When Retirement Math Doesn't Add Up

In my past essay, “The Healthiest Age to Retire”, I mentioned a friend in his 80s who had decided to adjust his approach to his work, but not to retire.  It’s been more than a couple of years since I wrote that, and I am glad to report that he’s still finding a great deal of joy and purpose in his work!  I couldn’t help but think of him this morning as I read over this article about wealth and retirement.  They were quite thorough in citing their sources and methods in their examination of the changing intersections of retirement spending, saving, and increased longevity.

The numbers are sobering.  One key finding is that with longer life expectancies and Americans’ wealth not keeping pace, many of our friends and neighbors are at serious risk of outliving their savings.  The systems in place, and their potentially outdated expectations, mean that many people’s retirement timelines are far too short and destined to leave them without enough money to fund their remaining days.  (Don’t forget, YOAMLAW).

There are very few questions that we answer around here more often than, “Can you make it so I don’t outlive my money in retirement?”  Oftentimes the answer is yes, and we are proud of our methods for turning assets into lasting income.  There is another question, though, that I suggest should be asked first.  Why are you retiring?  The most obvious answer may be “to stop working,” but a more nuanced and honest reply may be, “to stop doing work that drains my soul.”

This brings me back to the octagenerian I mentioned earlier.  He didn’t stop working on his 80th birthday, but he did change the way he worked.  Simply put, he cut out the parts of his work that he didn’t find fulfilling.  He still does the work he loves, with great joy and satisfaction.

Financial planning may be one of the only areas where you will hear longevity specifically described as a “risk,” but it doesn’t have to be.  If your retirement is designed with thought and care, longevity can most certainly be appropriately viewed as a blessing.

Those who know me best know that I’m a “math guy” to the bone.  I take pride in solving most of my professional puzzles with cold logic and careful calculation.  Today, I’d like to try a different approach.  If the math surrounding your retirement solution seems impossible to solve, perhaps the best solution can’t be calculated.  Instead of adjusting your plan to cut back on your lifestyle costs, accept higher risks to get higher returns, or <gulp> not live as long… perhaps you can put down the calculator.  Stop thinking of these circumstances as a math problem, but rather as a design project.

It’s not too late to consider what your retirement years can look like, even if they have already begun.  Perhaps you can create a productive life that you don’t feel the need to escape!