-By Sunél Veldtman
What makes for a successful retirement? Why do some people thrive through this transition and others falter? What do you need to retire successfully?
I have been privileged to help many people retire and watch them journey through retirement for the past two decades. I conclude that a successful retirement depends – amongst other things – on these five abilities in retirees. The same is true for all those over 50 who are searching for meaning (and want financial freedom) in their next fifty years.
1. Letting go of certainty
The financial industry is lying to you. “Just buy this one solution to all your retirement problems. We can make it go away.” They cannot promise you the retirement of your choice. Even if you have saved the recommended 15-20% per year over your entire career and received returns in line with projections, no one can guarantee you a comfortable retirement.
There are many factors that are out of our control and even if experts could predict the events accurately, they may not be able to assess the impact of unpredicted events in advance. Our government could nationalise insurance companies; your children might go through severe financial stress; global demographic trends could affect future returns on your portfolio; there could be a world war.
No one can protect you against these external factors.
The truth is that there is never certainty: there never was and there never will be.
2. Choosing to adapt your behaviour
Very few people will have enough money to keep their lifestyles during prolonged adverse conditions – but it will be the ones who can change quickly and still be content, who will be happy.
I watched this TED Talk recently about the retirement crises in the USA (it is a global problem). What is interesting is the speaker’s story about how she had to adapt.
It helps, I believe, to consider scenarios beforehand. I am not refering to global scenarios – those seldom turn out the way we think they will. I’m talking about what you will do when you fall on tough times. Which of your dreams will be easy to give up? What is important to you? Family? Friends? Where you live?
This adaptability is about holding dreams and expectations lightly, not finding security or preservation in money. “Everything can be taken from a man but one thing: the last of human freedoms – to choose one’s attitude in any given set of circumstances, to choose one’s own way,” Viktor E. Frankl, Austrian psychiatrist and Holocaust survivor.
3. Giving up (perceived) control
Building wealth may have needed control – controlling your career, your budget, your balance sheet, the costs of your investments. Retiring well however requires giving up control. It requires admitting that there are few aspects of one’s life one has controlled.
We find that whilst investors can be successful in building capital on their own through their businesses or investment properties for example, drawing capital necessitates expert skill. We also find that it is particularly difficult for these personalities to give up this control. Somehow they continue to derive pleasure or even identity in the control of their money – sometimes causing concern for their families, especially when they are no longer mentally or physically capable of making far-reaching financial decisions. Sometimes this control just causes stress for their spouses because they do not know how much money there is and where it is invested.
When control equates to safety, it can do damage to both your relationships and your wealth. Giving up control leads to freedom – not only to use your time on other more pleasurable activities but in accepting that there was no control in the first place.
4. Do the hard work
You are probably thinking that retirement is a time for relaxation. But retirement requires hard work of a kind that few people willingly do in their lifetime.
Retirement asks of you to work on your wellbeing. “On top of this we must now retire and recreate a new life and a new sense of purpose. Beyond that we need to find a new identity, one that does not define us primarily by our work or our organizational title,” writes David Borchard in his book, The Joy of Retirement.
Although not impossible and there are many high-profile examples, few people continue to achieve new heights in society during their retirement – few reach new career goals or become global leaders. It is this struggle with identity that requires so much work. Who am I? What is my worth when I am no longer attached to a title in my work or my home? How do I relate to the world and how do those around me react to me when I am distilled to just that, me?
It can be a time of renewal and purpose or a slow descent to miserable frailty.
5. Manage change well
Retirement is a time of continual transition. At first you might slow down, but still have involvement in your industry. You might still have contact with your work colleagues or industry friends. Then there may be the transition to a smaller home and new neighbours, or a move to the coast or to be nearer to the children. You may remain active until you have to transition to a slower pace because of ill health. A further transition to a retirement village and eventually frail care waits. Each of these changes require you to make new friends, to accept new realities and find new sources of happiness.
Transition requires skills in negotiation with your spouse, your children or your friends. Transitions asks you to make painful choices. It can mean the choice between affordability and time with dear friends or living in your dream location and being nearer to your children.
Some of these transitions happen at the same time. You may lose a spouse and face a move at the same time.
There are very well documented stages of transition. Denial. Resistance. Exploration. Acceptance. Commitment. Or when you move you may experience a honeymoon period, then culture shock, fighting, anger and then finally fit, tolerance and creativity.
Consider this: Pete and Veronica built their dream home at the coast. After the initial excitement of designing, building and settling in, they finally had time to watch the sun set. That is when they realised that they were both alone. But they were both too scared to admit it. Veronica missed her book club and Pete his weekly breakfast run with his buddies. It took a long time before they finally admitted to each other that they didn’t like spending so much time in each others’ company and it was only when they admitted it that they opened up to finding a new community. They didn’t move. They liked that their kids could bring all the grand children over for the holidays. But Pete started helping out at a local school and became involved in the development aspect of schools and Veronica joined a hiking group – slowly they made new friends and settled into a new routine – each independently happy.
Be alert for what is happening in you and open up to the impact on your family. Be honest about how you are feeling – with yourself and others. You can prepare yourself by reading about it, talking to your closest friends or seeing a counselor.
What about the money?
You will see that money is not on that list. Money does not guarantee you a happy or successful retirement. You may have money, but no friends to share it with or not be healthy enough to spend it.
Here’s another example: Anne is wealthy enough to fly first class around the world, stay in five-star hotels and experience almost anything she desires, but she has no one to share these experiences with. Her dream is to go to the opera in Milan, but she cannot find anyone to join her. There are many ways for Anne to make her dream come true. She can take a friend. She can sponsor the best vocal artist at the local university. She can join a tour group but none of these appeal to her – she chooses her loneliness.
For many people who do not have enough to make their dream-list happen, the solution seems money. Money is not the solution. Inventiveness is the solution. If we can let go of our dearly held pictures of what life is meant to be, we can find creative alternatives to get where we want to be.
Money helps. Money gives you choices. It helps to bring comfort. But it will not guarantee you a successful retirement.
Nietzche said: “He who has a why to live for can bear almost any how.”
At Foundation Family Wealth, we help our clients with scenario planning and cash flow forecasts, preferably long in advance, so that they have tools to think about different retirement pictures. We help our clients throughout retirement to adjust to new circumstances and different conditions. Retirement planning is not a once-off; it is an ongoing partnership between us as advisors and retirees. It is this partnership, we believe, which helps our clients to successful retirement over and above their own hard work during their retirements.
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