Planning for retirement is usually one of the primary goals in a financial plan. However, the concept of retirement is changing. Years ago, retirement was a clear concept. You worked for a company until you were 65 (or thereabouts), and then you never worked another day. If you lived on the East Coast, you moved to Florida and lived in a retirement community. You spent the remaining years of your life (ideally) soaking up the sun and playing cards.
Today, the concept of retirement is not so clear. One major change is that few people work for the same company for 30-40 years. The idea that you have a job until you are ready to retire is dead. You might want to work until you are 65 (or older), but there is no certainty that your company will keep you. Plus, when you are older, it is more difficult to find a new position. Age discrimination, especially for those over 50, is real.
Another major difference is people are living longer. According to the Social Security Administration, the median life expectancy for a 65 year-old male is 84. For a 65 year-old female, it is 86.5. One out of three 65 year-olds will live past age 90, and one out of seven will live past age 95. Living 30 years or more after retirement creates strains on savings, as well as mental health. Sitting in the sun and playing cards is not necessarily very mentally stimulating.
When discussing financial planning goals, I ask clients when they plan (or would like) to retire. Then I ask them what retirement means to them. For some, it is the old concept of never working another day in your life. For many, it is a second career. That second career often involves self-employment and doing something that the client is more passionate about. The second career might be lower paying and less hours, or it can be something more. It is usually something the client can do for many years, often past the 65 year-old “retirement age.”
A lot depends on when this second career starts. It is one thing to talk about “retiring” from your current career and moving to a new career. It is another thing to do it. Leaving a well-paying job to start over is not easy, especially if you have large financial commitments, like paying for college. Unfortunately, the reality is many of us will not have the luxury of planning this transition on our schedule. For many, it involves being laid-off or fired when we are older, and then being forced to figure out what is next.
The truth is this doesn’t have to be a sequential decision. If you think about leaving your current career and moving to something different, the first step is to develop a plan. It may be possible to start the second career (part-time) while you are still working for that big company. Over time, you can build up the new career and then leave your initial career on your schedule. While this is ideal, it will not happen this way for most of us. The lack of job security in our system should be something we all consider when we are planning our future. It is important to have contingency plans for our career and retirement.
Career change is something that I am familiar with. I left my career in the technology industry almost 10 years ago to embark on a new career in financial planning. Had I stayed in tech, I would certainly be making more money (assuming I hadn’t been laid off), but I definitely would not be as content with my career and life. Today, I wake up in the morning excited about my work. I can see myself doing this for another 20 years, maybe longer. Looking back, I know I made the right decision. If you would like to talk about career and retirement planning, feel free to contact us at info@L2Wealth.com.
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