I've given The Talk so many times I can do it in my sleep. 401k group presentations on the basics of saving for retirement. I have a favorite "slide-rule" style online financial calculator that I use to illustrate the need to save now versus later. The calculator's results allow me to branch off into different areas of budgeting/ saving/ investment returns. After 35 years in the industry, I dare say I am comfortable with the financial aspects of saving for retirement.
And then along came Jeanne Thompson, former retirement plan SVP at Fidelity with a new approach. Jeanne was the guest on my First Friday 401k education series available to my plan sponsors and participants. The First Friday series has covered everything from Medicare to Fidelity Bonds to the Roth option in 401k plans to Long Term Care. We've hit on the role of real estate in a diversified portfolio. We explored the world of a portfolio manager. We looked at the impact of tariffs on the global economy (hat tip to R. Paul Herman, FSA of HIP Investor Inc. )All of these topics though are focused on the financial aspect of retirement planning.
It makes sense to dig into the financial side though. If you do not have enough saved to cover housing, food, and water, retirement will likely be very short or not possible at all. As advisors, we focus on "the numbers" as that is something we are good at and something we have some control over.
Jeanne's approach is to look at the non-financial aspects of retirement. At age 57, I will grant you I am closer to retirement than I am to the start of my career. And yes, I have thought about what retirement might look like (Timothy's dog-walking business?). Jeanne's framework for thinking about retirement is contained in the acronym, "SHIFT" and is frankly eye (and mind) opening.
The "S" in SHIFT stands for structure. The workplace provides a certain amount of structure to an employee's schedule. My first US job was "IRA Call Center Representative". On any given day, I knew when my work day began and ended, when my breaks were (and for how long), and when my lunch was. I knew what I was going to be doing each day. Even as I moved into management, I had an idea what each day would hold. And finally, as an entrepreneur, I can certainly list my lengthy to-do list. The only difference being an entrepreneur is the working hours are much longer and the schedule more unpredictable.
Retirees can easily find retirement has no structure. While there may be a certain appeal to not having to get up and go at a certain time, I dare say that could old pretty quickly. I was talking with a friend after Jeanne's presentation and she agreed. It might be fun initially to have a "long weekend" to start retirement but eventually there would be a desire to do something. Just how much TV can one person watch? :-) And to quote Ian Fleming through his character, James Bond, in "From Russia With Love", "Those whom the Gods wish to destroy, they first make bored". Be wary of the stagnant brain.
The "H" in SHIFT represents hobbies. It is important to have a hobby or hobbies in retirement. You might even consider going beyond a mere hobby to finding something you are passionate about and want to improve in. It is easier to structure your day with a hobby.
This is a concern of mine as my hobbies are geocaching, kayaking, and Toastmasters (public speaking). Geocaching is a modern-day scavenger hunt that can be done anytime but usually is done solo. Kayaking as part of a formal group could be fun but I am not really interested in the more extreme kayaking (ie, sea kayaking). Haven't seen many "Placid lake kayaking" groups but perhaps I have not looked? As to Toastmasters, I have achieved the highest award the organization offers - Distinguished Toastmaster - twice and I am currently completing my third Distinguished Toastmaster. I am not sure how much more growth I may find in that arena.
The point is to find something you want to explore and start doing it long before you retire. There may be several things you explore before settling on one or two. Thankfully I still have 10 - 15 years to figure this out. Hmm, Motorcycle Club OG Timothy?
The "I" in Jeanne's SHIFT acronym represents "Identity" and is the one that really resonated with me. For many people, work is their identity. Their job is their world. Yes, we are speaking in generalizations and we can find an exception to this idea. I known one woman who is perfectly fine as is, does not define or see herself through work, and is happy doing anything/ everything/ nothing at all. Those folks are rare though.
Work provides structure to a person's day. It is something a person might be very good at and even passionate about. They may feel pride in their work and that they are seen as useful because of it. It is natural that people identify with their job. Jeanne pointed out that this is particularly true of people in skilled professions as well as teachers. If someone asks me what I do, I will invariably respond with some version of "401k advisor". As I think about it, in 35 years in the financial services industry, I have only been unemployed for 4.5 months. I have been working pretty much non-stop since I graduated UC Berkeley May 22, 1990.
When a person is no longer working, they may feel a loss of identity/ purpose. In fact, they might feel they are useless/ held in lower regard. It may be peculiar to American culture but there seems to be an image of a retiree as someone who is playing shuffleboard in their pajamas at noon at a retirement home. Carving a new identity or being comfortable not being defined by anyone or anything is not easy.
The "F" in SHIFT is for friends or community. This concept really had me pondering. It is possible that a retiree may find that their friends are mostly work-related. And when you retire, those friendships fade as you are no longer seeing those folks everyday and when you do meet up, you may find you are out of the loop on what is being discussed. More to the point, Jeanne and I discussed whether friendships in America are not as deep as those in other countries (as Dr. Jefferson Fish noted in Psychology Today years ago), the reasons for this, and what solutions there are.
It is important to have a community outside of work. This could be a community tied to your hobby/ passion project. But it is important to have a life outside of work (which ties back to the idea of "Identity"). Thinking about this from my perspective, I have 4,853 LinkedIn connections and 2,500+ friends on Facebook. How many of those connections and friends do I really know in-depth? To quote Simon Sinek, how many of those friends could I have an 8-minute in-depth conversation with? I suspect the answer is fewer than I might like.
That brings us to "T" in SHIFT which relates to thinking about your mission in retirement. Thankfully I believe I have this one under control better than the "identity" side of things. Given my childhood and my work at Green Retirement, I am focused on making a difference in the lives of others. Issues of inequality are glaringly obvious in the US. There is much work to be done in that arena.
The overall point Jeanne made is that planning for retirement happens long before one's official retirement date. If you wait until then to start thinking about retirement, you might be in for a surprise. Jeanne's work post-Fidelity is helping companies create programs for pre-retirees that help those employees "SHIFT".