Retire to What? Planning for an “Active Retirement”

The idea of retirement conjures up different images for people but tends traditionally to focus on various forms of recreation—depending on the person it might be extensive travel, golf, and/or a range of activities with friends. Recreation is still an important component of retirement, and for some people represents the core of it.

Although lessening the grind of 60+ hour work weeks is appealing for most of our clients, men and women in senior executive roles, a vision of endless recreation doesn’t itself immediately feel like a satisfying or desirable goal. They may no longer want to travel at a speed of 200 miles per hour, but they also don’t want to travel at 25 mph. For some, the right pace may be at 50 mph while for others it’s 150 mph. The common thread is how to build a life and a lifestyle that finds the right balance of that “in between.”

The Traditional View of Retirement Planning

Traditional retirement planning has generally not tackled that issue directly. Retirement planning is mainly thought of as a financial exercise. Do I have the money to retire? And if necessary, what potential financial/lifestyle compromises am I willing to make to do so? These are essential questions, and usually any advice I give to clients about these issues starts with recommending a comprehensive picture of their financial situation from a qualified financial planner or accountant. However, while understanding one’s financial position is a prerequisite to good “retirement” planning, it doesn’t end it.

Part of the problem is the word “retirement” itself. The word is so infused with the sense of all work ending that it tends to inherently present a bifurcation—you are either working or you are not. In truth, retirement for many of our clients means less work, maybe even much less work, but it doesn’t necessarily mean no “work”, even if that work isn’t always for pay. For those who no longer want to “work” at all, there is often still a major question: how do I keep myself occupied? Even individuals tired of the grind of work can still long for some of the non-material benefits that a professional job provides, among them intellectual engagement, social connections, and status. Additionally, even those who can afford to make less money than they did previously, can’t necessarily afford, or aren’t psychologically willing, to have no work income at all.

So how do we plan for a life post one’s predominant career and, if not “retirement”, what do we call it? Recognizing the problems and inconsistencies in using the word “retirement” for this time of life, some career coaches started experimenting with new words as a substitute. My favorite among them was the “third age”, a likely nod to the career coaching pioneer, Richard Bolles’ framework of “3 boxes of life”—“learning, work and leisure”. Although I like the phrase the “third age”, most people have no idea of what that means, so I have tended to go with the less interesting but more descriptive phrase of “active retirement”. So how do you plan for an active retirement?

Thinking Through the “Life Sectors”

While Bolles’ use of the word “leisure” can be sometimes taken as synonymous with recreation, leisure refers to the greater freedom for individuals to choose how to spend their time, apart from the dominance that working typically occupies throughout a large portion of one’s life. That can include recreation and as we noted earlier, even work, but the choices represent broader “sectors” of life. They can be labeled in different ways, but I use the following: Work, Finances, Recreation, Family, Learning, Health, Community, Spirituality. I also tend to add an “other” category so that if a client has a goal that they aren’t sure fits neatly into one of these boxes they can add it (and we can often decide where it belongs). The sectors are not always mutually exclusive. Someone can have travel goals with a spouse and that can be captured under family or recreation. There is also no requirement for someone to have goals in each one of these sectors. The idea is to identify which ones are important to you.

Most of these sector labels are self-explanatory, but two may need a little more description. “Community” pertains to the goal of engaging in some way with improving one’s larger social environment. That can be involvement in a governmental or nonprofit issue or organization within the confines of one’s town, state, country, or on something that pertains to community on a larger global basis. “Spirituality” refers to ways of seeking deeper meaning in one’s life, whether through religious or secular means.

Prioritizing and Setting Concrete Goals

Having thought through these sector headings, the next step in planning for an active retirement is to figure out which are important to you, how they fit together in terms of importance, and establishing more specific action goals for those selected. How do I want to spend my time? That is the question we have clients ask themselves when figuring out what sectors are most important to them. Planning for an active retirement in part represents two pie charts—one comprised of the current life sectors in one’s life in their rough allocations, and another one with the desired future sector allocations. The second chart doesn’t have to be a static picture of the future. It could change dynamically over time as one’s interests and priorities change.

Most clients start with examining the finance category because the question of “how much money do I need to make going forward?” is often the major constraint for assessing how much the “work” sector will play in one’s, at least in the immediate future. Distinguishing between financial “need” to make money and psychological “want” to make money is important. Finances have both objective and subjective components. “I need to make this much money to cover my current spending” is an objective reality, but whether one’s current spending is all necessary can be more subjective. Do I need that extra house, and at what cost to my other life interests? Additionally, there are some clients who believe they need to make more money despite their financial planner saying otherwise. It can be out of habit—”I’ve earned since I was 15,” out of the anxiety of a financial calamity—”suppose we enter into an economic depression,” or out of guilt—“my father worked until he was 75, what gives me the right to retire at 62?”

To be clear, we make no judgments about these things for any person. Our aim is to help clients be aware about their assumptions regarding money so they can make intentional choices about what is right for themselves now. Not what their father or mother did, and not what was right 15 years ago.

Intentionality speaks to choices across all the life sectors. “What do I want to do with the rest of my life?” is an enormously important question, and examining one’s aims across the spectrum of life sectors is a good way to begin to address it. But intentionality also speaks to concreteness. “I want to get healthier” is a wonderful start for priority within the health life sector but it needs specificity to help bring it into reality. For example, “I am going to contact a personal trainer” is a specific action step someone could apply towards that goal. Each of the life sectors need to be pursued through a set of actions. Figuring out which sectors, goals, and actions helps bring intentions to fruition.

Understanding the Role of Work in Your Allocation

As we indicated earlier, the idea of an active retirement doesn’t necessarily mean that someone isn’t going to work at all (though that could be the case), just that he or she might be either working less, or that the “work” pursued is not primarily in the interest of making money. Maybe it’s moving to a different kind of work environment, a part-time role, board work, a paid position connected to an avocation, or some intellectually engaging volunteer role. What we often see in folks desiring an “active retirement” is an interest in creating greater passion and/or building more flexibility into schedules to be able to devote time to goals in other sectors. Although there is often worry about the real obstacles of age discrimination for senior executives seeking new full time roles, the wisdom that comes with experience is often prized for roles that demand specific expertise in a more concentrated form—that can include, among other things, developing one’s own consulting practice, interim executive roles, teaching, and corporate or nonprofit board positions. It can also include a “portfolio” of multiple work activities (that can be coupled with non-work life sector activities.) 

Engaging with Your Spouse, Partner, or Significant Other in “Retirement” Discussions

Retirement, active or otherwise, can impact partners, and their plans may have an impact on yours. Retirement can be a wonderful time for relationships, but it often represents a major transition in lifestyle. For some, that may be getting used to the experience of having both individuals home much of the time (though in a post-COVID world it’s possible couples have better adjusted to that). But even more significantly, life sector allocations do not always match exactly. It may be that while one partner is ready to slow down a bit in terms of work, the other isn’t. Or one wants to slow down but the other wants to stop. I had a client who complied with their wife’s requests to contain work within certain parameters (for example, limiting their consulting practice to six months a year so that winters could be spent recreationally in a warm climate.) Or both want recreation but have different visions of what that means. I also was once involved in discussions with a client and her husband. They both had visions of retiring elsewhere, but only realized during our collective discussions that she had in mind somewhere in Florida and he had in mind somewhere in Europe. The point in this is that conversations between couples to clarify their respective retirement assumptions and expectations are valuable in building a mutually satisfying next stage of life.

The Value of Planning

Thinking of a life beyond the dominant goal of making a living can be very exciting. However, it can produce anxieties in people who aren’t sure what that life will look like in terms of intellectual engagement, or how they will get there. There are a myriad of tactical steps towards the “getting there” part not addressed in this blog. But the first step of the process is figuring out a vision of what a satisfying “active retirement” looks like for oneself. Financial planning is critical towards any retirement, but a satisfying active retirement is not just about finances; it’s about developing a full plan for how individuals want to devote their time over the next chapter of their lives, and beyond.

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