Do you dream about early retirement?
The definition of retirement is the action of leaving one’s job and ceasing to work. That is why the term retirement and financial independence are often used interchangeably.
Both, retirement and financial independence, are achieved when you have enough retirement savings and investment incomes or NZ super to cover your expenses.
The History of Retirement
Retirement hasn’t actually been around for that long- it really only started in the 1930s. Prior to that, it was generally expected that people would work for their entire life- and if they couldn’t work anymore- their family would be expected to provide for them.
Almost every Kiwi has a dream of being able to retire. Unfortunately- the data suggest that many New Zealanders don’t have enough saved to stop work at 65. Then there is the fact that NZ super may not be around when my generation hits retirement.
But you don’t have to be in this group. All you need to do is to make a few lifestyle changes in order to save a decent proportion of your income to invest with- some suggest 10% as a good rule of thumb- but I think the number is more nuanced- and you can achieve financial independence when you retire.
Your Retirement Vission
I love discussing people’s visions for retirement. It fascinates me. The answers are often unique. Some want to spend more time with family, and some dream of travelling the world. Others want to have more time for their hobbies.
These are all great retirement ambitions.
But, what I wanted to write about today is societies idea of retirement. The idea that the media sometimes portrays. The idea that we are sold. I think it’s wrong. Even ludicrous in some ways.
Think about it. Society’s visions of retirement is often portrayed as a time when you can sit around on a tropical beach, drinking Mojito, and do nothing.
Spend all day on a lounger on a beach, in the sun- going on the occasional swim when it gets too hot. These are the so-called Golden Years.
Sounds great, doesn’t it?
But that’s not really a retirement plan, that’s a travel poster.
Think about it. If your idea of retirement is living on at the beach drinking Mojito every day- how long is that going to last? Forget the money side of it. How long will that lifestyle last?
How many Mojito are you going to have to keep yourself entertained on this beach? Two, three, how about ten? And how long are you going to keep this retirement lifestyle up? Six months?
You’ll be an alcoholic by that stage.
Not only that, you’ll be a sunburnt unhappy hangover alcoholic.
How long can you have Mohitos on a beach in retirement- maybe you can do this a week or two every six months. But it’s not a vision for retirement.
But this is often what you think about when you are working and grinding away- week in and week out. The idea that at the end of it all, you get to sit on the beach, or next to the pool, being waited on all day.
It’s a fantasy.
Ok, so another vision of retirement I often hear is to spend more time with your family. And I like this idea too. But again, how many months can you spend every day with your family?
How long will it be until your family gets sick of you? I know that is hard to hear- but spending every day in your retirement with your family is probably not a good retirement plan.
In reality, I think retirement has to be varied. It can’t be just one idea- sit on a beach or spend copious time with relatives.
What I believe people really want, and in turn what makes them happy and fulfilled- is for them to take on a challenge! A challenge that pushes them past where they have already been- and then for them to succeed in it.
Once you succeed in this challenge you get a sense that it was a worthy exercise- even though it was difficult. That’s what retirement should be. Retirement needs to be a series of challenges you set yourself- no matter how big or how small.
Retirement isn’t about sitting on a white sandy beach drinking Mojito. It’s being able to take on difficult challenges and succeeding at them. That is what brings you true happiness.
This is why some people will never retire- they enjoy the challenge that their work provides- they don’t need anything else. I bet we all know someone like that- my father is like that- and so was his father- working on the land until the day they die.
If you’re on the financial independence journey like me, you should sit down and think about what your retirement is going to be like. Don’t sit there daydreaming about the beach- truly think about it.
Becoming financial independent is a great goal- one you should almost certainly strive for- but you need to know what challenges you want to set for yourself once you achieve it- or more generally- think about the challenges you want to achieve during your entire life.
I would argue that if the challenge that will make you truly happy require you to be extremely physically fit- something that only a youthful body can provide- then going all out and saving 75% of your income towards the goal of retiring early may not be best for you.
It might be better for you to strive for financial independence at a slower rate while achieving some of your challenges along the way- theirs nothing wrong with that.
You need to realise that achieving FI isn’t just an end date to work. There’s no final day of work, where you finish work forever. You shouldn’t be looking towards retirement, you should be looking forward to what you are going to do when you don’t have to do the stuff that you don’t want to do anymore.
Make goals and find challenges.
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