This article was reviewed by Chris Singer, CFP®.
Retirement planning is far more than an exit strategy from work. It’s more than saving enough money to support yourself (and your family) in old age. Done right, retirement planning is about having the freedom to choose how you want to live based on your values, lifestyle vision, and how you intend to create purpose once your working years have passed. The financial planning aspect of retirement planning is to ensure you have the means to live in accordance with these important aspects.
Aligning Your Retirement Plan With Your Values
Life planning, and by extension, retirement planning, should rest on the foundation of your value systems. A lifestyle that goes against your values will never be a life you thrive in. It’s important to consider what matters most to you. Is it family? A sense of freedom, or having adventures? Do you value community and giving back? Do you value feeling safe and secure? By defining your values, we can plan for a retirement that feels good, specifically for you.
Someone who values adventure, for instance, may want to ensure they have enough funds to travel, whereas someone who values security may be less inclined to travel, but may desire a bigger nest egg to alleviate any financial anxiety.
Once you have identified your values, you can begin asking yourself how those values can be put into action. Some questions you could ask yourself are:
- Do you want to leave your child(ren) an inheritance, and if so, how much?
- Do you want to be able to take family vacations?
- If your children live in a different city, would you want to travel to see them more often?
- Do you want to be able to travel?
A Retirement With Purpose
For many of us, our identities and sense of purpose become wrapped up in what we do for work. Our work is often one of the first ways we define ourselves and one of the first things people ask us about in social settings. Work as purpose is baked into our culture. So what happens when you are no longer working? For many, there is a profound sense of loss—of identity and meaning in their lives. Nearly one-third of retirees experience depression in relation to this loss.
An important, but often overlooked part of retirement planning, is considering how you will create purpose in your senior years. What will define you and your days? How will you redefine who you are? Reflecting on these topics before you retire can help you get ahead of potential mental health challenges and ensure you have the resources available to pursue the things you anticipate will fill the void of work and bring you a sense of purpose.
Here are a few questions to ask yourself:
- What causes do you care about?
- What has personal meaning for you?
- Is there something you’ve always wanted to do but never had the time?
- Is there a side-hustle you would like to pursue?
In your retirement, you could consider mentoring, volunteering, spending more time with family, or starting a passion project as a way of establishing meaning and identity in your life. Instead of seeing retirement as a loss of purpose, try seeing it as more of a shift, as an opportunity to pursue personally meaningful activities you never had the time for while working full-time, or running your business. Proper planning is meant to ensure you have the freedom to pursue your passions in retirement.
Identifying Your Ideal Retirement Lifestyle
How you want to live is going to impact how much money you need. A retirement filled with travel, for instance, will require more capital than a retirement enjoyed at home. Where you want to live (both location and building type), the hobbies you want to participate in, even the kind of car you want to drive—everything about your desired retirement lifestyle should be factored into the financial plan you and your financial advisor create. When considering your ideal retirement lifestyle, ask yourself the following questions:
- Where do you want to live? Not just geographically, but consider if you want to live in a home, a townhome, or a condo.
- Are there hobbies you want to be involved in? What is the cost of participation?
- Do you want to continue working part-time in some way?
- What do you want your day-to-day to look like?
Having a clear understanding of how you want your life to look and feel will allow you and your financial planner to ensure you are investing and saving in a manner that will have that dream come to fruition.
Financial Planning That Ensures a Vibrant Retirement
Knowing your values, purpose, and lifestyle vision allows you to focus your financial planning to ensure your retirement is fulfilling and vibrant. Without this information and insight, your planning is arbitrary and could fail to meet your needs and wants when you retire. At Cedar Rock, we view financial planning as the key to freedom in retirement.
Frequently Asked Questions
1. What Should Be the Foundation of Retirement Planning?
Retirement planning should include more than simply saving enough money to stop working. It should also consider your values, the lifestyle you want to have, and how you will create purpose in retirement. A well-rounded retirement plan ensures your finances support the life you want to live.
2. Why Is It Important to Align My Values With My Retirement Plan?
Your values influence what a fulfilling retirement looks like. For example, if you value family, you may want to budget for travel to visit loved ones or help support your children and grandchildren. If you value security, you may want a larger financial cushion. Aligning your retirement plan with your values helps ensure your future reflects what matters most to you.
3. Why Is Planning for Purpose Important in Retirement Planning?
Many people find that their identity and sense of purpose are closely connected to their work. Without a plan for how you will spend your time, retirement can sometimes feel isolating or unfulfilling. Thinking ahead about hobbies, volunteering, mentoring, travel, or spending more time with family can help you create a retirement that feels meaningful and rewarding.
4. How Does My Desired Retirement Lifestyle Affect My Financial Plan?
The type of lifestyle you want in retirement has a direct impact on how much money you will need. Travel, hobbies, housing choices, and whether you plan to work part-time all influence your retirement expenses. Understanding how you want to live allows us to create a financial plan that supports those goals.
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It can be helpful to ask yourself questions such as:
- What do I value most?
- Where do I want to live in retirement?
- Do I want to travel?
- How do I want to spend my time?
- What activities or causes are important to me?
- Do I want to leave an inheritance or support my family financially?
These answers help create a retirement plan that is tailored to your goals, values, and vision for the future.