As I argue in my latest online column for MoneySense, published this morning, I believe that the next big wave to be surfed by the baby boom generation will NOT be retirement, but Semi-Retirement. Click on highlighted link to access: Why semi-retirement is the future.
I’ve also argued that the boomers are largely going to be responsible for retiring the very word Retirement. This is of course the central theme of the book I co-authored with former corporate banker Mike Drak: Victory Lap Retirement, which MoneySense excerpted in its Summer retirement issue. See Why you wake up each day. (See also links to two recent reviews and a BNN clip listed at the end of yesterday’s blog: Millennials say Financial Independence defines Adulthood.)
Now a cynic might argue that in making the Victory Lap Argument, necessity is the mother of invention. A lot of us haven’t saved enough to retire in the style to which we’d like to be accustomed. Add to that the decline of corporate Defined Benefit pension plans and minuscule interest rates and there’s a lot to be said (at least financially speaking) for sticking at the old grind for five or ten extra years.
But those extra years don’t have to be spent as an employee in a corporate setting, complete with the challenges of coping with bosses, endless meetings, daily commutes and all the rest of it. There has to be a happy medium between corporate wave slavery and the traditional “full-stop” retirement that amounts to a permanent vacation. Some call this new stage between full-time careers and traditional retirement an encore career or a legacy career. We call it the Victory Lap.
When asked to define what constitutes adulthood, 40% of of millennials (aged 18 to 26) cited Financial independence, according to a Bank of America report issued on October 6. it was reported by Reuters under the headline “For millennials, adulthood now defined by financial freedom.”
As Bank of America executive Michele Barlow puts it, “It’s not so much that young adults are having trouble with adulting: they’ve simply redefined it.”
With so many millennials still living at home (often because they can’t afford to leave), it seems they view adulthood as being able to land a job and not depend on their parents for financial help. About 14% surveyed named moving out on their own as their top priority, while getting married, starting a family and getting an education were all cited by 7%.
This study is music to our ears here at the Financial Independence Hub. Of course, our definition of Financial Independence (or the contraction, “Findependence”) is a bit stricter than merely landing a job and no longer being financially dependent on parents. We tackled this early on: see the highlighted post, Merely leaving the nest does NOT constitute true Financial Independence.
Still, getting rid of debts, landing a job and no longer being dependent on the Bank of Mum and Dad is a huge step TOWARDS Financial Independence and ultimately what we used to call Retirement. While not quite synonymous with the outdated term Retirement, we view Findependence as having sufficient financial resources that you do not have to depend on employment income to make your daily and monthly expenses.
“Time is more valuable than money. You can get more money, but you cannot get more time.” – Jim Rohn
It wasn’t until I began working on Victory Lap Retirement that it came to me that time, not money, was now my most important asset. The relationship between time and money had changed for me over the years.
When I worked in the corporate world, I willingly traded my time for money and I would use that money to provide security for my family. My efforts were focused on working hard and getting a promotion in order to get a bigger salary. I was willing to invest more and more of my time in order to make that happen because that was the way the game was played.
But when I was finally able to achieve “Findependence,” trading my time for money no longer felt like a fair exchange, Other things became more important and something inside started pushing me to become the real me. The only problem was that after all those years in the corporate world I had forgotten who I was, but thankfully I was able to figure that one out eventually.
This change in thinking probably had something to do with visiting my mother in the nursing home and realizing that in finally getting to my own Victory lap I had essentially used up two thirds of my allotted time. Let’s just say that I’m very concerned with how I invest the time I have left.
Expiry dates and Best Before dates
Everyone is born with an expiry date; the problem is that date is kept hidden from us, and when it happens, it just happens. But everyone also has a best-before date, a date up to which you are still physically able to do most things you enjoy: studies have shown this period can be influenced to a large extent by a person’s lifestyle.
When I think about the word “retirement,” and my definition for retirement is admittedly very narrow, I tend to think about that period that lies after a person’s best-before date up to their expiry date. This is the period where a person is no longer capable of being independent, and are dependent on others for care and support for their remaining years.
My main focus in my own Victory Lap is to make good investments of my time to create an optimal lifestyle with the goal of pushing back as far as possible my own best before date.
The video was a real eye opener for me. After watching it, I began to really appreciate the value of my remaining time. I promised myself I would take the appropriate corrective actions, but habit change is never easy and it is a work in progress for me. Please be assured that I will talk more on this important subject in future posts.
It takes ten years to become an overnight success
One day at a yard sale, I bought some old poker chips with the intent of using them to help track the time invested in pursuit of some of my goals. I came up with this idea after reading the book “Outliers” by Malcolm Gladwell and his chapter on the 10,000 hour rule, which is the hours of practice required to achieve mastery in anything.
A key component of my Victory Lap is the job I created for myself (my reason for getting out of bed in the morning) and creating the VLR community. To succeed, I need to improve my writing, blogging and public speaking skills. I also need to get healthy again so I will have the energy to get it all done. I have committed to investing 10,000 hours on this project, which equates to 1,000 hours per year over a 10-year period.
Those poker chips I bought? I counted out 520 chips, which represent the number of weeks covering a 10-year period and keep them in a glass jar in my home office. Each Sunday night after reviewing what I accomplished with my time that week I throw that week’s chip away and replace it with another one from the jar.
Watching that jar of chips shrink over time makes me focus on the important things in my life. It creates awareness especially as I carry the current week’s chip around in my pocket. When I hold it, it reminds me to focus on doing what I need to do in order to make things happen. Sometimes I might write something on the chip to serve as a theme for the week. It helps me to focus on what’s important and to forget about the rest.
The most important decision that you make each day is how you are going to invest your time. If you can’t see a reasonable return from your time investment don’t make the investment period.
Mike Drak is an author, blogger and speaker based in Toronto. He can be reached at michael.drak@yahoo.ca. Victory Lap Retirement, co-authored with Hub CFO Jonathan Chevreau, is now available for is now available for orders online. It’s also available now as a Kindle e-book, and on Kobo. The paperback edition will be available in bookstores in the second week of October. This blog is reprinted from Mike’s site with permission.
Or you can scroll down below for a lightly edited transcript of the proceedings.
But first, here’s an overview written by Doug Hoyes, co-founder of insolvency trustees Hoyes Michalos:
Doug Hoyes
Doug Hoyes:
Today’s podcast is the first ever podcast interview with Jonathan Chevreau and Mike Drak together, talking about their new book Victory Lap Retirement. This is so exclusive an interview that the book won’t even be officially released until October 10, 2016 but it is available for pre-order at amazon.ca, and the Kindle version is available now.
Mike Drak created the concept of a Victory Lap as an alternative to retirement, and teamed up with Jonathan to write their new book.
So what is a Victory Lap?
You will have to read the book for a full description, but as Jonathan and Mike and I discussed the concept of retirement has changed significantly. Our grandparents and parents had a good chance of working at the same company until aged 65, and then retiring with a full pension before dying at age 70.
Today almost no-one works at the same company for their entire working life, and most employers no longer offer full pensions, so the old fashioned view of retirement at age 65 with a full pension is no longer reality for most workers.
Instead, we are working longer, and living longer.
The essence of Victory Lap Retirement is to leave corporate employment, which usually entails working for someone else, and enter a new and different phase of your life.
Mike and Jonathan wrote Victory Lap Retirement to show readers how to transition from a high stress work environment to a low stress sustainable lifestyle to enjoy a happier, healthier life. For many, that may involve turning a hobby or passion into income during your “retirement” years, or working part time to “stay involved.”
Debt and Retirement
Debt is a prominent subject in Victory Lap Retirement, including this quote:
…make breaking free from the chains of debt your first priority. Not only will debt limit your financial freedom severely, it will suck the life right out of you.
As we discussed, debt and retirement don’t mix. When you retire your income decreases, so it’s likely you won’t be able to afford payments on a mortgage or other debt in retirement. Get out of debt long before retirement.
Unfortunately that’s not always possible, which is why seniors are the fastest growing age group of people filing bankruptcy and consumer proposals. Older debtors, aged 50 and older, now account for 30% of all insolvency filings, up from 27% two years ago, and that number keeps growing.
Senior debtors, people aged 60 and over, have the highest amount of unsecured debt of any age group when they go bankrupt, almost $70,000. A growing percentage of them even resort to payday loans to stay afloat.
If you’ve got debt, retirement is very difficult. If you have trouble making your debt payments while you are working, it may be impossible to keep up when you retire and your income drops, which is why we all agree that eliminating debt is essential long before retirement.
In addition to eliminating debt, Mike and Jonathan suggest you ask yourself “what do I like to do?” and start planning your Victory Lap now.
For more, listen to the podcast or read the transcript.
I don’t like to admit it, but over the years and due to circumstances largely beyond my control, I have turned into a skeptic.
I wasn’t born that way, but who here can blame me for turning into one with all the crazy stuff going on in this world? Today people seem to say anything they want. They just make stuff up. If you want proof of this, just watch the race for the presidency in the US. Enough said.
I discovered I was a skeptic one day while drinking bottled water. I used to get clean drinking water at several places in or outside my house. I just had to pick up the hose and there it was, as much as I wanted and best of all, it was free. I think we can all agree that when healthy things are free that’s a pretty rare and good thing, especially these days.
But things changed after I married the Contessa and became “sophisticated.” Water was no longer free and I began a new routine of driving to the grocery store to buy bottled water. It didn’t stop there, because I now drink a particular brand of water called “Smart Water,” probably not a very smart thing to do as it costs more than regular bottled water.
Have you read about what’s inside your bottle of water? The nutrition label is all zeros, because there’s nothing in it besides water.
It’s incredible how advertisers have been able to convince us to start drinking bottled water when we all have free clean water to drink at home. I would love to meet the person who came up with the idea that we need to drink eight 8-ounce bottles of water a day in order to stay healthy.
In North America bottled water is a $170 billion dollar industry. I don’t know where all this bottled water is coming from, but I can’t get this image out of my head of a couple of people sitting in a bathtub somewhere filling up water bottles. That’s what being skeptical does to you.
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As I argue in my latest online column for MoneySense, published this morning, I believe that the next big wave to be surfed by the baby boom generation will NOT be retirement, but Semi-Retirement. Click on highlighted link to access: Why semi-retirement is the future.
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