Retirement Spontaneity Takes a Bit of Planning

CINCINNATI BUSINESS COURIER
November 26 – December 2, 1990

Investments
by Charles D. Vaughan

Retirement Spontaneity Takes a Bit of Planning

DO WHAT YOU WANT, when you want to do it! Go to work if and when you feel like it. Want to cruise the world; go ahead. Or, if you would rather, volunteer at a soup kitchen, turn a hobby into profit, or start a consulting business. Be what you always wanted to be because you have earned it. That is called financial freedom and it blows away more stereotypes than almost any other current topic.

While virtually every mass marketer in America is trying to define and capture the “senior,” “mature,” “elderly,” “affluent retiree” market, the people who make it up are acting more like individualists than any other population group in history. They defy definition precisely because they are doing what they want. And good for them!

The word retire comes from French roots meaning to ‘draw back to a secluded place.’ No wonder the standard image of a retiree is that of some dried up old fogey bundled up in a drab sweater sitting in a rocking chair waiting for the Grim Reaper. For many, retirement planning is a defensive process. It seeks to determine if you are going to have enough money to live out your life in the same standard of living you had before retiring. Even if the plan appears likely to work, it brings little excitement or satisfaction because it hits the wrong target.

Planning for financial freedom, on the other hand. is a positive process. It seeks to a shift from fulltime employment in a controlled environment, to a life of personal growth and fulfillment. The emphasis moves away from accumulating dollars and maintaining a standard of living. It moves toward intelligent use of resources to enhance the quality of life for the family.

The financially liberated frequently scorn the term “retired.” They will tell you they are busier now than they ever were when they worked full time. Unlike the stereotype of “old retired folks,” those leaving the work place now are apt to be closer to 60 than 65 and ready to experience life anew. Recent studies show that retirees now are much less interested in leisure time pursuits than new experiences. As a group they read more books and newspapers, are more active voters and volunteers and give more time and money to charity than other age groups.

Being financially free for many signifies having the opportunity to travel and spend time with family and friends. It also means having the capital to help dependent children and parents as well as pitching in to help with grandchildren’s’ education.

The difference between planning for retirement and planning for financial freedom is twofold; first, focusing on freedom directs efforts toward a lifetime of continued personal growth.  Second, freedom planning seeks to reduce the impact of any potential hazards that could impair the quality of life.  A financial freedom plan has three characteristics that distinguish it front most traditional retirement plans:

1. Completeness.  Standard retirement planning typically involves an income/expenditure analysis, and tax, investment and insurance reviews. Some also include estate planning reviews for larger estates. Freedom implies not having to worry about other important matters such as health care costs. This includes a review of medical insurance in conjunction with Medicare and Medigap coverages. It also should include a review of home health care and nursing home cost protection strategies for parents and other family members including Medicaid awareness.

2. Control.  In many ways freedom means control. Good planning should allow you to have your resources (and yourself) handled in accordance with your wishes to the greatest extent possible  no matter what. This suggests first that you have arranged your finances in a simplified and orderly manner that someone else could take over smoothly in case of your incapacity or death, Second, it means that you have executed the proper advance directives to empower some trusted person to sign documents and speak for you on health care matters. Finally, it means having arranged for the speediest and most costeffective method of passing on assets to heirs upon death.

3. Confidence. By taking a worst case approach, a freedom plan includes a wide margin of error, This suggests that investments should be of moderate risk and broadly diversified. It demands that all financial projections err on the conservative side  rates of return low and inflation high. By covering every possible area of exposure and preparing for the worst in advance, it is possible to enjoy the new growth opportunities financial freedom affords without fear,

Yes, you can do what you want when you want, but only when you are good and ready.

 

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