Retirement Planning & How to Retire Early
Many people are concerned about their retirement planning but put it aside for far too long. Unfortunately, this often leads to a retirement you settle for versus a retirement you want. Retirement planning is a process you put in place to manage your finances after you leave the workforce or sell your business. Retirement planning involves various steps, including planning when to start, figuring out how much money you will need to maintain the lifestyle you want after you retire, identifying priorities (what is most important, not negotiable, and what is least important), planning investments and figuring out who will manage those investments. If you plan to manage your investments yourself, you will need to learn to do so. If you plan to delegate this to a financial planner, you will need to learn enough to see if they are doing a good job for you. And then, you also need to plan for how to make your retirement enjoyable. This often means having sufficient mental stimulation and social interactions to maintain a full and engaging life.
Please note that we are not financial planners. Please ensure you get proper advice from financial planners before making changes to your retirement planning goals. We are sharing with you some key insights that may help you as you are thinking through your retirement planning.
What are some of the most common financial and non-financial challenges associated with retirement?
Loss of identity. I see this often with clients even before retirement if they lose their job or decide to take some time off work due to burnout.
Lack of succession planning. If a retiring person is running their own business, there are challenges with exiting the business. Children often do not want to take over, and selling is difficult and stressful. Over 80% of businesses listed for sale do not sell after the first listing. Many business owners give up and close doors, with all assets built over decades going to waste.
Unsatisfactory lifestyle due to lack of income. There is often a noticeable negative impact on the type of lifestyle a person can have. Many people have to cut down on expenses after they stop working. They miscalculate how much money they need to live comfortably.
Not able to pay unexpected medical expenses. Medical expenses can quickly put someone in debt. Just one trip to the hospital can result in a huge issue for a retired person as a significant part, or the entire savings can go to cover the bill. I know a person who went to a hospital for one hour and ended up with a statement for USD20,000.
How can someone who has retired best navigate the obstacles to ensure their retirement years are lived to their fullest?
Continue being involved in some kind of work. It helps the keep mind sharp. When people completely retire, they often age faster and die sooner because they stop developing their minds. I see it so often with retired partners from major consulting firms. Once they stop being involved in some kind of work, their life and health start deteriorating quite rapidly. You may do consulting or coaching for a few hours a week, and that will keep you in contact with the world. You can also acquire or build a business that requires only a few hours of work per week, where you can be as involved as you want and have a team running the rest of it for you. It is not as difficult as it seems to build or acquire a business like this, and we work with clients to help them acquire and run a business.
Consider getting a coach to help you restart your career. If you left the workforce and feel you miss working, get a coach who can get you results and help you do this effectively. You can work with us, or you can work with many other coaches out there, but get someone who can help you. Your coach can help you set up goals and then figure out the steps needed to get there, which we call your critical path, and help you along the way as you are taking the steps.
Have a good social life. Surround yourself with other interesting people who care about some of the same things as you so you can have a full life. Humans need social interaction, so it is crucial not to isolate yourself. This becomes especially important in retirement.
Do not allow yourself to think of yourself as an old person. Focus on what you have (decades of experience, a lot of knowledge, achievements, great kids) instead of what you don’t have (for example, if you wish you were younger, or you feel your energy level is not where it used to be, etc.). Often clients tell me, “I am old. I am 50 years old.” And I tell them that if they spoke to someone who is 75 or 85, that person would tell them that they are a baby.
How to Retire Early
You may be asking yourself how to retire early. If you want to retire early, building your own business is the fastest path I know to it. It is not as hard as it seems. It’s hard the first few years, and it gets easier.
You can also buy a fully operational business. Buying a business can allow you to retire early as soon as you build a team to manage the business’s day-to-day operations. Many businesses for sale are SBA pre-approved, so you can buy a business for as little as 10% down.
If I continued to work as a management consultant or a banker I would not be in a position to retire because in corporate world when you stop working you stop getting paid, and it takes a long time to invest enough money to accumulate enough to retire. Of course, you want to invest and take advantage of the power of compounding. The power of compounding refers to when gains grow on top of other gains. For example, if you invest $1,000 in one year and it goes to $1,100 the next year, your next year’s gains will be on top of the $1100, not the original amount you put in. Over time, that compound growth can significantly boost returns. Compounding effect, however, takes time. I have not found a faster way to build wealth than starting or buying a business. If you build or buy a business, a machine that runs, adds value to clients, and build a team to run that machine, you can retire or semi-retire early.
I am an example of someone who could retire at 40, or even earlier, after building my business and building a team who could run it. I choose to continue to work because, for me, it is about fulfilling my mission of helping my clients stop professional suffering. However, there are situations when I can’t work, and in such situations, my business continues to operate because I have a great team that helps run day to day. For example, this spring, I had to attend to a family emergency for a few weeks, and, during that time, at times, I stepped away from the business and my team was running it.
About the Author: Kris Safarova is a USA Today, Wall Street Journal and Amazon bestselling author who has published 20+ books on business strategy, leadership and problem solving. She is the CEO of FIRMSconsulting.com and StrategyTraining.com, the latter which is the largest business strategy video training platform in the world. Two of her podcasts, Strategy Skills and Case Interviews & Management Consulting, are often ranked in the Top-10 for careers in many countries.
She holds a Diploma in Music, a B.Comm, cum laude, and a MBA with distinction and on the deans list, the latter from Ivey Business School in Canada. She worked as a management consultant and corporate finance director, where she managed a >USD$1 billion portfolio. Kris was a master classical concert pianist and official music representative of the Russian Federation, who toured Europe. Kris has studied voice for decades, most recently under Roger Love, the world’s top voice coach, to become a reputed and certified executive presence and speaking coach. Kris Safarova is a professional with a decades-long track record of rapid promotions in the corporate world and building successful businesses.