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Retiring early is an idea that appeals to lots of people. Financial planners say that at least half of their clients mention early retirement as one of the favoured goals. Why is it such a major draw? There are usually two reasons:
One - they want to be financially self-sufficient by a much earlier date, so that they can disengage from the rate race. They may want to continue working, but without any financial pressure on them.
Some want to work part-time as consultants,which would leave enough time for relaxation or to pursue other interests.
Two -they just want time to relax and enough enough to see the world; do social work or pursue hobbies without worrying about money.
So, it's essentially about two things. They are fed up with the rat race, want to accumulate money fast and opt out. The other is that they want to pursue some hobbies or other interests and need time for that.
It has almost become a fad now. But, most of the time people are not truly financially secure by they time they want to retire.
There are also cases where the person intends to retire at a particular age and even achieve financially security by that time. But when they finally hit that age, they don't want to retire. That is because they add some aggressive goals since they make the initial financial plan.
So, there are cases of people who are never able to get off the tread mill, though they intend to. But it is a comforting feeling for them to know that they are financially secure and can live without worry.
Are your prepared?
The other reason why they leave - to pursue hobbies, do social work and so on. For most, it looks like the ideal thing to do. But, many don't think it through properly and it remains just an idea.
When people are asked to imagine what they will do 24 hours of the day after retirement, at first they are enthusiastic. But when they actually start thinking about it or write down on paper how they will spend their time, that's when they realise how much they would have and how bored they could get.
One commonly expressed desire or thought is to teach in villages or do social work. But often these are people who have never taught in their lives and do not know what it entails. They don't understand, for instance, that teaching is not for everyone. Also, if they have expertise in a specialised area, will it not be more useful to assist or mentor people in those areas? This may result in more satisfaction as they would be passing on their expert domain knowledge to others, ensuring that their knowledge, experience and expertise is not lost forever.
Similarly - social work. For most people, this again looks like the correct thing to do, as they feel that they have got so much from the society and would like to give back something. Again, the sentiment is fine and laudable. But lots of people find to their surprise that social work is not their cup of tea.
Even people who simply want to relax or pursue hobbies find that there is simply too much time on their hands.
Retirement is seen as the time for enjoyment and rightly so, as one has worked the entire life and deserves a peaceful and relaxed life, after retirement. But boredom catches on and many find that after a few months, travel, hobbies, social activities and so on do not have the same attraction to them, as it initially did.
Another problem faced by early retirees is that their contemporaries are still working and, hence, don't have the time for them. At some point the early retirees start questioning their decision. And then, when it appears to them that it is a mistake, they want to get back to work. Getting back is a lot more difficult. So, they start doing some assignments, where possible, or do work which is far lower than the one they were used to. All these are stress points for them.
Preparing for retirement - Whether it is early retirement or retirement at superannuation, one needs to prepare for the day of reckoning.
There are ways to be meaningfully involved in cultural, social, religious and personal work in retirement. One needs to be able to identify, what one wants to do in retirement.
For that, it is better to try them out and see if they really would be interesting. It would be a good idea for people to start trying out things they plan to do in retirement, a couple of years before retirement. For instance, if they want to purse golf more actively after retirement, they should play that round of golf a bit more frequently and see, if it grips them. Join a club and participate in tournaments on a regular basis.
Or those who want to do social work should try their hand at teaching or doing other work in the weekends and find out if the attraction is for real. Lot of these things might look interesting initially. So they should try it out for at least six months and then see, if the activity will be a good one to pursue in retirement. Lot of seemingly great pastimes, fall by the wayside, when subjected to this discipline.
Similarly, many would like to relocate to their villages after retirement. City dwellers find it very difficult to adjust to the perceived charm of the villages, which look alluring, when one goes on a short visit. Actually living there exposes one to the harsh realities - like lack of medical facilities, power cuts, voltage fluctuations, lack of entertainment avenues, disconnect with the people living there and so on. So in such cases one should try it out for about six months. Stay on rent before shifting shift lock, stock and barrel.
Ultimately, we all need to figure out some activities that will interest us and keep us engaged. Else, the retirees end up watching TV and spend the rest of the time in sheer boredom.
The writer is Founder, Ladder7 Financial Advisories
