The traditional road to a well-funded retirement is a linear process that follows the predictable trajectory of school, university, job, marriage, children, travel and then retirement – a process which is supported by approximately 480 paycheques and interspersed with climbing ladders, moving jobs, buying bigger homes, faster cars and more stuff.
Over the past decade or so, however, a number of significant factors have worked together to create the perfect storm within the retirement landscape. Increased longevity, the rise of the ‘experience economy’ and the dearth of the silent generation, coupled with the desire by a generation of brave new millennials to retire differently, has necessitated a global rethink as to the ‘magic’ number 65 and what retirement is really all about.
The concept of retirement is linked to the idea of financial freedom, and it has widely been accepted that us humans have approximately forty years to achieve this status. Perhaps this generation’s preoccupation with choice has contributed to us questioning why the traditional retirement model provides very little in terms of options for those averse to the thought of making a clean-break at age 65.
Re-imagining retirement begins with unpacking exactly what it means to retire. The point at which a person is able to financially ‘retire’ marks the point at which he has accumulated sufficient assets to generate enough income for the remainder of his life. Our challenge in the re-imagining process is to accept that we are not restricted to a forty-year period in which to achieve financial freedom. If we are prepared to devote our time, money and energy towards this end-goal, the timeline is ours to determine.
Replacing the term ‘retirement’ with the term ‘financial freedom’ is an empowering substitution which removes age-based limitations and reinforces the personal desire to save towards absolute financial freedom, whenever that may be. While the term ‘retirement’ connotes being in the last stage of life, ‘financial freedom’ is a timeless phrase achievable by absolutely anyone with the right mindset and a financial plan to support it. ‘Saving towards absolute financial freedom’ is a much more desirable objective than ‘saving for retirement’ and is something that even a 22-year-old graduate can relate to and gear for.
Traditionally, retirement means stopping work for pay, whether in the form of formal retirement, early retirement or semi-retirement. On the other hand, financial freedom means being permitted to work for passion and purpose alone – something that most of us aspire to. Working towards financial freedom at an earlier age has a significant impact on the way we make every-day financial decisions.
On the journey to financial freedom, we will be greatly challenged to find a balance that allows us fulfilment in the present while simultaneously staying focused on the end-goal.
Every vehicle upgrade, every overseas trip, every capital outlay delays our goal and extends the period during which our choices are limited and our time is not fully our own.
There is no doubt that the retirement landscape has changed forever as younger generations grapple with traditional retirement concepts and formalities that are seemingly foreign to them. Financial freedom as an end goal is a much more appealing and identifiable objective and is being actively pursued by younger and older generations alike. Designing a clear picture of what financial freedom looks like to you is the first step in the process, keeping in mind that the vision needs to be clear enough to act as a touchstone for all your financial decisions.
Rephrasing ‘retirement’ to that of ‘financial freedom’ is less about semantics and more about framing a mindset from the get-go that we are not working so that we can reach age 65 and ask, ‘What am I going to do for the rest of my life?’. We are working towards reaching a point in our lives where we can sit back and say, ‘I can do whatever I like for the rest of my life’.
You might not know now, or even at the point of reaching financial freedom, what it is you plan to do with the rest of your life, but you have bought yourself the freedom to spend your time as you choose, and that is priceless.