On Retirement

Commonplace Newsletter #84

I don’t plan to retire. Ever. I’m certain of that. Now don’t get me wrong, I’m no blinkered workhorse who believes in grinding away at tedious toil for the sake of it. I question a lot of the ‘hustle’ narratives that are sold to us. Temperamentally I lean towards what I would term an idle life, or a bohemian artistic mode of living, which consists of languid meditative leisure time punctuated by spells of all out creative work. This is my personal ideal and I gear my days, weeks and years around this staccato rhythm. It works for me. But of course such a way of operating is largely inimicable to the idea of conventional retirement. Which is fine by me because as far as I can tell retirement- quit the workforce at 65 and then settle into a twilight of coach trips, cruise ship holidays, cocktails and daytime telly- is a misguided strategy at best and an outright con at worst.

Allow me to explain.

Photo by Matthew Lancaster on Unsplash

You could call this sour grapes, or rather an attempt to spin the cold facts of fate into something that I am framing as a choice. See I was born in 1987, left university at the start of The Great Recession and I’m currently living through a time of inflation and market downturns. Crypto- the alleged financial saviour of my generation (and the one below me) is sinking like a stone as I type these words. So you could say the handshake and gold watch retirement of my parents’ generation isn’t on the cards for me. Isn’t on the cards for any of us any more. I can’t have it, so therefore I didn’t really want it anyway.

Perhaps. But I don’t think that’s really true at all.

Chaotic times bring opportunity, and knowledge is more abundant and easier to discover than it has ever been, that is if you have discernment. I would say this is the greatest time ever to build wealth if you have a stomach for risk and the ability to communicate and be of service to others. Many will suffer as a chasm forms in the middle class and we enter a more binary society of the haves and have nots. This seems pretty inevitable I would say. You can either position yourself and make moves based around the way things are going or you can accept the slow erosion of your quality of life.

But I’m getting of track. Traditional retirement may not be possible for my cohort, or for any given individual because so much of it is predicated on timing. That’s why I mentioned fate in the paragraph above. The time of your birth, when you come of age, when you hit your prime earning years and when you want to cash in your chips are all huge factors in retirement. Imagine being 60 or 65 now, at this moment, being ready to retire and then the current downturn happens. Your number (which I’ll discuss more in a second) goes down and now you can’t afford to retire just yet. You have to keep working and wait for the recovery. Like Michael Corleone said “Just when I though I was out, they pull me back in”.

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Retirement is a simple equation. You can retire as soon as the dividends from your savings (or rather assets) equal or exceed your annual living expenses. If you need say £30,000 per year to live the life you want then as soon as the returns from your portfolio equal this you can tell the boss where to go and Tony Manero strut out of the building. Hit your number and then cash out. Simple. In fact some people have optimised this whole process and figured out that frugal living plus aggressive saving plus canny investments mean that you can theoretically retire at an incredibly early age. If you can save 75% of your pay packet you can retire in 7 years starting from zero. Many people have done this and blogged about it. The tenacity is impressive and the logic is undeniable. I tip my hat.

But. You’ve got the issues of timing, courage and meaning playing against you when you go down this road.

Firstly with timing, as we have already touched upon, your exit can be delayed significantly if market forces work against you on the home stretch. Chasing the number and seeing it recede into the distance must feel something like being an indentured servant with no fixed release date. The means of your salvation instead becomes a millstone, an albatross, as you have to clock in on Monday yet again.

Secondly you have the courage aspect. Retiring is always going to take a degree of nerve. Will you outlive the nest egg or will the nest egg outlive you? Should you work a couple of years more, scrimp and save a bit more aggressively, defer retirement until you can make sure your safe withdrawal rate is closer to the very conservative 3% rather than the conventional 4%¹?

F.U. Money relies on the ability to say F.U. much more so than it does on the size of your bankroll. Personally I have said F.U. to exploitative jobs when I have had nothing but lint in my pockets. Some will pull the trigger too soon on retirement, some will revise their Number when they get close to it (perhaps out of a fear of their impending freedom) and some will become misers who continue to hoard wealth and never actually use it for the business of living and enjoying life.

And finally we have the problem of meaning, which is my main objection to conventional retirement. Work gives you purpose and the end of work can quickly mean the end of purpose and with that senescence soon accelerates. We need reasons to get up in the morning, we need things to strive for and to work towards mastering. For the type of aggressive saver mentioned above the quest to save enough to retire is what brings meaning to their lives. The journey is the point and the destination is not only anticlimactic but also antithetical to what they actually want. There aren’t enough mini umbrella strewn margaritas in the world to assuage the misery of he existential boredom that the lack of purpose brings.

Now don’t get me wrong. Increasing net worth is good, having financial goals is good, having enough saved so a leaking roof or engine trouble doesn’t decimate your entire life is good. But work, in its truest sense, can never stop. You should never work a job you hate just for the money (well maybe as a short term cash building move, but never indefinitely), but I think you always need to be doing something, existing out in the world, earning, volunteering, talking with people, gaining and receiving wisdom, sharing, being.

Everyone needs to be of use to others. Both for the sake of the others and for ourselves. This is a large part of being human. Retirement can short circuit and atrophy that whole dynamic. You should always do things that give you meaning, satisfaction, a challenge and a sense of accomplishment until the very end. And plenty of those things you can get paid for. And if you know you can always earn- both in terms of currency and in terms of intangibles such as respect, dignity and favours in kind- then the Number ceases to be so important. It reverts to what it truly is, simply a number.

Until next time,

Live well,

Tom.

1. I’m not going to bog myself down in all of the nuances and terminology of retirement financial strategies here. If the topic interests you- either in the abstract or as an actual practical thing to initiate- I recommend you read Early Retirement Extreme by Jacob Lund Fisker