When we retire, we know what we’re leaving. But we don’t often know what we’re going to. In this post we’ll see why it’s unhealthy to contemplate a blank future, and why it’s important to recognize that we’ll probably transition gradually, not jump instantly, into a new lifestyle.
In talking with friends and with financial professionals, one big psychological lesson has imprinted itself on my mind. It’s important to retire to a lifestyle, not from a lifestyle.
Let me start off on a tangent.
There’s a difference between thinking about something and experiencing it, touching it. The generation that lived through the Depression was seared by the experience. Those who had significant amounts at risk during the global financial crisis that started in 2007-8 know the feeling too. A colleague of mine captured it beautifully this way – he said: “We discovered that Risk has a friend called Pain.” Isn’t that beautifully expressed? Risk is only a concept; in contrast, pain is real, it’s an experience, not just a mental possibility. And we all know the result: once you’ve experienced pain, after that (at any age, from infancy to senility) managing risk, avoiding a painful outcome, is sometimes even more important to us than achieving a good outcome.
Why do I emphasize this? Because, in my turn, I too have left full-time work and touched retirement. And the experience was different from just thinking about it. And there are things I now understand much better. Let me express this personally, even though I understand from others that this sense of dislocation is not uncommon.
Here’s the first thing. I felt that I was a tree that had been uprooted. For over 40 years I planted my roots deep, very deep, into soil that nurtured growth. I loved the experience of life and work. It had a pattern, it had a rhythm that I grew deeply attached to – even if I periodically complained about it (as we all do) and dreamed of the day I could become self-indulgent. Harry Levinson, professor emeritus of psychology at Harvard Medical School, implicitly predicted how I’d feel; he said: “All change is loss, and all loss must be mourned.”
Obviously, this will vary from one person to the next, reflecting the extent to which you find your previous routine fulfilling. My friend Dr Meir Statman captured these feelings when he wrote: “When we lose a job we lose more than money, we lose part of our identities, pride in our accomplishments, and membership in our communities.”
Anyway, my flourishing 40-year-old tree was uprooted. I needed to plant a new tree. I wasn’t entirely sure I knew the kind of tree I wanted it to be, nor where exactly I wanted to plant it, nor if I’d change my mind. I simply couldn’t be sure, because experiencing this … freedom to choose, freedom that I dreamed about, freedom that was the first word in our family Christmas letter that year … it was still new and I wasn’t used to it. It took me three years to define my tree, and I ended up planting roots in new soil, in a different country. These were new roots. They didn’t start out deep. Only time could give them traction.
I tell my friends this because I want them to know that a change in lifestyle leaves a void. I’m lucky in that I finally had an idea about how I wanted to fill that void. But I spent three years in psychological transition. Russ Hill, the President of Halbert Hargrove, a wealth advisory firm on the west coast, introduced me to the concept of transition. Because it’s so powerful, it’s really a whole stage between accumulation (saving and preparing for leaving full-time work) and decumulation (drawing down money to live on in that phase of life), and we should give transition its due and call it a potentially long, intermediate stage.
Too many people never get out of it. And that’s a shame, because direction is so important for happiness. That’s the message I give them. Avoid what I did. Move to a lifestyle, not just from a lifestyle. And know that it’s perfectly OK to change your plan if you find that it doesn’t work for you. (A subject for another post, some time.)
I see advice in that area as potentially part of a financial professional’s role. The best, the most successful of them, are not just financial and investment professionals, they’re psychological counselors too. I tell my friends: there are many services, many tools, to help you identify and remember what you enjoy, how to integrate these things into your life, how to set goals, even how to set a personal mission statement. There are life coaches. There are budgeting tools. In many countries the government’s statistics department has analyses of patterns of household expenditure on broadly defined spending categories.
Talk to your financial professional or to a life coach. See if he or she is willing to become a partner, not just a professional.
Make sure you have some ideas about your post-work life; transitioning to a vacuum is depressing.
I have written about retirement planning before and some of that material also relates to topics or issues that are being discussed here. Where relevant I draw on material from three sources: The Retirement Plan Solution (co-authored with Bob Collie and Matt Smith, published by John Wiley & Sons, Inc., 2009), my foreword to Someday Rich (by Timothy Noonan and Matt Smith, also published by Wiley, 2012), and my occasional column The Art of Investment in the FT Money supplement of The Financial Times, published in the UK. I am grateful to the other authors and to The Financial Times for permission to use the material here.