Some retirement thoughts...

Retirement Thoughts - and these are relevant to YOU, GenX, GenZ and Millennials too!

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As I reach (semi)retirement I’m realising some things….?? I thought the money was?the main thing to plan and worry about, and yes that is a BIG and difficult issue, but once that's done you realise that Purpose is also a significant problem. ?Let’s have a closer look:

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The money

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Most of us won’t get much of a company pension if any, and not much of a state pension either.? (Check your numbers!). We need to save up some of our own money for when we retire!

A simple way to think about this is that if you had a pot of a million pounds (or Euros or Dollars) and say you could get 4% interest, that would give you 40k a year to live off.? Should be just about OK!

BUT, in 20 years time 40k is not going to be as valuable as it is now, so ideally you’d put some of the interest back in to increase the size of your pot.? However, this won’t be enough becuase even if you put ALL of the interest back in and take out nothing to live, your capital still slowly degrades if the interest rate is lower than the inflation of cost of living, which it usually is, because the people who pay interest are making a living from doing that, so they pay less than inflation.

But even if you COULD live off the interest – or spend the million at a rate of say 50k/year for 20 years – the problem is how to get a pot of a million in the first place??

You could save 10k a year for a hundred years, or you could save 100k a year for 10 years, or 33k for 33 years – but it’s clear that these are not going to happen.

So that leaves three other ways – either to

1 - use compound interest and start putting money away in your 20s, or certainly in your 30s – if you leave it till your 40s it’s too late.? OR

2 - to find a way to make a LOT of money, several million - OR

3 - to set up some sort of residual royalty-type income, in the years leading up to retirement.? e.g. some people have rental properties, or write amazing books.

None of these is easy!

At least living in retirement is probably going to be cheaper because you don’t have to pay into your pension, you’ve probably paid off your mortgage, and you can maybe downsize your house now the kids have moved out.? And maybe (?) you won’t travel so much, both in your own country with car and petrol costs, and on foreign holidays.? But? you WILL have increased medical bills, and certainly in the UK the NHS can no longer be relied on, even now, let alone in the future.

So the money is tricky, important, and needs planning, and needs ACTION, ideally a long time ahead of retirement.? Don’t leave it till the last minute!

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Purpose

Leaving the money for the moment, I am now discovering that there are other things to think about.

With all this time when you retire, it’s going to great …isn’t it??

After you’ve done your jobs to do (sorted out the shed, written that memoir) then what?

I always imagined a portfolio life of all my favourite things – tennis on Monday, beach on Tuesday, reading, playing music, eating out or getting into cooking, visiting friends, walking the dog, cycle trips, etc – there’s certainly enough to fill the weeks.? BUT….

I suspect that a load of little fun things doesn't add up to Purpose...

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So – how to get that feeling of purpose that work used to give? (at least it did when it was good)

a)???????? Go back to working, doing the same thing, at least part time (do I want to do that?)

b)???????? Get into a new kind of work (not easy to learn and do well at over 65)

c)???????? Charity work (might be like ordinary work only more difficult and more annoying!)

I think all of the above are viable options, even though they come with difficulties attached.

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Which one to choose?

I’ll let you know when I’ve figured it out…..

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