Stan's World - Getting There
September 30, 2019
I’ve detected recurring patterns when working with clients of different ages. Clients in their 40s and early 50s, for example, tend to ask various questions that pertain to the theme “How am I going to get there?” They want to know how much they need to save, how many years they have to work, and how much their portfolios will need to grow in order to reach “there”. “There” is an undetermined date in the future when work as they know it will cease, where they live will change, and how they live will be different. While “there” is often not well defined, it clearly represents a lifestyle change from “now”.
As clients reach their late 50s and into their 60s, conversations tend to focus on whether the goal has been achieved: “Am I there yet?” Interestingly, “there” may still not be well-defined, or may look radically different than it did 10 or 20 years earlier when the conversation first started. But if a plan was followed, to include annual savings targets, and if the stock market cooperated by growing, then “there” is closer than it ever was before. When “there” is close at hand, it gives clients pause to start wondering about “what-ifs:” “What-if” I work for X more years and then work part-time? “What-if” I take early retirement, collect Social Security, and call it a day?
Finally, when clients reach “there” by choice (e.g., saving sufficient assets) or by actions outside of their control (e.g., losing a job), the discussion takes a different twist. Rather than simply rejoicing, clients tend to question, in detail, what “there” is going to look like: “Now that I/we got here, what’s next?”
Retirement, as it used to be defined, has changed dramatically over the past few decades. When life expectancies were substantially shorter, our parents and grandparents worked until age 60 or 65, collected Social Security and a company pension, and focused on enjoying the remaining years.
Often, those remaining years were not measured in decades, as they are today. When someone retires today at age 60, or even 65, it’s conceivable they may live another 20-25 years (or more!). “There” is different, and probably shouldn’t be viewed as one static event. Encompassing 20 years or more, “there” may include not one move, but two or three. With adult children finding jobs in what seem to be more far-flung places, parents who retire and choose to follow their children (and grandchildren) may find that they move more during “there” than they did while they were trying to get “there”.
Further, if we assume a longer retirement than our parents or grandparents enjoyed, we should view “there” as multiple events. If health and finances cooperate, the early years (the Go-Go Phase) may be viewed as a period of increased activity: travel, fitness, social.
As the years mount, the next phase (Slow-Go) may entail a more sedate part of retirement. If the house is too much work, perhaps a move to an apartment in a town where transportation is more readily available, and owning a second car may no longer be necessary. Expenses drop, and the lifestyle may change yet again.
The final phase (No-Go) may include a community where one ages in place, surrounded by amenities seen as more necessary (e.g., doctors, home care). Even one car may no longer be essential, and travel may be deemed as too difficult. It’s time to slow down and enjoy the world immediately around us. (Some of us may even find ourselves in so-called Granny Pods, smaller homes on property owned by one of our children. It allows seniors to be near family, but to have their own space.)
If you’re working on getting “there” or have already arrived, perhaps it might be best to view it as a work in progress. Assume it won’t occur in the same location where you live now or even the same state, and further assume that what you do when you get “there” will vary significantly as the journey continues. “There” is no longer a fixed place, but rather multiple stages. Living longer is giving us more opportunity, so don’t assume that 20, 30, or even more years of retirement will ever be the same.