All posts by Michael Drak

Planning for Longevity: How to avoid Retirement Hell

I never thought that I would fail at retirement and end up in Retirement Hell. But I did.

You see, I spent my entire career – almost forty years- in the banking industry. While there, I learned a lot about money and investing and, over the years, I helped thousands of clients save for their own retirement. Furthermore, my wife is a financial advisor. And yet despite all that knowledge and expertise, I still managed to fail miserably at retirement.

Looking back, I now realize that many of my beliefs about retirement were wrong because they were all linked to the financial aspects of retirement. What I know for sure now is you just don’t fall into a happy retirement because you have a lot of money. You need financial security, of course. But designing a satisfying life takes thought, time and planning on many more levels. You need to know your needs and values, and what makes you happy, and then you have to find ways to satisfy these aspirations on a regular basis. Thinking that you will figure things out when you get there doesn’t work.

Traditional retirement planning has programmed us to think it’s all about the money, but it’s not. In conventional planning, the focus is always on the number: how much money you are going to need to retire. Few financial advisors/planners talk about the other important stuff: how you are going to replace your work identity, how you are going to stay relevant and connected, and how you are going to keep mentally sharp and physically fit, among other things.

Believe it or not most retirements fail for non-financial reasons rather than financial ones. I don’t want that to happen to you so for the past year and a half I along with five of my friends have been working on a new book — Longevity Lifestyle By Design — to help people design a life they would be happy to wake up too.

Retiring from work is simple. Figuring out what you are going to do with the rest of your life is the hard part.

Our mission is to help improve the transition to retirement and help retirees to design a life that they look forward to living everyday.

We know that many people are going to struggle with the non financial challenges that can often accompany retirement. It happened to me, my colleagues and through my discussions with other retirees discovered that it also happened to many of them as well. Continue Reading…

My biggest retirement planning mistakes

Looking back, my biggest retirement-planning mistakes had nothing to do with money. Rather, they resulted from not thinking things through and not having a good retirement lifestyle plan in place, for when I did retire.

Because of that, it took me a couple of years to figure things out and get things right after retiring. Unfortunately, I will never get that time back. If I could do things differently, here are some of the mistakes that I would avoid making:

Mistake #1

Deciding to turtle, play safe and hang on for another 7 years

The opportunity cost of staying in a career that you no longer like just so you can max out your pension is high, especially if you have already achieved financial independence. You end up losing precious time and become sour. But there is something about that pension statement with the pre-determined retirement date that keeps us coming back for more. I can’t tell you how much time I spent running the numbers over and over again trying to figure out the right combination that would allow me to move on to something better.

Few people quit a marathon at mile 25 and most people late in their careers will choose to hang in there until the bitter end. But they need to ask themselves: Is it really worth it?

Why continue to waste valuable time putting off something that you are truly passionate about?

Although switching to part-time work means taking a pay cut, finding great work increases the odds of you working longer. Instead of retiring at age 62 feeling tired and worn out, you are thriving and excited by the work you do. By finally making the choice to leave and start your Victory Lap (VL), you no longer go to bed at night dreading the next morning’s work, trying to hang on until another weekend. Making a little less for a little longer while dramatically increasing your daily personal fulfillment is a total win.

Mistake #2

Not knowing my values and what would make me happy in retirement

I’ve learned that a great retirement is not about how much money I have; rather, it’s about an attitude, a way of living, filled with searching and discovery. To have a great retirement, you need to have a good sense of who you are, what you are, what you value and what will make you happy.

Unfortunately, because we are so busy taking care of our families and just trying to survive, we lose touch with our values.

In order to be happy in retirement, you need to get a good feel for who you are. This can be done through self-analysis to identify your abilities, values, drivers and interests. After going through this process, you will know what you are good at, and what you want/need to do with the rest of your life.

Mistake #3

Not starting work on my side gig before I left my corporate job

Working on what I planned on doing in my VL would have been a far better use of my time, instead of wasting it de-stressing in front of the TV for hours at night. Continue Reading…

There’s more to Retirement than Financial Planning

The retirement industry is starting to wake up to the fact that just because a client has achieved a certain level of retirement savings doesn’t mean that they will automatically enjoy a happy retirement.

Life just doesn’t work that way and the truth is that financial planning fails without lifestyle planning: you need to have a good handle on what you are actually saving for and why.

Our level of happiness is not determined by how much money we have; rather, it is how we choose to live our lives. In our new transition guide we have compiled a list of key attributes that if focused on will help you live longer, healthier and happier lives. By focusing on these attributes you will be well on your way to a happy and fulfilling life.

Today I would like to share some thoughts I have on one of these attributes, which is our relationship with time.

Time: Your most precious resource

“Don’t say you don’t have enough time. You have exactly the same number of hours per day that were given to Helen Keller, Pasteur, Michelangelo, Mother Teresa, Leonardo de Vinci, Thomas Jefferson, and Albert Einstein.” – H. Jackson Brown

Visiting my mother at the nursing home always reminds me that I’m getting old and every day is bringing me closer to the end. It is not a negative thought; rather, it’s an important reminder to focus and use my remaining time on this planet wisely on the things that really matter. Rushing around stressed out because I’m wasting my time is a major happiness killer for me. Watching my mother I often wonder if I am living my “why,” the best I can? Can I do better? Am I doing the best for my family?  For my friends? Am I making the world a little better?

Best Before Date

Today I’m working hard at getting into shape. My time investment is a priority of mine as it will increase the odds of me living longer, and also help push back my “best before date” increasing the amount of quality time I have at my disposal.

I view “quality time” as the period of my life when I am healthy enough to do the things I love:  golfing, fishing, traveling etc. Once you pass the “best before date” and have lost your health it really doesn’t matter how much money or time you have left because you will not be healthy enough to spend it. That’s just the way it is.

Black Swan Events

Continue Reading…

When you retire where do all your friends go?

This question comes up at presentations I make on Victory Lap Retirement. A strong social network is key to our happiness and longevity. Friendships enrich our lives, so we should always look to build our social network and build relationships with people we care about.

The challenge for all of us is that we are so busy working and nurturing our families, we can sometimes underinvest in our friendships. Our relationships with friends can also suffer when we are stressed out and in some cases pull back from friends; after all, who wants to be a “downer” to our friends?

One of the biggest mistakes you can make is sacrificing your time with friends, just so you can work longer to save for your retirement. The risk is when you finally get there, you may end up wondering where all your friends have gone. We all have times in life where we have to invest time at work, which means not spending time with friends and family. Don’t lose sight of your friends and make it a priority to invest time strengthening your friendships, especially as you get closer to retirement.

Everyone has two groups of friends: work friends, the group you spend a great deal of time with; and your outside or real friends, people that know you warts and all, and accept you for who you really are.

Work Friends

If you take an inventory of your relationships, you may be at risk of a lonely retirement if you find the majority of your social network is from work. Continue Reading…

Where did the Retirement idea come from?

I was reading an article on retirement in The Atlantic. The article discussed the earliest concept of retirement, dating back to Otto von Bismarck of Prussia in 1881.

The concept was to provide financial support to “older members” of society. The idea was radical because people did not retire: if you were alive you worked. At the time the majority of people were employed in agriculture to feed the masses.

The struggle for payment continued for 8 years and finally with pressure from the socialists, legislation was introduced for the state to take care of those disabled from work. Social security was later introduced for those over 70 years old; however, 70 was well above life expectancy at the time.

Soldiers were paid pensions for years prior to social security; however, virtually all worked after their military service. In the late 1800s pensions were paid to many public servants in major US cities  and in 1875 American Express started to offer pensions,  followed by major industrial companies that started paying pensions in the early 1900s.

US Social Security in 1935

All this culminated with the Social Security Act of 1935, with a retirement age of 65 and a life expectancy of 58. Research at the time suggested mental capacity started to decline at age 60 and it was time to pass work onto the younger generation. In Canada, the Old Age Security Act was passed in 1927.

It is interesting to see the history of retirement,which was designed to not pay or pay very little since no one was supposed to live past the age of qualification. In the 1960s people started to live past Social Security age and had the money/savings to actually retire. This led to the problem we see today, which is the strain to fund payouts from government pension plans.

This problem will need to be addressed before it becomes a problem for our children, but that is a discussion for another day. You might have seen this before on this blog, so here again financial and lifestyle planning are critical to ensuring that you enjoy retirement on your terms: expecting anyone else to take care of you, even the government, is not wise.

People are living longer and want to work longer

Our current reality is that people are living longer and want to work longer. You might say we are going back in time. Continue Reading…