When planners talk about retirement, they often use the metaphor of a three-legged stool. The three legs of this metaphorical stool include:<\/p>\n
With Social Security income becoming less and less reliable, and traditional pensions all but extinct, the three-legged stool has become quite a balancing act: Today’s retirement plan is not<\/i> your father’s retirement plan!<\/p>\n
Two Legs Down, One Questionable<\/strong> Who needs the federal government and the boss? One would think that 41 years after the birth of the financial planning industry, and 36 years after the creation of the self-directed retirement plan (401k), the do-it-yourself era would be alive and well, and the old three-legged stool would be replaced.<\/p>\n Unfortunately, conventional wisdom takes too long to change. People (and many financial planners) are still including Social Security in financial plans; and the disappearance of traditional pension plans has profoundly highlighted the debilitating human element of procrastination: Reports reveal that nearly 50 percent of Americans are not adequately saving for retirement.<\/p>\n The three-legged stool has been reduced to a pogo stick! How’s your<\/i> balance?<\/p>\n Fortunately, the Baby Boom generation, beginning with those who started retiring five years ago, and including those who are retiring today and up to 10 years from now, is beginning to change the conventional meaning of retirement. Let’s learn a few things from today’s retirees, observe what they are discovering, and form our own retirement philosophies, strategies and tactics.<\/p>\n Time to Rebuild the Three-Legged Stool<\/strong><\/em> The first step in alternative retirement strategy formation (and to rebuild the three-legged stool), therefore, is in alternative thought<\/em> formation:<\/p>\n <\/p>\n <\/p>\n Now that you’ve begun to alter your thoughts<\/em> regarding retirement, you may now begin to consider alternative financial strategies and tactics<\/em>.<\/p>\n Career Planning as Retirement Planning<\/strong><\/em> Working is a large part of being productive and mentally active; and it can be a viable (and meaningful) way of replacing one of the legs of your retirement plan’s three-legged stool. In JD’s book, Your Money: The Missing Manual<\/a>, he describes this as “finding your sweet spot,” which originates from another outstanding book, Good to Great<\/i><\/a> by Jim Collins. The sweet spot is where your passions<\/em>, what you do best<\/em>, and what people will pay you to do<\/em> overlap.<\/p>\n If retirement is a time to write a new chapter in your life<\/em>, start writing the chapter now! As Aristotle said, “If you enjoy what you do, you will never work a day in your life.” If you enjoy your work, you will replace one of the legs of the conventional three-legged stool: Retirement will no longer be defined and created by money alone.<\/p>\n Start a Business<\/strong><\/em> Similar to the preceding point on career planning, you may reduce risk by starting the business long before<\/em> you plan to retire; by starting the new chapter in life now. Who knows, your moonlighting prior to retirement may produce retirement savings in addition to<\/em> the formation of another income leg during retirement. Just be sure that the business involves something you are passionate about (see previous point).<\/p>\n Reduce the Size of Your Nest; Increase the Size of Your Nest Egg<\/strong><\/em> Consider downsizing\/relocating your home, getting a reverse mortgage, doing a sale-leaseback, or renting unused space:<\/p>\n <\/p>\n <\/p>\n <\/p>\n You Know the Rest<\/strong><\/em> Do your best to enjoy life. Worrying about tomorrow takes away from today; and remember, retirement is not something defined (or created) by money alone. An online savings calculator, for example, will not tell you how to find meaning and purpose in retirement: Savings calculators are quantitative; life is qualitative.<\/p>\n To rebuild the conventional three-legged stool, you must think (and plan) in non-conventional ways. What you do<\/em> \u2014 not what you have<\/em> \u2014 creates meaning. So be sure to make what you do<\/em> meaningful first and let the money follow. It may sound corny, but the old saying, \u201clife is about the journey, not the destination,\u201d is wise (and true)!<\/p>\n The journey never ends as long as you live; therefore the proper perspective is to make life, which is always in the present moment, the best it can be…<\/p>\n How (and what) are you doing in your retirement planning?<\/b> What unconventional retirement philosophies, strategies and tactics have you found useful? What are the “legs” of your retirement stool?<\/p>\n","protected":false},"excerpt":{"rendered":" When planners talk about retirement, they often use the metaphor of a three-legged stool. The three legs of this metaphorical stool include:<\/p>\n With Social Security income becoming less and less reliable, and traditional pensions all but extinct, the three-legged stool has become quite a balancing act: Today’s retirement plan is not<\/i> your father’s retirement plan!<\/p>\n Two Legs Down, One Questionable<\/strong>
\nSocial Security will pay out more this year than it gets in payroll taxes, and leaders in Congress are now seriously talking about raising the retirement age to 70. Also, the traditional pension plan, especially in the wake of the Great Recession, is all but dead.<\/p>\n
\nMitch Anthony, modern-day expert on the behavioral aspects of retirement and the author of The New Retirementality<\/i><\/a>, says retirement is not defined by financial means but rather \u201ca time to write a new chapter in your life.\u201d He’s not just making this up; he gets his ideas directly from people in retirement!<\/p>\n\n
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\nMany retirees return to work, not just for lack of money, but for lack of meaning. In The New Retirementality<\/i><\/a>, Anthony says the definition of work, inspired by recent retirees, is \u201ca meaningful and productive engagement, paid or unpaid.\u201d<\/p>\n
\nStarting a business isn’t for everyone. It carries a lot of risk, perhaps even more than the market risk associated with investing in stocks. The rewards, however, both in money and in meaning, can far outweigh that of stocks, which can make the risks of starting a business worthwhile.<\/p>\n
\nMany people find themselves house rich and cash poor; yet conventional retirement planning doesn’t consider the home as a retirement asset. While this strategy steps a bit outside of financial planning and into the realm of emotion and sentimentality, an empty nest that is larger than you need is also a retirement nest egg<\/em> that is smaller than necessary: Home equity can be another leg in your three-legged stool.<\/p>\n\n
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\nThe rest of retirement planning is familiar territory to GRS readers. Continue to form and reinforce money habits that work: Reduce and eliminate consumer debt; drive used instead of new; automate your savings; if you get a raise at work, save it, don’t spend it; track your spending and eliminate unnecessary expenses; take advantage of the 401(k) at work, especially if there is an employer match; and keep educating yourself (but try to have some fun while you’re at it)!<\/p>\n\n
\nSocial Security will pay out more this year than it gets in payroll taxes, and leaders in Congress are now seriously talking about raising the retirement age to 70. Also, the traditional pension plan, especially in the wake of the Great Recession, is all but dead.<\/p>\n","protected":false},"author":3350,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[496,493],"acf":[],"_links":{"self":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/posts\/44842"}],"collection":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/users\/3350"}],"replies":[{"embeddable":true,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/comments?post=44842"}],"version-history":[{"count":0,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/posts\/44842\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/media?parent=44842"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/categories?post=44842"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}