What will you be doing 3 months after you retire?
For most of our lives, our time is filled with obligations, but what do we do when we’re no longer obliged to do anything much? For many of us, working for money occupies our time and energy for most of our adult lives. We may be in different types of work. We may be employed or self-employed. We may care about career advancement or not. We may enjoy our work and find it inspiring and rewarding, or resent it and begrudge every minute, or simply consider it a neutral necessity. What ever our feelings about working, while we’re in the midst of it we rarely stop to think what happens next? What will I do after this?
I think this may be one reason why so many people don’t save enough for retirement*. They simply can’t picture themselves without their work. That’s not to say people don’t want to stop working. If you ask people what they’d do if they won the lottery jackpot “quit my job” or “never work again” come high up the list, but that’s usually about getting away from stress and frustration, not moving towards a more desirable life.
To put it another way, many people can imagine vividly what it would feel like to tell Cherie that she can staple her own damn expense reports, Derek that his reheated mackerel is a form of air pollution, and their line manager to get ****ed because they are outta here, suckers!
But what happens next is a mystery.
Financial independence doesn’t require a lottery win. Regular, diversified, tax efficient investments plus time will get you there. Even if you don’t make plans to fund your life once once your stop working, at some point you probably will. It’s worth taking the time to understand what you want your life beyond work to be like.
Once you’ve successfully built wealth throughout your working life, how will you spend it?
The interesting thing is that many people can name the things they will do in the first few weeks of freedom, because that’s really just like planning an extended holiday. The bigger question is how will you spend your day-to-day? What happens next? And what about after that?
This is a deeply personal question. Everyone has a different answers. Some may want to take frequent holidays. Some will spend time learning, volunteering, pursuing hobbies or creative projects. Some want to spend more time with family. Some want to focus on their wellbeing and staying active.
Most of us only have quite vague answers to this question and that’s an issue on two fronts.
Firstly, because vague goals are not motivating. Why would you save and invest for a life that doesn’t exist? Having a clear vision of your life beyond work helps you understand how much money it will take your to get there. It also makes that goal more desirable. Once I can really imagine my future, every pound I put into investments is no longer “for my pension”, it’s for my “learning historically accurate calligraphy and bookbinding” fund. Or my “weekly one-to-one yoga class, sauna and mani-pedi” fund. Or my “hiking the world, from the South Downs to the Appalachians” fund. Or whatever floats your boat. (A catamaran fund?)
It’s more obviously worth being frugal now in order to invest towards these dreams than the generic investment goal “for retirement”.
Secondly, you may be able to put plenty aside for your life beyond work, but if you don’t know what that looks like, you could get there and find you’re feeling kind of flat and nonplussed. It’s common to struggle with the transition out of work, and the change in identity that comes with it. Thinking about what you want your life to be like can make that transition smoother. It’s psychologically easier to let go of a past identity if you have a future to reach towards.
For me, I’d like to have a studio space and make all sorts of art without caring if it’s any good, at least three holidays every year, and the option to pay for massage and physiotherapy immediately if any part of me starts feeling creaky.
What would your ideal life beyond work look like?
You can learn more about financial independence and investing to make work optional on my podcast, Squanderlust.
*Or protect against serious illness and injury for that matter, but that’s a whole other topic.
Taking advantage of life changes to improve your money habits
A small change in your routine can mean big changes in how you spend and save money. We carry out so many of our habits on autopilot or near enough, that sometimes we miss opportunities to improve our lives. Anything that disrupts our habits can be a great way to create mindfulness and allow us to reset our behaviour in ways that benefit us.
As you may know, my husband and I moved house just over a month ago. It was a horrible, stressful process but we’re very happy in our new home. One side-effect of the move is that we no longer live opposite our local corner shop. This is the corner shop where I get my chocolate. Sorry, this was where I used to get my chocolate. The nearest corner shops are now at least five minutes walk away. Now I think twice before going to buy chocolate. The extra few minutes walk means I have to want the chocolate more before I‘ll be bothered to go and get it. This is what is known in behavioural science as friction. In this case, this friction is going to be good for my blood sugar and also my wallet, because I have expensive taste in chocolate. It doesn’t have to stop me altogether, even a 50% drop in trips to the shop will make a difference given time.
Friction can work for you or against you. We’ve also moved further away from the gym and I can’t see myself restarting my membership because I know the extra distance means I’m much less likely to go. Since I’m getting a surprising amount of physical activity sorting out our new garden, I’m not so worried about that. (Also yay! More money saving!)
These are changes that happened naturally as part of the move, but this change is also a chance to reassess our day-to-day lives and find opportunities for intentional improvements. For example, we’ve reconsidered which bank account we use to pay our bills. We’ve set up joint savings for the work we’ll need to do on the house. We’re planning our finances more as a household than as two individuals who happen to be married and live together.
It’s no surprise that all the research says that big life events are the time when people often seek financial advice or coaching for the first time. Getting married; buying a home; giving birth or adopting; and approaching retirement are all big changes with obvious financial implications. As are the less happy life events, such as divorce, bereavement and sickness. Yet many people would be better prepared for these big events, both happy and sad, if they’d got advice or coaching some years before.
Similarly, waiting for a big event before you evaluate your habits is a mug’s game. You’re really just procrastinating. Instead, set a date with yourself to go through your finances regularly and while you’re at it consider your daily life and see if you can find a way to tweak a routine or habit for the better.
Would you save money if you:
Walked a different route and avoided a tempting shop;
Tried a different supermarket or avoided a certain aisle during your usual shop;
Unsubscribed from a mailing list (or twenty);
Changed your evening routine, so you’re not browsing while you’re tired and your defences are down;
Unfollowed certain social accounts;
Made more proactive choices about how you spend your free time, so you feel more fulfilled and connected, and are less prone to emotional spending;
Found a way to reduce friction for your good habits, like automating payments to savings and investments on the day you get paid or using an app with a round-up function;
Considered the big events that could be coming in your life and started working out what you’d need to make sure your finances were in the best shape possible if/when they happen.
I have another blog post about why it’s important to use friction to help you do the right thing and also a podcast episode with the science behind why we shouldn’t rely on willpower, so it’s better to design your life to avoid temptation.
What have you done to help you reinforce good habits and avoid troublesome ones?