Why retirement needs to be retired… The Finn Review
Yep, you heard me.
My name is Finn Kelly, I run a financial advice company and I think retirement is bullshit.
The majority of the financial advice industry has positioned their entire value proposition around the concept of retirement.
But the concept of retirement for anyone alive today is outdated, especially for us millennials.
Get this word out of your vocabulary and the concept out of your mind.
Times have changed
People used to focus on retirement because they didn’t actually enjoy their jobs.
Millennials don’t tolerate that any more!
We want our careers to align with our purpose and values, and make the necessary choices to ensure we’re doing this. We get satisfaction out of our professional lives and choose to do what we do rather than feeling obligated.
Often people say they would keep doing what they are doing even if they weren’t paid for it. I prefer to be a little more realistic: I would still do what I do even if I didn’t need the money (because I was financially free).
We live longer
With advances in living conditions, science and medicine, we are living longer and longer.
Some people predict that in the future we may be living well over 100 years old. This means if you aim to retire at age 60, you could have another lifetime or two in front on you.
Do you really want to be living a life of leisure for all that time?
Trust me from someone who has already had two mini-retirements (shit, I said the ‘r’ word… let’s go with ‘sabbaticals’ instead…) you get over it pretty quick.
Another risk that comes with increased longevity is the traditional financial model used to work out how much you will need to retire is completely wrong. You most likely won’t have the choice not to work, so you better get prepared.
Why save the good times for later?
Something we do way too much is tolerate shitty circumstances with the hope that they will be better in the future.
I had a conversation with a member this week where I heard one of my least favourite sayings:
“We just need to knuckle down and get through these next few years.”
By embodying this mindset, you’re essentially kissing goodbye a couple of years you’ll never get back, in the hope of a better time in the future. I’m not saying you should be irresponsible and not think about the future, but you don’t need to tolerate a shit life now. There’s a balance, and life is meant to be enjoyable. Do what you need to do to make this the case now.
Sometimes I think that we approach life in the wrong way around.
Buy yourself time
One way to see saving/investing is as buying yourself time.
Time is our most valuable asset and it’s reducing every day. How you spend your time ultimately determines your sense of well-being and happiness.
We work in order to earn income so we can meet our living needs to survive, as well as provide us with choices on the conditions we live in and the experiences we have.
The traditional concept of retirement was to work a lot now and invest everything so one day we could live off these investments instead of having to work. Effectively buying ourselves time in the latter half of our lives.
The earlier you start investing, and the more you invest, the more time we’ll buy ourselves in the future.
The challenge with this for millennials is that it’s way too far in the future to connect with. We don’t feel the pressing need to change our behaviours. Having the choice to have multiple sabbaticals over a lifetime instead of one retirement it brings the future a lot closer to the present and forces you to make the necessary behavioural changes.
What happens next is a flow on effect: You suddenly start really valuing your money as you can see the freedom and flexibility it provides you. You no longer waste money on things you don’t really value and you become a lot more connected to your investments as they are what enable you to have your sabbaticals.
Initially, you might think your sabbatical is going to set you back from your peers because it’s a period out of the workforce where you are spending money instead of earning it. However, there’s a lot of evidence that suggests otherwise.
When you take a sabbatical your brain gets a chance to reboot providing you with the ability to see opportunities you couldn’t before. You’re able to perform at a much higher level when you return to work. If done correctly, I see sabbaticals as an investment instead of an expense.
In my next article, I’ll share a strategy to help you better understand the concept of buying time and provide you with the motivation to make the required behavioural changes to live a free and wonderful life.
Always have enough liquidity to handle unexpected plans
Life is unpredictable at its core.
For us millennials who have a habit of changing our minds regularly, it’s even more unpredictable. This means we need our investment strategy to be prepared for many different scenarios.
In the investing world, liquidity describes how easily an investment can be converted into cash at stable prices.
One of the biggest risks in an investment strategy is having to sell an investment when it’s undervalued or just before its return cycle becomes positive.
A very important component of your investment strategy is understanding how liquid your portfolio is and what investments can be used to fund unexpected scenarios.
At WE, our members have a number of different diversified investments. They also have a Get Out of Jail (GOOJ) account with ideally three months income (at a minimum) to be able to fund unexpected expenses or loss of income.
Members who own property also have direct share portfolios as it’s a lot easier and cheaper to sell shares than it is a property. If you need a portion of funds, you can’t sell a bathroom off your house, but you can sell down a portion of your shares.
Finn’s fun facts
The S&P 500 (an index that represents the 500 largest companies in the U.S) has just recorded it’s longest ever ‘bull run’ (meaning it’s at least 20% above a previous low and hasn’t suffered a 20% decline from a record high).
It’s been in bull territory for 3,453 days which marks the end of the Global Financial Crisis roughly 10 years ago. What’s scary is there are many millennials who have never started investing because they got spooked by experiencing such a large crash so early in their earning years.
They felt like it was too risky to invest. But the greatest risk you can make is not to invest at all.
What does my heart want?
These five simple words have changed my life.
Every morning as part of my journaling routine I ask myself this question: What does my heart want? I don’t overcomplicate it, I just write down what first comes to me. Remember, you are asking your heart, not your mind, so it’s often a feeling rather than a thought.
The insights I have gained have been profound. I’ve discovered things I thought I liked doing but I really didn’t. There are people in my life that I want to get closer with or to let go. There are days I know I need to stop and be still and connect with my body-spirit self.
If you are ever struggling to make a decision, asking yourself this question. It will make the decision a simple one.
When we get into our hearts instead of constantly being in our heads, we start connecting with what’s important.
So, what does your heart want?
I look forward to hearing about what you discover.
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Disclaimer: all information contained within this article is of a general nature. Do not rely upon it when making financial decisions. Please consult a professional financial advisor or planner (like us!) before acting.