What Does “Retirement” Mean to You?

What Does Retirement Mean to You

Photo courtesy of Vinoth Chandar

We’ve all heard the same advice: you have to start saving for retirement.

We’ve heard it from our parents. We’ve heard it from your friends. We’ve heard it from random people on TV. Heck, you’ve even heard it from me.

The advice is well-intentioned. It’s even good. But it misses a key point.

It totally ignores the question of what you actually want from life.

The advice to “save for retirement” typically includes the assumption that “retirement” means to same thing to everyone. That is, you work until age 65, at which point you stop working and enjoy your golden years fishing, traveling, babysitting grandkids, or whatever else you’ve waited your entire life to have time to do.

Maybe that’s exactly what you want. Maybe not. But it’s important to recognize that the traditional view of retirement is NOT the only option available to you.

In today’s world, you can define “retirement” any way you want.

Where does the traditional definition of retirement come from?

I’m actually not 100% sure where the traditional view of retirement comes from, but I think it’s primarily two sources:

  1. Social Security – In the Social Security program, “full retirement age” is defined as anywhere from 65-67, depending on when you were born.
  2. Traditional pensions – These are becoming less and less common, but here again “full retirement age” is often set at age 65 or somewhere near there.

In both cases, it’s not until age 65 that you can start collecting full retirement benefits. And in both cases you may even be able to get a bigger benefit by working longer.

These big programs were the only real options available to most people for a long time, so working until 65 just became the standard way that things were done.

And even though the world has changed a lot over the years, our society hasn’t really updated its view on retirement. The assumption is still that you’ll work full-time in a traditional job until age 65, and any other viewpoint is looked upon kind of strangely.

But that’s started to change.

Why you can do it differently

There are two very simple reasons why you don’t have to adopt the same definition of retirement that everyone else does:

  1. Social Security is just a government program, not a code you need to live your life by.
  2. You have more options than ever before to save and invest your money in ways that make it possible to live alternative lifestyles.

That second point is the real key. A lot of people worry about the shift away from traditional pensions, where your company guaranteed some amount of income in retirement, towards things like 401(k)s and IRAs where the burden to save is on you. And there are some legitimate societal concerns there, particularly for older generations that don’t have as much time to adjust to the change.

But for the well-prepared, this shift actually opens up a lot of opportunities. Here are some of the big advantages you have today that didn’t exist for past generations:

  • The money you save is yours – Unlike with traditional pensions, where you had to rely on your company’s word and you had to stay with the company for years to maximize benefits (or even keep them in some cases), the money you put into a 401(k), IRA, or regular old taxable account is yours, plain and simple. You can move it with you as you change jobs, start a business, become a stay-at-home parent, or whatever else it is you choose to do.
  • You can choose to save more – You aren’t require to wait until 65, or any particular age, in order to get “full benefits”. If you’d like, you can choose to save more so that you can reach your financial freedom sooner.
  • You have better investment options – It used to be really hard and/or really costly for regular people to invest their money well. That’s no longer the case. We now have easy access to top-notch investment options that not only perform well, but require minimal work to maintain. You can put your money to work making a better future for yourself, no matter where you’re starting from.
  • You have more choices when it comes to work – Technology has made it easier than ever for people to work remotely, start side projects that could eventually turn into full-time gigs, and generally do things more efficiently. You can certainly still take the route of finding a good company and working your way up, and for many people that’s a desirable way to go. But it’s no longer your only option.

These aren’t trivial things. These are radical changes that open up an entire new world of opportunity and allow you to define “retirement” pretty much however you want.

In fact, I’m getting to the point where I’m not even a huge fan of the word “retirement”. To me, financial independence is the phrase that gets much closer to what I see people wanting to work towards.

Financial independence isn’t about working until you no longer have to work.

Financial independence is about purposefully building the financial resources that allow you to live whatever life you want to live, as soon as possible.

So what do you want?

There’s no right answer here. Some people love their job and would happily keep doing it until they’re on their death bed. Other people might view their job simply as a way to make the money that allows them to pursue other things like travel, volunteer work, or spending more time with friends and family.

The point here is that the choice is yours. The traditional view of retirement is now just one option of many.

What do you want?

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9 Comments... Read them below or add one of your own
  • Syed September 8, 2014

    This is a great question and something I still struggle with. I think a good exercise to is to ask yourself if you were in a position where you could do ANYTHING and money wasn’t a question, what would you do with your time? Maybe the answer you get is what you should strive for your retirement to be like.

    My answer? Train as a full time martial artist in Asia. Will have to run that one by my wife first! Thanks for the great post.

    • Matt Becker September 8, 2014

      I like the way you frame the question, and I like your response even more!

  • Emily @ evolvingPF September 8, 2014

    I’m so far from retirement, whether that is defined as age 60-whatever or FI, that it’s difficult to even put parameters on it. I don’t even have a career yet so I can’t know whether I’ll want to continue it forever! For right now I’m content to save as much as we can while still having a comfortable life in the present and work on our careers.

    • Matt Becker September 8, 2014

      I like your approach a lot. The great thing about what you’re doing now is that it will give you plenty of options down the road. Whatever it is you do decide you want, you’ll likely have the resources available to make it happen.

  • Lance @ Healthy Wealthy Income September 8, 2014

    I want to be in charge of my life and time so I am willing to make the extra effort to save and invest like crazy so I can retire and do what I want. My grandpa retired in his 60’s, my dad in his 50’s and I would like to retire at age 50. Right now I am on track. I may not quite working, but I’ll stop working full time and control what I want to do. I just want to put myself in a position to not worry about money or time.

    • Matt Becker September 9, 2014

      “I just want to put myself in a position to not worry about money or time.” That’s pretty much exactly how I feel to. 50 is a good goal. Good luck!

  • Done by Forty September 9, 2014

    I’m realizing more and more, Matt, that I’m not really retiring “to” something yet. I know I don’t want to work 40 or 50 hours a week because, well, I don’t like anything enough to do it for 40 or 50 hours a week. Still, I haven’t spent enough time thinking about what my day to day life will be like after work. There’s a general sense that I can’t really figure it out until I get there. Like planning out a vacation: you can do some things ahead of time, but on some level you’ll have to figure it out as you go along. Maybe that’s a bit of procrastination though, too.

    • Matt Becker September 9, 2014

      I think that’s fine, to be honest. I mean, I think it’s a good idea to have some kind of plan but I also think it’s just honest to say that you don’t really know what it will be like until you get there. No one does. That’s why my personal focus is on creating a life I enjoy today, while putting money aside for tomorrow. I don’t necessarily know what tomorrow will bring, but having funds available will give me options.

  • Kayla @ Red Debted Stepchild September 10, 2014

    This post raises a good point – no longer does retirement mean the same thing to everyone. I don’t know what it means to me, but it is something I should work to figure out as it could change my financial plan considerably.

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