With Kelley Long, CPA/PFS, CFP®
For this month’s You Oughta Ask, we’ve tapped our good friend and Business Advisor at MACKEY, Kelley Long. She’s a wildly talented CPA, CERTIFIED FINANCIAL PLANNER professional, and personal finance specialist, with cutting-edge thoughts about what it means to retire in the modern era.
The days of spending the last third of our lives playing golf and watching The Price is Right are over. Why? Because traditional retirement isn’t sustainable in today’s world, nor does it appeal to many Gen Xers and younger generations.
But before we dive into the ‘why,’ we need a brief history lesson:
Up until the late 19th century, people simply worked until they died. Retirement wasn’t a thing. In the rare circumstances where someone lived so long that they couldn’t physically work anymore, their families made sure they were fed and housed.
But in the late 1800s, the German government had a problem. Unemployment was high and young men couldn’t find work. A nationwide revolt against the government was a very real possibility. To quell the unrest, the German government developed a new policy: a mandatory retirement age. All members of the workforce were initially required to retire at 70, but that age was eventually lowered to 65. In exchange, the government paid these individuals a pension, guaranteed for life — it was the first example of social security. Most members of the workforce didn’t even make it to 65 back then let alone 70, but it did get aging members out of the workforce, opening job opportunities for young, unemployed individuals. Thus, the pension was born.
Pensions gained traction in other nations and private companies around the world. Eventually, in the 1930s, the program informed the US Social Security system.
But, with the adoption of pensions and social security came a cultural shift. Individuals saw making it to 65 as an incentive. The idea of retirement became a thing to aspire to, and not simply the end of life itself.
With the addition of labor laws which made it safer to work in factories, unions, and healthcare advancements, life expectancy grew rapidly. What used to mean a few years of work-free life started to change.
In fact, it’s only been in the last few generations that we’ve come to believe that post-retirement means decades of R&R.
These days I hear a lot of common concerns when developing retirement plans for my clients:
· Work is such an important and valuable part of my life. I can’t even imagine retiring at 65. I’d be bored!
· I don’t think I’ll ever stop working, at least not in some capacity.
· Is it even realistic to retire at 65 these days? Won’t social security have dried up by the time I’m able to take advantage? Why plan for something that isn’t possible?
I also see a lot of stress. Many of my clients feel they aren’t saving aggressively enough for the coveted ‘golden years’ and worry that they’re behind.
But what if we shifted our paradigm?
What if we threw the arbitrary retirement age out the window? Even better, what if we threw the entire traditional definition of retirement out the window?
If you’re stressed about your retirement savings, start with this question:
Are you holding yourself to a societal standard that isn’t actually important to you?
If you’re stressed because you’re not on track to retire at age 65 and you also don’t envision yourself wanting to be done working at 65, stop stressing! It seems so obvious, but so many of us are judging ourselves because our parents, a finance teacher, or even a television commercial told us that we’re financially unwell if we’re not on track to retire at 65.
I call BS.
Financial wellness is not about meeting an arbitrary societal benchmark. Financial wellness is about financial optionality.
Ask yourself: What do I want to do? If you have the financial freedom to explore and pursue your options, then, in my opinion, you’re in a strong financial position.
Maybe you want to take an extended break from your traditional job in your 40s or 50s. Perhaps you want to take a few years off to reset, travel, and spend time with family. You’re not walking from your career entirely. You’re just hitting pause. A mini-retirement, if you will.
Mini-retirements are growing increasingly common. Instead of working around the clock to cash in on the golden years, professionals are viewing their lives and career paths with a fits-and-starts strategy.
Maybe you take six months off, or three months, or three years. Maybe you do so to raise a family, or write your first book, or sit at home and be the best damn cat mom on the planet. Regardless of your motivation, the idea of mini-retirements is something we need to start talking about more.
Spreading our working years out over our entire lifespan is a major mindset shift, but it’s one that has the power to transform our lives and help us find our bliss.
To learn more about mini-retirements (and how I successfully took a three year hiatus) check out my podcast, Financial Bliss with Kelley Long.