Retiring early and putting the leg up is an idea, which appeals to lots of
people. As financial planners, we find that early retirement to be one of the favoured goals, in atleast
half our clients. Why is it such a major
draw? We find two reasons.
Reasons for early retirement - One – they want to be financially self-sufficient
by a much earlier date, so that they can disengage from the rate race. Then
they want to work on, without any financial pressure on them. Some want to work
part-time as consultants, which would leave enough time for relaxation or to pursue
other interests.
Two – they just want time to relax & money enough to see the
world; do social work or pursue hobbies without
worrying about money.
So, it’s essentially about two things. They are fed up with the rat race, want
to accumulate money fast & opt out. The other is that they want to pursue
some hobbies or other interests and need time for that.
It has almost become a fad now.
But, when we see if they will be financially secure by the time they
want to retire, most times it does not work. In some cases we have found it to
work. But we are never sure if they would actually stop working as per their
original intent. We have seen that it did not happen in atleast one case, where
he wanted to retire by 42. He was financially secure by 42, but did not want to
retire. There was another reason… he had also added some aggressive goals,
since we made the plan initially.
So, we find that people are never able to get off the tread mill, though
they intend to. But it is a comforting feeling for them to know that they are
financially secure and can live without worry.
Are they prepared?
The other reason why they leave – to pursue hobbies, do social work
etc. For most, it looks like the ideal
thing to do. But, when we dig deeper to
see if they really mean it, we find that it is but a whimsical idea. Most have
just not thought through it properly.
When we ask our clients to imagine what they will do 24 hours of the day
in retirement, they get enthusiastic at first. But, when they start filling out
what they will do 24 hours of the day, they start to realize how much time they
would have and how bored they could get.
Many had said that they want to teach in villages / do social work. Lots
of such people have never taught in their lives and do not know what it
entails. They don’t understand, for
instance, that teaching is not for everyone.
Also, if they have expertise in a specialized area, will it not be more
useful to assist / mentor people in those areas? This may result in more
satisfaction as they would be passing on their expert domain knowledge to
others, ensuring that their knowledge, experience & expertise is not lost
forever.
Similarly – social work. For most
people, this again looks like the correct thing to do, as they feel that they
have got so much from the society and would like to give back something. Again,
the sentiment is fine & laudable. But lot of people find to their surprise that
social work is not their cup of tea.
Even people who simply want to relax or pursue hobbies find that there is
simply too much time on their hands. Retirement is seen as the time for
enjoyment & rightly so, as one has worked the entire life and deserves a
peaceful and relaxed life, after retirement. But boredom catches on… many find
that after a few months, travel, hobbies, social activities etc. do not have
the same attraction to them, as it initially did.
Early retirees find that their contemporaries are still working and hence
don’t have the time for them. At some point the early retirees start
questioning their wisdom. And then when it appears to them that it is a
mistake, they want to get back to work. Getting back is a lot more difficult.
So, they start doing some assignments, where possible, or do work which is far
lower than the one they were used to. All these are stress points for them.
Preparing for retirement -
Whether It is early retirement or retirement at superannuation, one
needs to prepare for the day of reckoning.
There are ways to be meaningfully involved in cultural, social, religious,
personal work in retirement. One needs to be able to identify, what one wants
to do in retirement.
For that, it is better to try them out and see if they really would be
interesting. We suggest that people should start trying out things they want to
do in retirement, a couple of years
before retirement . They should play
that round of golf a bit more frequently and see, if it grips them. For those
who want to do social work, they should try their hand at teaching or doing
other work in the weekends and find out if the attraction is for real. Lot of
these things might look interesting initially. So we suggest that they try it
out for atleast six months and then see, if the activity will be a good one to
pursue in retirement. Lot of seemingly great pastimes, fall by the wayside,
when subjected to this discipline.
Similarly, many would like to relocate to their villages after retirement.
City dwellers find it very difficult to adjust to the perceived charm of the
villages, which look alluring, when one goes on a short visit. Actually living
there exposes one to the harsh realities – like lack of medical facilities,
power cuts, voltage fluctuations, lack of entertainment avenues, disconnect
with the people living there etc. So we recommend in such cases that one should
try it out for about six months on rent, before making up their mind to shift
lock, stock & barrel.
Ultimately, we all need to figure out some activities that will interest
us and keep us engaged. Else, the retirees end up watching TV & spend the
rest of the time in sheer boredom.
Article
by Suresh Sadagopan Published in Business Standard
For
Comprehensive Financial Planning come to the experts - Ladder7 Financial
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