Twin Cities Business, Personal Finance, August
2008, By Jeff Dekko
Retirement isn’t what it’s cracked up to be
– at least the version promoted by all the financial
services companies: Endless golf, leisure, and
canasta on the veranda. That sort of retirement
– “our father’s retirement” – can make you sick,
depressed and bored out of your mind.
Oh, and there’s a pretty good chance, with
some proper planning, that you’ll have enough
money when you do kick back. And yes, your retirement
income will probably include Social Security
benefits.
That’s the message from Mitch Anthony, a Mankato-based
financial advisor and author of the book, “The
New Retirementality.” For him, traditional retirement
is “an artificial finish line. What if you remove
the finish line? Everything changes.”
For one thing, the whole notion of a retirement
age is a myth. Sixty-five as some sort of magic
age when a person is supposed to quit working
is, and always has been, an entirely arbitrary
benchmark, invented by Chancellor Otto Von Bismarck,
of all people, in the late 1800s as part of
a pension scheme to move aging bureaucrats from
their posts.
Bismarck’s original age for his pension plan
was 70 (based on a biblical reference of “three
score and ten years”), but he lowered it to
65, figuring that would be a pretty safe age
to pick, since the average life expectancy at
the time was 46. Even so, 65 made the journey
across the Atlantic in 1935, and was subsequently
lowered to 62, with the passage of the Social
Security Act – again, at time when the life
expectancy was – 63.
With the combined average life expectancy now
past 78, in survey after survey people are saying
that they don’t want to stop working.
“You have to have a vision,” he says. “The
primary difference between a successful and
an unsuccessful retirement is having a purpose.
Never underestimate the value and virtue of
some kind of work. Work brings dignity to your
life. The so-called ‘consumer retirement,’ where
you live in some kind of gated community and
play games is not a health retirement.”
Indeed, ever hear the phrase, “ill at ease?”
Anthony, 49, posits that too much leisure time
leads to bad habits – too much eating, drinking,
getting out of shape. That can make you sick.
Literally.
So what’s a body to do? Approach retirement
planning differently; Anthony calls it “financial
life planning.” In fact, he advocates eliminating
the term “retirement” from one’s financial vocabulary.
“We must emphasize life issues before we address
our financial issues,” he says.
Focus first on your own personal history, including
your history with money; your principles and
values toward life and money; your present life
transitions and your hopes and goals (you can
get a personalized Life Transitions
Profile).
All this requires also a different hierarchy
of needs – a notion taken from Abraham Maslow’s
Hierarchy of Needs – for one’s money. Anthony
envisions a pyramid, similar to Maslow’s notions
surrounding self-actualization, beginning at
the base with Survival Money, and above that,
Safety Money, then Freedom Money, Gift Money,
and at the very top, Dream Money.
“If you start at the bottom of the pyramid,
you just have to ask yourself, ‘How much money
do I need to survive?’” he says. “Just ask any
retiree. People spend less when they’re retired.
And there’s nothing frivolous in a survival
budget.”
Then, figure out how much you need to insure
yourself so you’re safe – life insurance, disability
insurance, long-term care. Next is your “freedom
money.” Do you like to ride horses? Travel?
Race cars? After that: The people you love.
To whom do you want to give money? Charity?
Your children? Your uncle? And finally, at the
top of the pyramid
All this becomes easier, Anthony says, if you
could have some money still coming in the door
from work. And if enough people do that, the
Baby Boom – a 72 million strong voting bloc
– will still be funding Social Security.
And Social Security, Anthony contends, isn’t
going away. “My suspicion is that the government
will figure out a way to make it work,” he says.
“If you recall, Social Security was going to
go bankrupt in 2013. Now that date has been
pushed out to 2038.”
Bottom line: work through each category, build
your budget – get in touch with yourself. Then
get busy living the life you want to live. “Don’t
ever grow old,” Anthony says. “The healthiest
cultures in the world didn’t have a word for
retirement.”
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