Help clients find purpose in retirement

Originally published by MoneySense.

In their new book, Victory Lap Retirement, Mike Drak and Jonathan Chevreau advocate a re-balancing of work and leisure in order to create a low-stress, sustainable lifestyle—in both working years and in retirement. They see the Victory Lap as the time to enjoy the fruits of years of training, practice and sacrifice. (And yes, they really do expect us to work in retirement—but ideally not because you need the income. You should work because you want to.) There are insights for both advisors and clients.

Okinawa is a chain of islands off the coast of Japan and home to some of the healthiest seniors on the planet, with many living past the century mark. Not only are these seniors some of the longest-living people in the world, but they also benefit from more healthy years, free from disability and illness. Heart disease and dementia rates are lower than the worldwide average, and rates for breast and prostate cancer are lower still. Obviously the elders of Okinawa are doing something right.

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Prior to industrialization, most people in North America lived on farms and farmers didn’t retire. This is very similar to the thinking among Okinawan people, who refuse to believe in the concept of retirement and do not practice it. It’s interesting to note that in the Okinawan language there isn’t even a word for retirement. In its place is the term ikigai (eek-y-guy), which roughly translated means, “the reason for which you wake up in the morning.”

Ikigai really means having a sense of purpose. There is a great deal of literature supporting the idea that people who have a strong sense of purpose are healthier and better able to deal with the difficulties that life may occasionally throw their way. Older Okinawans can readily articulate the reason why they get up in the morning. They live intentional, purposeful lives. They feel needed, they matter, they contribute and, as a result, they live longer.

Once you have found your ikigai, why would you ever want to retire? What would you wish to retire to? People need a reason to live, and continuing to work at something they find enjoyable gives them that reason. Why would they ever want to take it away from themselves via retirement?

The younger people of Okinawa who are seduced by the lure of high-paying jobs in high-stress environments have poor diets and don’t get enough exercise. As a result, they are succumbing to the illnesses (heart disease, stroke, cancer, etc.) that their elders have managed to avoid. The younger people want more and they want it now, but the chase for more is killing them. This kind of mentality is more in keeping with another Japanese word, one that is decidedly more ominous: karoshi, which means “death from overwork,” caused by a lack of work-life balance. Sounds like we might be suffering from a little karoshi here in North America as well—working flat out for decades to attain the dream of a full-stop retirement that we may never live to see. Do you think maybe we have got this retirement thing all wrong? We sure think so.

After reviewing much of the prevailing retirement literature and longevity studies, we have concluded that for most of us a full-stop retirement is not the best way to go. We hate to break it to you, but sitting on a beach all day drinking piña coladas just isn’t going to do it for you after a week or two. In fact, a study published in 2005 that looked at Shell Oil employees in the U.S. showed that people who retired at age 55 were 89% more likely to die in the 10 years after retirement than those who retired at 65. The same study found that the workers who continued working to the age of 65 were 89% more likely to live 10 more years after retirement even though they were 10 years older than their early-retirement counterparts. These findings suggest that without a purpose, without a reason to get out of bed in the morning, people tend to live shorter lives. A life without purpose, even if you have a lot of money, is a sad life indeed. Living a life with purpose means you can celebrate a Victory Lap retirement.

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Start planning your Victory Lap now

Smart Victory Lappers plan their exit from the corporate world well in advance. They view their corporate jobs as stepping stones toward the time when they won’t have to worry about impressing the boss anymore and they will no longer have to endure time-sucking commutes, job plateauing, office politics, endless meetings and pressured sales just for the money. And when they get to that point of financial independence, they don’t wait for permission from someone to say it’s okay for them to leave their primary job to start their Victory Lap: It was their plan all along.

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Create a lifestyle plan with your financial advisor

It’s a surprising fact, but most people do not have a financial plan. Many just rely on the assumption that the more they save for retirement, the better off they will be; while this may seem reasonable, it is not true in all cases. What most people fail to understand is that just achieving a certain level of savings does not guarantee a happy retirement. You cannot assume that because you have a good financial plan things will just fall into place when you retire. Trust us on this, they won’t!

A good financial advisor will sit down with you and discuss what you want out of life, then figure out how to build the financial resources to pay for those things that are important to you. You and your advisor both need to ensure that the life plan is aligned with the financial plan. The key point is that it’s your own vision based on your own plans and dreams; you need to be the one designing it, it’s not something you can just delegate to your advisor.

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Turn your paycheque into a “playcheque”

The beauty of gaining financial independence is that you no longer have to chase after money anymore. Remember, once you’re “findependent,” you are working because you want to, not because you have to. Life becomes much easier when you know there is a safety net under you. If you’re findependent, all your basic, necessary costs of living are already covered by the passive income from your pensions, government benefits, earnings from your investments and so on. Think of that income as your paycheque and any extra as your fun money that can be used to invest in experiences for you and your family, not money to be used to purchase more “stuff” or to finance your basic needs in retirement.

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Find your Ikigai

You spent most of your life following orders and doing what you were told at work. Now you need to figure out what you want and create a lifestyle that will satisfy you for the rest of your life. That sort of freedom can be daunting but you will have the benefit of about 50 to 60 years of knowledge, skills, wisdom, insights and experiences. At this point, you know what you can and can’t do. You know what makes you happy and what matters to you.

Find work that you love, work that supports how you would really like to live. It should be based on something you enjoy doing, something you are good at, and something for which there is a need. And, ideally, something for which you can be paid! Once you find it, just do it. What are you waiting for?

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The upside of finding a balance

There are countless benefits for those who manage to achieve their own Victory Lap. Here are nine considerations:

1. Take the opportunity to start over and design a new life for yourself, but without being limited by your job or responsibilities to others. It’s no longer doing what you have to do; from now on it’s all about what you want to do.

2. Reduce fear and anxiety. At 4% inflation, your buying power halves every 18 years. Retire at 62, and by age 80 your pension will buy half of what it did at that early retirement age. Most seniors today are putting their savings into low-risk investments like GICs or CDs, which means that with historically low interest rates, they are safely going broke! But remember you will not need to save as much for retirement during your full-time working years, as you are creating a life from which you do not intend to retire anytime soon.

3. Moving on from being a good corporate soldier to leading a purposeful life, in which you’re doing something you enjoy and that matters to you, may not pay as much in terms of money, but it pays a whole lot more in terms of spiritual meaning, personal health, and length and quality of life. And it will keep you out of the graveyard longer.

4. You can opt to work part time and free yourself up for elder care, child care, working out, charitable or philanthropic causes, travel or any number of creative pursuits. You’ll enjoy far more flexibility even though you’re still working. Your schedule will be entirely under your control.

5. Take the opportunity to do the things you had to put off while you raised a family and worked toward financial independence. It gives you the chance to pursue long-repressed dreams while you’re still young enough to enjoy them and to create a long, successful and sustainable lifestyle.

6. Abandon an expensive modern way of life and return to a simpler, frugal lifestyle. Your Victory Lap allows you to become free-spirited, like a kid, again—a time when it seemed everything was possible.

7. Look for work that combines personal meaning and social purpose. The alignment of “who you are” with “what you do” is a powerful combination that will help maximize both passion and happiness. Helping others is the easiest way to get a happiness boost. Some may choose to work for pay, while others may choose to volunteer.

8. It’s the third act in a four-act play. It’s your last shot at creating a happy life, an opportunity to pursue lost dreams and missed opportunities. It’s an incredible chance to have fun, pursue old or new hobbies, make new friends and possibly start checking off the boxes of your own unique bucket list.

9. It’s not about who or what you used to be; it’s all about who and what you will become. You should look at it as a rebirth, a “do over,” a last shot at doing it right. Don’t waste a great opportunity to finally do it your way.

Adapted from Chapter 5 of Victory Lap Retirement by Mike Drak & Jonathan Chevreau

Excerpt originally published by MoneySense.