In my last column, I explored how to make your working days numbered by calculating your personal number. That is, the amount of assets you must amass to retire confidently and comfortably. I ended it with a profound planning question: when will you know that you have enough money and what will you do then?
Let’s ponder the “what then.”
Two Types of Planning
I’ve long maintained that we engage in two types of financial planning. The first, which I call the planning of scarcity, is where financial planners who work with diverse clients spend much of our time. The goals here are many: cash reserves, college for kids, and retirement. It’s all about allocating finite resources to achieve multiple goals. Something always seems to give.
It’s never clear that the finish line will be crossed, but it almost always is. That’s when we go to type 2 planning - the planning of plentitude. You know you have enough, what now?
As always, there’s the technical answer to this question. Financial planners are great at that, it’s our comfort zone. The nuts and bolts of planning for abundance will be a topic for another day.
Far more difficult is answering the human question of what’s next. It’s not easy to deal with, especially on a global or group level. You have enough now. You don’t need to work. What should you do?
No More Excuses
Pretending you can’t retire allows you to avoid this question, to wave it away. Hi ho, hi ho, it’s off to work I go. Meanwhile, to lean on a memorable lyric from Pink Floyd’s “Time”, “…the sun is the same in a relative way but you’ll be older, shorter of breath, and one day closer to death.”
How do you want to spend that day? There’s a cliché in retirement planning that instructs you to retire to something. What is that something?
It may be continuing to work. I have a physician client who says he’ll never retire. He practices at a highly regarded facility and reports that his patients retire and fall apart physically. He likes his work and wants none of that.
At first, I accepted this at face value. But I pondered it, and the retire and deteriorate observation didn’t fit with my experience of working with scores of middle-class millionaire retirees. With a few exceptions, my experience is that people love their retirement.
I suspected that this doctor’s patients were at the top of the workforce food chain and highly paid executives. He confirmed my suspicion the next time we talked. This, combined with their regular relationship with a specialist doctor, leads me to conclude that his experience is not universally applicable.
Keep Dropping the Hammer and Grinding Those Gears
It is a valid point, however, and may apply to you, regardless of your trade or profession. If so, embrace it. I have a trucker client, highly skilled, in his late sixties and still logging the miles. He’s in high demand and highly paid and enjoys his work. Why retire?
In Florida, where I live and actively boat through a boat club, most of the dock hands are part-time semi-retirees. Recent hurricanes put many at home for the last few weeks. I recently had one, a retired Teamster turned part-time dockhand, tell me that if that’s what full-time retirement is, he’s going to get back to jamming gears.
This point, in other words, need not come with a white-collar bias.
So Much (and So Little) Time
That said, when executives and business owners retire, they leave a lot at the office. Work provides friends and structured time, as it does for many. But they may also work far more hours and therefore have less of a life and identity outside the office. And if they’re blessed to work with a dedicated and flexible team, they’ll miss the support.
Substitute Fun for Work
A few years later, I was able to see this guy’s mistake through the experience of another client, a wonderful man who taught special education for more than 40 years before retiring. He collected his full pension and was financially solid but had a serious issue. His wife was still working full-time and didn’t want him sleeping in while she schlepped off to work.
As a result, he worked as a substitute teacher, basically full-time, for another 15 years. The pay was much reduced, but he was collecting his full pension as well. When I asked him why not just go back full-time for more money, he looked at me like I was crazy and explained that he didn’t have to do any course preparation, attend staff meetings, or deal with any staff politics. He was doing what he loved—helping students with intellectual disabilities—having a good time doing it, and putting a little money in his pocket, all the while keeping his wife happy. Not a bad deal.
Then Is Now
So back to that question: what will you do now?
For many this answer is easy. If you have any addiction—I mean hobby—the question likely appears stupid. I know people who live for fishing. Filling days is no problem. They have the money for fuel, repairs, and gear. If this is the case, you don’t have to think about it too long.
My clients who found bliss in Florida’s The Villages community have no problem with the answer. It’s frequent golfing, plenty of affinity clubs, and more social groups and restaurants than you can shake a stick at. I think of it as high school without any classes and plenty of money. For those of us who enjoyed high school—likely because we treated classes as optional even then--this ain’t bad. It’s an apocryphal tale that The Villages has a high rate of STDs. But there’s a reason it’s believable. Who ever really wants to grow up?
On the Road
For others, it’s a series of what I call aspirational trips, adventures really, with friends and family. These are the sorts of trips you just can’t do while employed. You go to distant places like New Zealand or the South Pole or multiple places in Europe for a month or more. You spend gobs of money, but money you have. It’s not high school without classes. Rather, it’s the summer on the Eurail Pass, and you’re not using the “book Europe on $20 a day” to book your itinerary.
Changing Diapers
One of the joys of getting older for some of us is being made a grandparent. “Then what?” may be to provide day care, either full- or part-time. Yes, I know, this does not sound like bliss to a few readers. But for others, nothing would make them happier. The Wall Street Journal recently ran a lifestyle feature on grandparents, whom it calls baby chasers, moving to be close to grandchildren.
I do see this, as well as both the part-time and full-time day care models, in my practice. Part-time is what it sounds like, a negotiated few days a week. Your children avoid day care costs. A great relationship is created for the grandparents and grandchildren.
The full-time option is, well, full-time. In an extreme case, I had a grandparent couple who had to secure a babysitter so they could go out to dinner. They weren’t upset. Taking care of their family is exactly how they wanted to spend their time and treasure.
Getting Tossed out the Door
Now for some of you “what’s next” may be a forced exit from a job you still love. Commercial airline pilots hit this wall at age 65.
Sometimes the push is financial, a vested pension embedded that must be taken by a certain age to retain its full value to the employee. If you have a pension, especially one that comes with a rule with a number, such as a Rule of 85, you should analyze the data. This is especially true for first responders who can often retire at a very early age.
Consider the math. A person who reaches age 59 with 26 years of employment is eligible for an unreduced pension. If she retires a month prior to age 59, her pension pays $5,500 a month. She hangs on for one month more and it pops to $6,300.
She’s happy at her job. No matter. I tell her to get out, since she’s about to get a massive pay cut.
You see, if she continues to work another six years to make it to Medicare age, her pension only increases to $8,800 a month. It looks like a big jump, until you crunch the numbers. If she keeps working, she gives up over $450,000 in pension income only to get $2,500 more a month at age 65. Straight math says it takes her 15 years to break even. Assume she could have earned a 5% return on the pension funds had she invested them, and she’ll die before breaking even.
But why did I say she’d take a pay cut if she kept working? Well, if she shows up to work every day, the company will send her $15,000 a month, pre-tax. If she stays home or goes to work somewhere else, it will send her $6,300. She’s no longer getting paid $15,000 a month, but 40% less. If she wants to keep working, her preferred move is what I call the victory lap. Collect the pension and pick up a new job at a similar company.
This could be you if you have a pension. I find most people don’t really consider this until I point it out. The exception is first responders, police officers and firefighters, who play it like Charlie Daniels on the fiddle. I met a police chief twice retired with two pensions who was still working part-time in security in the private sector.
If any of this applies to you, you should crunch your personal numbers. You may still love the work game and want to continue to play it. Consider taking a victory lap. You’ve got nothing but good options.
No One Gets out of Here Alive
Financial planners and the industry in which we are embedded constantly stress the need to prepare for a long, expensive retirement. If I had $100 for every time I’ve heard that a 65-year-old man has a 50% chance of still breathing at age 84 and a 25% chance of lawn bowling on this side of the grass at age 91, I might already have hit my number. (The ages are even longer for women.)
This is a half-full way of looking at it. Here’s another point of view. It means that one in two of us dudes will not be around to blow out 84 candles.
I’ve been to three funerals in the last four months, of men ages 65, 58, and 58. I have a photo of four people to whom I was very close and whom I loved very much. Three have now died at 85, 70, and 58.
Stephen R. Covey, the late great author of “The 7 Habits of Highly Effective People,” noted that the correct answer to the posthumous question, how much did he leave?, is “all of it.”
Keep these points in mind as you ponder the second half of this fantastic question: how will you know you have enough and what will you do then?
Your first task: figure out if you have enough. Then pick something. Anything. Even if it’s a job you love. And do it.
Michael Lynch, CFP®, is a financial planner with the Barnum Financial Group in Shelton, Connecticut, and Fort Myers, Florida, and the author of three books, “It’s All About The Income: A Simple System for a Big Retirement” (2022), “Keep It Simple, Make It Big: Money Management for a Meaningful Life” (2020), and, most recently, “Taking Care of Your Future: The Yale New Haven Nurse’s Guide to Retirement” (2024). You can find more articles and videos at michaelwlynch.com. He can be reached at mlynch@barnumfg.com or 203-513-6032.
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