Using Life to Guide Your Money

Two weeks ago, I spoke at the Ameriprise National Women’s Conference in Austin, Texas. It was enlivening to be among so many bright women, all of whom were financial advisors or their staff. One of my takeaways from the conference was the deep sense of ownership these folks have in wanting to create a great plan for retirement for their clients.

My presentation was about the health and satisfaction outcomes of retirement as we know it today and how things are changing. Lots of our current indicators show that we need to prepare for and live into retirement differently than we have previously. Our rates of depression, dissatisfaction, and chemical abuse in retirement are rising as people live longer.

In my presentation, I put out the call for doing more retirement LIFE planning in  addition to our financial planning. In fact, I think both types of planning should be done in a one-to-one ratio with the other.

Only 30% of those retiring have put any meaningful time into working through how that phase of life will support their health and well-being, which in turn determines what lifestyle they will need to support financially. Think of all the years you made the conscious decision to invest in your retirement savings. How were you being intentional about preparing for your quality of life in retirement (not just how to finance it)?

Most of us think of retirement as simply stopping work and having more leisure time. The reality is that in retirement, the type of work changes. There are a number of areas we need to focus on in this next chapter in order to live out healthy lives. In addition, new situations frequently arise during retirement such as changing family relationships and perceived demands, marital tensions, health challenges, and the resulting need for new pastimes. Each may ask us to create a new plan along the way. This phase of life is about being ready to flow with change much more than pushing forward with a hard-driving plan. The more we can do some self-examination in advance, the more ease we will have in adapting along the way.

Being intentional about planning life in retirement also has ramifications for our retirement portfolios. Financial advisors can tell stories of how often clients make large, unanticipated financial decisions once they are a couple of years into retirement and time is getting long. We might see people suddenly decide to buy into a business, buy a bigger second home, trade off the RV for something more substantial, or decide to move to a different part of the country, etc.

It's a bit of a dance to plan retirement well. It would be nice if, in our 20s and 30s, we could know what we'll want to do in retirement and then save and plan for it accordingly. However, some of that insight only starts to appear on the horizon in our late 50s and early 60s, and some of it appears a few years into actually living retirement.

Absent any deeper life planning, a financial plan for retirement can only anticipate some of the high points and some of the worst-case scenarios for which to be prepared. The reality is, there's a whole lot more middle to retirement and we now have that middle for many more years as we live longer.

It's never too late to take stock and set new intention about how we want to live and what we want to do with our remaining years. It will not only improve the financial decisions we make along the way, but increase the quality of our life and health for the rest of our lives. How are you forming a life plan that will guide what you need to do financially to support it? Who knows, you may end up doing something that changes the world.