Introducing the stages in Route 3 of Freedom, Time, Happiness, and the podcast series (and a little gift suggestion at the end)
Freedom, Time, Happiness
We’re getting there! Today I’ve uploaded all of Route 3, a route through the territory of Life Two that explores longevity.
There are 7 stages in this route, and I’ve organized them in two sections, starting with an explanation of the basics of longevity, and then exploring longevity risk.
Though two of the stages are part of Life Two, they’re both included in full in FTH, so there’s no need for cross-references.
I don’t think there are any aspects here where it’s necessary or even particularly helpful for both partners in a relationship to discuss them. Typically one partner in a relationship is much more interested in longevity-related themes (or is the designated partner to worry about them!), and that’s fine.
And that’s it. I’ve noticed other commentators starting to introduce the concepts involved in longevity, including why the expected age that we’ll survive to increases as we age, but hey, we covered that a long time ago. And I’ve also found, in many conversations, that the concept of “joint and last survivor” longevity, which underlies our Personal Funded Ratio calculator, isn’t used a lot, even though I think it’s fundamental: if you’re a couple, why would you base your plan on one life rather than on both? Oh well …
Next up: Route 4 (exploring retirement finance).
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The Podcasts
I mentioned in the last blog post that we had an event in November to launch the podcast series. I’m delighted to say that they’re now available on this website! (Or at least the first three episodes. We’ll release the others as soon as they’ve been technically polished, a non-trivial process.)
I thought you might be interested in what I said at the event, which you’ll remember was co-hosted with Common Wealth (Founding Partners Alex Mazer and Jonathan Weisstub, Marketing + Communications Director Janette Luu). As background to the way I started, Janette’s seven-year-old daughter Mazzy was interviewed in a teaser that was played for the attendees, and said (without being prompted) that she liked the name Life Two!
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Thanks so much for being here, to help us to celebrate the launch of these podcasts. I’m going to tell you about reframing retirement, about my Life Two book, and about the podcasts.
OK, first some background, after the teaser you just heard: why I call this Life Two. It wasn’t an obvious name to me. It came about accidentally.
I thought of it as “life after work,” as I researched it, because I was living it, and wanted to make it as happy as possible for myself. And then a very precise friend told me: “You mean, life after full-time work, right?” Yes, right, because even if it includes working part-time, it’s that after-full-time flexibility that I’m thinking of.
But if you keep saying it, the phrase “life after full-time work” becomes a mouthful.
So I tried to construct an acronym. I wrote down the words “life after full-time work,” then the first letters L-A-F-T-W(O).
That spells LafTwo.
And I thought: I can hear a Texan friend of mine saying Life Two!
And when the name Life Two presented itself, suddenly years of assembling thoughts fell into place, and acquired a structure and a purpose and much more. And here’s what I realized.
If you think of it as Life Two, then Life One is our grown-up working life. Life Two is what follows. For most of us, it’ll be long enough and healthy enough to be a life to enjoy, not just an end. Forget the old concept of “retirement.” Let’s retire the word!
Life Two is the best part of life, so much so that I think of Life One as just the long prologue that finally gives way to the real show, when enjoyment and happiness and fulfillment peak.
If you look at studies of happiness, how it varies by age when you eliminate other influences (money, health, the society we live in), in every country (74 countries when I last counted) it’s a U-curve, peaking after age 65 or so. Nothing to do with retirement. It’s our brain chemistry that does it, making us (as we age) less driven, less pushy, less frustrated – and more contented. We start to see the same glass as half full, rather than half empty. (Of course, you know that actuaries look at that glass and see a glass that’s twice as big as it needs to be – but moving right along …)
Another reason why it’s the best time of life. When we’re kids, we have no money. We have lots of time. When we work and raise a family, we start to accumulate money. But we’re very stressed for time, during Life One. It’s not until we retire, or at least stop working full-time, that we have both the time and the money to truly enjoy all of life. That gives us freedom!
So yes, think of Life Two as a full life; a mature life rather than an immature one; a happy life rather than a stressful one.
That’s how to reframe retirement. Now, about the book.
It’s ironic that dreading retirement makes us unhappy and anxious at work. We don’t know what it’ll be like. We just know it’ll be a change, possibly a big change, from what we’ve become very used to. And we’re scared to think about it. We don’t admit to being scared. Instead, we say, “It’s too complicated to think about.”
The Life Two book aims to relieve that dread. First, by saying: you know, you’re not alone, we all feel this way. And second, by saying: let me tell you about the three big fears that surveys identify, and show you how to overcome them.
The first fear is: Without my work to define me, how do I define myself? A sort of: what would I put on my new business card? “Retired” is so negative. So … learn how to find new motivation and redefine yourself.
Second, how will I fill my time? Linked to this: I have a partner, and we’re frankly not used to spending that much time together.
And third (and this is what surveys say is the biggest fear): Will I outlive my money?
I can’t tell you “Don’t worry, everything’s going to be all right” – because that just isn’t credible. But what I can do is help you find your own answers to those three questions. And, as with the best education, that needs two things.
First, it needs the best wisdom from experienced people – and that’s what I’ve gathered in this book, through extensive research. And second, that wisdom needs to be applied to your own personal circumstances. And there’s only one way to do that. It’s called homework.
The book is written as a walking tour of the land of Life Two, with me as your tour guide. And at the end of each of the 24 walks through the territory, I set an exercise. I pose specific questions for you to answer.
These are not tests. They’re not about right and wrong answers. They’re about giving you questions to ask yourself, to help extract your own thoughts. Because you are the expert on yourself! Sometimes the key to solving a problem is finding the right questions to ask. That’s what I’ve done for you.
And when you answer the questions, the sum total of all the answers ends up as your answers to the three big questions, and they become your personalized plan to enjoy Life Two.
If you take one walk a week, in less than six months you’ll put yourself in the driver’s seat. You’ll still have decisions to make, but they’ll be informed decisions, and you’ll feel in control, which is a huge thing, psychologically.
Let me add this thought. I hope you’ll go further. I hope you’ll bring this book to all your co-workers over the age of 50, which according to surveys is roughly when the anxiety starts. Imagine: you could help take away the anxiety, and replace it with confidence, in fact eagerness, to get to Life Two. The workplace atmosphere, productivity, will be transformed.
There are copies of the book on the table – take a look.
Finally, the podcasts.
They’re the brainchild of my co-hosts, at Common Wealth. It was entirely their idea. And I like them and admire them, so I happily agreed to see what we could do together.
We started with a rough framework. Let’s focus mainly on the financial aspects. There are phases as we prepare financially for Life Two. First, just get started. Later, it’s time to get serious. And then, as the time approaches, get set. Then there’s the actual transition to retirement – and yes, it’s a transition, not a clear separation. And then: let’s go and enjoy it!
Between us, we knew a number of global experts. And we asked if we could interview them, and told them the rough framework. And to our delight, all said yes, except for those whose calendars or recent career change conflicted. What a joy! And an even greater joy for Alex and me to actually chat with them, and receive their wisdom.
When we were done, a running order presented itself.
Start with a double length first episode, with Chris Battaglia (who runs the publication Pensions & Investments, and is globally knowledgeable) and Jeremy Cooper (who authored the fundamental Cooper Review that shaped the Australian superannuation system). They tell us about what needs to be improved and what different countries are doing.
Then Jonathan Clements (the former Wall Street Journal personal finance columnist) outlining the financial stages in planning for Life Two, stages that synced perfectly with our own ideas.
Then getting started, the first 20 years or so, with David John, the senior adviser to AARP.
Then getting serious, the 20 or so years before actual retirement, with Canada’s own Fred Vettese, actuary and popular newspaper columnist.
Then getting set, with international best-selling author Ernie Zelinski (also Canadian, as it happens), telling us about psychological preparation for retirement and how to fill our time.
Then transition, perhaps the first 3 years after retirement, with Jon Glass, an Australian who represents a new breed, the retirement coach, talking about the psychological transition.
And then Life Two itself, with my Canadian guru Professor Moshe Milevsky, who knows more about longevity and decumulation than anyone in the world I’ve ever met.
Having done all that (seven episodes, if you’ve been counting), the eighth one went back to a global overview, of innovative solutions to retirement security challenges, courtesy of Ida Rademacher (she’s the Executive Director of the Aspen Financial Security Program) and Will Sandbrook (the Executive Director of the UK’s NEST Insight – that’s their National Employment Savings Trust).
At the end of each of these wide-ranging interviews (in which by the way we encouraged our experts to go way beyond the framework), I added a few minutes of what I call My Personal Touch. That’s where I said: given everything we’ve heard in this episode, what are the lessons for you – the individual – to do today, to change your thinking or your actions? Down to earth.
We had two more episodes that were slightly outside this structure, so we present them as bonus episodes. First, an interview with Cindy Deere (the General Manager of Shell’s US Pension Plans), and then finally I interview Alex and Jonathan, about their perspective, the way they identify the problem they’re trying to solve, the skills required, clients’ motivation, the role of civil society, like unions and associations.
All the way through, Janette was like our Chief Operating Officer, making sure everything worked, that we were briefed and prepared, like a play where the audience sees everything go smoothly, and you have no idea of all the things that needed to be organized and fixed backstage!
Did I tell you at the start that I like these guys? I’ll go further. I love them. It’s been a privilege working with them.
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A gift suggestion
I belong to two different groups that meet for lunch every month. And a few days ago one of the members of one of the groups suggested to his friends that, with Christmas approaching, they might consider buying, or including on their own wish list, my book Life Two. What a great idea! The suggestion should have come from me!
So I’ll steal it. And I suggest that you consider Life Two as a gift for your friends over the age of 50.
The idea has been well received at a couple of pensions and investment industry conferences I attended and spoke at in the last few weeks, with lines of attendees eager to receive an autographed copy. What makes it different is that the book isn’t just educational, it also produces outcomes (that’s the current buzzword, I understand), thanks to the explicit exercises that create personal action plans.
For Canadians, I’ve just heard that Kindle Direct Publishing now prints in Canada too, so paperback delivery is immediate, rather than having to send the printed copy from the US. Of course, delivery is totally immediate with the e-book edition.
Enjoy your Life Two!
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2 Comments
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.
Don I just listened to the first of your new podcasts and, as I anticipated, it was both informative and entertaining
One thing that Jeremy was ‘lamenting’ was that people in retirement treat their super as capital and tend to try to live off the earnings (plus presumably other sources) and don’t access the accumulated value. Assuming that a) they are getting by on the income streams and b) they have a reasonable unease about outliving their income – or needing it for some health related surprise I don’t see why it is the government’s role to ‘force’ them to deaccumulate at a pace not of their choosing.
If they looked to some public source to tide them through while still sitting on their pot then there should be some coercion to deplete it first but short of that I don’t really see the problem.
Thanks for your deep observation! I sent it to Jeremy, and here’s his response:
“The big issue with many pension system is tax concessions. In Australia, if you have saved $1m to retire with, about 1/3 of your retirement wealth has been given to you by the government. In other words, if you tried to save that money at your marginal tax rates, you would only have around $666,000. As a result, the government has some right to nudge retirees to spend some of the money. In Australia, we have entirely tax-free retirements and don’t have any inheritance taxes either, so the tax collector misses out all round. In the example you describe, I agree there doesn’t seem much of an argument to force retirees to consume capital. However, in today’s low interest rate environment, such retirees are in the minority. Most people simply don’t have enough capital to live well from their investment income alone. They can enjoy a much better lifestyle by spending some of it and that’s what pension policy makers are trying to make happen. I hope this sheds a bit of light on my lamentations.”
I believe that the granting of tax concessions in the accumulation phase is (in many — most? all? — countries) accompanied by an attempt to retrieve some portion of it either in the decumulation phase or from the estate at the end of life. In some cases you pay tax on a deemed minimum withdrawal, whether or not you actually withdraw money.