not by any outside influences.  Since there is no such thing as a "one-size-fits-all" definition for retirement, it behooves the individual to arrive at one for them self, otherwise their path may take them to a destination determined by popular conventions -- one that is completely unsuitable or even unattainable for the individual.

The "five-minute retirement plan" is where retirement planning begins -- it requires pausing for just a few minutes to create your own definition -- after which, the longer, quantitative, and less important portion of planning begins.  In other words, think of the definition as your "master plan" and the number crunching as a separate creation of subordinate details to achieve it.

So, how does one formulate the "five-minute retirement plan?"  Of course, as you might guess, that is something only you can create for yourself; however, I can offer some limited guidance by suggesting what "conventional wisdom" to avoid:

• Any definition of retirement should not include the word, "rich," unless that word is defined for the individual as well.
• "Financial freedom" is another trap.  How do you define freedom?  We are never absolutely "free" of finance unless we have zero assets and zero liabilities.  Think about that.
• The age, 65, is the traditional age at which full Social Security benefits are available.  If that is your assumed retirement age, then it is likely the government and society at large have defined retirement for you.  Why can't you retire sooner? 
• You should try to avoid any direct reference to money in your definition.  As author Mitch Anthony said, "life is not about making money -- money is about making a life.
• You should also try to avoid defining retirement as the day you don't have to "work" anymore.  The vast majority of retirees who "stop working" actually hasten their own demise with sedentary lifestyles.
• Retirement is not an "ending;" it is a beginning.

So, by this point, you may be tempted to ask, "OK, Mr. brilliant 'Financial Philosopher,' what's your 'definition' of retirement?"  As you may guess, I would never suggest that my definition should be yours; but, approximately two years ago, I defined retirement as follows:

To do what I want, when I want... within reason.

This definition of retirement is intentionally simplistic, broad, and without limitations; yet it is certainly better than the standard of "replacing 80% of income in today's dollars" then putting away money for decades to reach that goal.  After re-defining it, my "new retirement" took me 12 months to achieve, which means that I've been "retired" already for one year -- all at the ripe old age of 38!

Of course, I'm still "working" and putting away money for various reasons, but my definition said nothing about my career or money.  This is somewhat of a simplification, but I decided that, to reach my goal of "doing what I want," I needed to start my own business.  Once I did that, I enabled myself to do things "when I want" as well.  If I want to go to my son's Christmas play instead of working, I can;  If I want to work 10 hours one day and three hours the next, I can; and it is all "within reason..."

To summarize, your definition of "retirement" or other fluid words, such as "rich" or "freedom," or whatever it is you are striving to achieve, absolutely must come from you.  You must be the master of words or they will be the master of you... 

Who knows, in five minutes, you may discover that you are already "retired..."

 

TFPAuthor, Kent N. Thune, QPFC, is the President and founder of Atlantic Capital Investments, LLC (ACI), a 'fee-only' Registered Investment Advisory firm located in Mount Pleasant, SC.

Comments

[CanadianInvestor]

I enjoyed reading this post and have commented on my own blogsite http://canadianfinancialdiy.blogspot.com/, where I concocted my own definition of reitrement.

I've read a few others of your posts and find them of value too, so I'm also adding your blog to my favorite blog listing.

[dokidok]

I like very much your definition of retirement.
I came up 2 weeks ago with something similar. Why people think about retirement instead of keep doing (working) what they really like and enjoy.

[Brett]

Retirement can be so complicated. There is never a better time to start planning than now. Especially with the younger generation. sister in-law is 20, lives at home is unemployed and thinks nothing of buying a $25,000. car. It's hard to convince a generation that feels invincible to think more than a few minutes into the future. Fortunately we all start thinking about it one day and whenever you get started it’s an uphill battle.