The process of planning for retirement is about to completely transformation. Rather than simply planning for how much money we need to retire sometime in the future, the focus will be on how we can position our lives today so that a "retirement date" becomes insignificant. Now don't get me wrong, having enough money for what we now call "retirement" is all well and good. What I'm suggesting is something different; something that will alter how we live our lives forever.
Take a brief walk with me through the past 50 years. Back when our grandparents, and to some extent, even our parents, were building their careers, the process was fairly straightforward. You worked, most likely at one, two, maybe even three companies, built up your pension, retired somewhere between age 62 and 65, and then lived off of your social security and pension income for the rest of your life. This was great, because there were no worries about running out of money or not being able to do what you wanted to do. The income was consistent, no matter how the stock market or economy was performing.
Recently, especially post 2008, we have seen the impact of a perfect storm. The earliest baby boomers are starting to retire, most likely without a pension, which means they must rely on their personal savings in vehicles such as 401(k)s, IRAs , brokerage accounts, CD's, etc.
If the stock market had continued to rise, the recent retirees who "socked" enough money away would have been just fine.
The current problem is twofold: 1) Many of the soon-to-be retirees are not accustomed to saving most, if not all the money that they will need in retirement, because they are the first generation required to do so, and 2) even the ones who did save took a huge hit in the stock market at exactly the wrong time. Taking a loss at the beginning of your retirement years can have a devastating effect on the longevity of your retirement income no matter how much you saved, especially when you are relying on a finite amount of savings. Unfortunately, there aren't many options for them. They must either go back to work, or severely cut back on their spending through their "golden years" -- the years when they are supposed to be able to enjoy life and connect with their passions. Ouch!
So what about the rest of us who have 20, 30, maybe even 40 years before we can "retire"? We've seen what can happen when life savings are wiped out by forces outside of our control. What are we to do? Do we trust the stock market to provide us with the growth needed to build a significant nest egg? If not, where do we put our money so that it keeps up with inflation and will be there when we need it most?
Hold onto your hats ladies and gentlemen. I'm going to say something radical...
What if there is no retirement? What if we don't wait until 65 to enjoy life and connect with our passions? What if the so called "Act 2" when retirees find their dream jobs doing what they love to do actually happens now when we are in our 20s, 30s and 40s?
I don't know about you, but I'll be damned if I'm going to wait until I retire to get the most out of life, have fun and do what I've always wanted to do. I'm as healthy as I'm ever going to be right now and I certainly have more energy than I will at age 67 (the full retirement age for much of the working world). I want to live now, connect with my passions now, and create the life I want to live now! Are you with me?