Matt’s retirement article got published!

Personal finance has been an interest of mine for years.  Not day trading or finding the next Google – rather, trying to understand the real value of money, how to spend well, save well, and invest sensibly.

Based on a blog post from this site, I put some of the thoughts and reflections that lead to our decision to travel into an article and submitted it to Canadian Moneysaver.  I was genuinely shocked when they decided to make it their cover piece!   If you don’t want to buy the magazine at Chapters/Indigo – here it is:

Why I am rethinking my retirement plan

Dave is a young, bright, hard-working guy who just finished high school.  He has all the tools for success. But what is that? The standard model of “success” looks something like:

• graduate from post-secondary education
• get a good job
• get married and have kids
• save enough for retirement – as early as possible
• retire and enjoy the good life

So, Dave does well in school, earning himself an MBA and lands a “good job” – i.e. stable with good pay, but not particularly interesting.

Dave gets married, buys a house, has a few kids.  The best years of his life are spent working long hours.  But life is good and he enjoys a bunch of nice stuff: a series of nice cars, a home theatre in his man-cave, trips to Disneyland every few years for some much-needed “family time”.

All the while, Dave is responsible and saves 10% of his paycheck for retirement, just like he knows he should.

Dave gets older.  By the time he retires at age 60, his kids have left home to start lives of their own.  Even though he knew it was coming – even looked forward to it – he’s a little uncomfortable with all the free time he has, the empty house, the lack of productive work.

To fill the void, Dave books a few cruises, even buys a brand new sports car.  He dabbles in a few hobbies he used to think were ridiculous. Weeks and months go by and Dave is overcome by sadness that the retirement he looked forward to feels empty and pointless.

Finally, on a whim, Old Dave gets a job at the local hardware store stocking shelves and helping customers.  He can’t believe how happy he is. Even though it is completely different from the retirement he envisioned, Dave knows he will keep this job for as long as his health allows.

This is success.  Dave did it right.  No unemployment, no devastating illness, no crushing divorce.

But also no passion, no risk, no adventure.

It’s like Dave followed the path of “success” that our society had already defined – and he did it well – but he never made it his own.  Dave did a great job of maintaining the status quo.

What did Dave miss?

It is so easy to get comfortable, to not ask questions, especially when we are “doing well” by most standards and “busy” all the time.  But our time on this planet really is short. If we want to make the most of it, we have to ask ourselves the tough questions and we need to be okay with the trade-offs that are built-in to our choices.  In Dave’s case:

• he spent the best/healthiest years of his life in school or working
• he worked in order to retire, not because the work was rewarding in and of itself
• he sacrificed time with his family and pursuit of other passions for work and money
• he worked more to accumulate “things” – none of which actually contribute to fulfillment
• when he reached his goal of “retirement”, it turned out to be the wrong goal all along

In spite of having all the appearances of success, in some ways Dave’s life was a failure.  It was based on the wrong premises. Stuff does not make us happy. Even leisure does not make us happy.

What makes us happy is shared experiences with people we care about;  creative pursuits; doing good things for other people, not ourselves.

I think it is about time we question our definition of “success”.  The life path of education – work – retirement is pretty restrictive.

What could Dave have done differently?

We all make choices that determine our life’s path.  Sometimes those choices are nearly unconscious – we just follow the norms that have been established.  That might work for some people but I wonder how many of us really consider our options. There are trade-offs, as always, but we could:

• Find a job that is inspiring, that doesn’t feel like work.  When work is fulfilling for its own sake, why would you even want to retire?  It might not pay as well, but you will want to do it for longer. People who are inspired by their work are instantly recognizable – and the inspiration is contagious.
• Keep the “good but uninspiring” job, but work less.  Trade money for time. Then use that time wisely to pursue relationships and experiences, not stuff.
• Take mini-retirements.  Save 25% of your pay so that you can take a year off every 4 years.  Many employers have programs like this, or create your own.

The implicit contract of the standard model of retirement is that we forego doing what we really want to now so that we can do it later.  Delayed gratification. But there are a few major problems with this.

First of all, you can’t get now back.  The years when your kids are at home, loving every minute they have with you, hanging on your every word.  Years when you have the health and vitality to pursue a big business idea. Years when your relationships could be growing stronger – or weaker.  We must realize the incredibly high price we are paying for the gift we are giving our future self: retirement.

Second, as Dave found out, we may not enjoy that gift nearly as much as we thought we would.  I know many people who wish they’d pursued a risky entrepreneurial venture they were passionate about, or gone on some crazy travel adventure while they were young and healthy.  There are countless more who would trade anything for more time with their kids when they were young.

Third, stuff happens.  Take it from an ER doctor – we might not even make it to retirement.

And so, at 41 years old I am questioning my own life path.  I am Dave. I have been responsible and “successful”. But that is not enough.  I want more.

I don’t regret being Dave up until now, but I don’t want to die like Dave.  There are other options.

I realize that I am happy to trade money for time.

I finally understand that “nice stuff” has nothing whatsoever to do with happiness.

I also realize that trading a cushy retirement for amazing experiences with the most important people in my life now is a good trade.

So, I have decided with my wife and our four young boys to take a detour from the “responsible and successful” life path that we were on.  Even though it doesn’t fit with the retirement savings plan, a few months ago we decided it’s time for a mini-retirement. We are going to take the kids out of school for a year and backpack around the world.

Do we know what we’re doing? Not really.  Will it be hard work? Yes. Will it be an adventure of a lifetime?  Hell yeah.

So, think hard.  What is really important to you?  What do you want your legacy to be?  Financial success is making your money support those values.