Monthly Archives: October 2014

Prosperity

How Big is Your Nut?

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The following is a guest post from Ed Burghard.  Ed has had a long and distinguished career at Procter & Gamble where he was named a Harley Procter Marketing Director, the highest honor for a P&G marketer.  He retired from P&G and now dedicates his time to his passions including his wife, his fitness, and  www.StrengtheningBrandAmerica.com.  Enjoy his guest post and feel free to comment below.

If you would like to submit a guest post, please use the Contact page to submit or inquire.  Enjoy…

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How Big is Your Nut?

Retirement Nut
How Big a Nut Do You Need for Retirement?!

Actually, the real question is – How big a nut do you need to retire?  It is one of the most relevant, scariest and controversial questions retirees (or retiree wannabees) need to ask and answer in order to be confident that their retirement doesn’t turn into a nightmare.

Before you read further, I need to provide full disclosure.  I am not a financial consultant, nor am I an expert in personal finance or retirement planning.  I am simply a guy who is retired and has had to figure out how to blaze a personal path through the complicated maze of unclear and often conflicting information to answer the question.

I have seen several ways of trying to determine how big a nut you need to enjoy a desired quality of life throughout your retirement.  The literature will tell you that the “right” answer depends on how costly that “quality” is, how your investments perform, how protected you are against catastrophic financial events, what your risk tolerance is, what your personal priorities are … etc. etc.  Net, the experts generally agree that there is no real “right way” to calculate how big a nut you really need to retire.  With the above in mind, here is a simple way I arrived at an answer that makes me sleep well at night.

  1. Decide, in general, how much money you need pre-tax to live on per year.  Some advisors suggest 80% of your current (or last) annual salary is a good starting point.  But, you may decide you want to actually spend 110% of your salary.  The important thing is to pick a number and be realistic about it.
  2. Divide the number by .03 (3%) to estimate just how big a nut you need.  For example, if you decided you need $100,000 gross per year to live in the style you desire, then your nut will need to be roughly $3.4 million (excluding the value of your home).

From this point you can make any refinements you want to increase the precision of your estimate.  For example, you could assume a revenue stream from social security as a way to cover your required nut.

Note, in my approach inflation and earnings on investment are considered a wash.  Admittedly this is over simplistic.

Okay, financial consultants and retirement counselors will have a field day picking apart my approach.  Personal-Finance-Tips-Advice-From-ExpertsThey will rightly point out that 1) to achieve a 90% probability of achieving a retirement income goal with a 30-year time horizon a 40% equity based portfolio would have an initial withdrawal rate of 2.8% [based on Monte Carlo testing – see here for link] and 2) the way I look at the question will likely result in having money left for an inheritance.  But, in a world where you no longer have a reliable inflow of cash to offset your cost of living, and the life expectancy of retirees is increasing, I think my conservative way of answering the question makes sense.

To be clear, the answer to how big a nut do you need to consider retiring is not the same thing, as answering the question of – What should my actual annual draw down rate be?  In all probability you will draw down at a variable rate based on what is going on in your life at the time.  Once you are in a world of more money going out than coming in, it becomes very important to assess your draw down percentage per year in the context of your portfolio performance and current market conditions.  But, the truth is that if you don’t have a big enough nut to start with, the exercise is moot.

At a minimum, I hope my experience is helpful.  Ideally, I hope it encourages you to explore deeper what the right answer might be for you.  After all, nothing impacts your enjoyment in retirement quite like the size of your nut.

Ed Burghard

MyLife2.0 - The Journey and Journal

“Yes, Dear!”

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In my retirement, I finally truly understand the power of the words I was told at my wedding – “Yes, Dear!”

In retirement, I finally learned the power of those two words I was told at my wedding... "Yes, Dear!
In retirement, I finally learned the power of those two words I was told at my wedding… “Yes, Dear!

Most of us had a reference such as this at our wedding toast if the best man was married:  “The key to a successful marriage is two simple words, ‘Yes, Dear!'”  Marriage is a joint partnership; it takes collaboration, give and take, working together, not always needing to be right…  But I have never been fond of being wrong.

Now that I am home, those two words “Yes, Dear!” are more important than ever.  I used to go to work and interact with people all day.  Sometimes it was fun, sometimes stressful, I was always on… when I came home, if I was stressed and snapped at someone, I could blame it on work.  Now, however, as my wife likes to say, “I am in her space”.  She is adjusting to having me around more during the day.  While we love our new found time together, it changes her routine and can cause some stress for both of us.  And now, if I am stressed and become agitated, it is the same causes of stress that she has had all along – keeping up with kids, house, cooking, appointments, homework, fitness and the list goes on.  We summarize it in our family as “oh, I am just cooking, cleaning, washing, scrubbing!!”

Inevitably, I make a comment to my wife during the day.  It might be innocent and inquiring, “why do you do it that way?…”  It might be more critical and judgmental in tone, “why do you do it THAT way?!”  Either approach, I always regret asking!  It is a sensitive time.  My wife is adjusting to having some of her daily routines challenged and it is not always pretty.  I need to learn the power of those two important words in my life and I need to continue learning the lesson to L’Eggo My Ego!

Romantic Retirement Bliss
The Romantic Bliss of Retirement!

My wife and I are spending more time together now than ever and we love it.  In our first two weeks, we are exercising together, shopping together, relaxing together, enjoying each other and sharing the load at home and with the kids.  We realize we also need our own time and will settle into a balanced routine.  Fortunately, we have always been each others best friend.

My wife and I are talking more about the future and are discussing our near term goals and routines (this week/month); our mid-term goals (this year/this summer as we begin to plan an RV Adventure!); and our long-term goals (the next 5-25 years!).  As we get re-oriented, re-aligned, and re-tire, it will become easier as we work toward the same goals.  Until then, I realize it is important that I adjust and finally learn, in my retirement, the true meaning and power of those words I was told at my wedding… “Yes, Dear!”

MyLife2.0 - The Journey and Journal

L’Eggo My Ego!

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I left my job as CEO of a large and growing company only two weeks ago.  Since that time, I have immersed myself into the world of sabbatical, retirement, family, fitness and friends.  It has rapidly become clear — I need to let go of my ego to make the most of MyLife2.0.

Retirement from CEO to House Bitch
Retirement brought me from CEO to House Bitch in 24 hours!

Within 24 hours of my retirement, my wife’s friends were congratulating her on having a ‘house bitch’.  That was a bit abrupt – within 24 hours I went from CEO to house bitch!  I asked my wife for a more gradual approach — maybe I could start by being her Assistant House Manager and see how it goes?!

However, my more helpful ego lesson was as I started taekwondo.  My 12-year-old son has been taking taekwando for a few years and is one belt from his black belt.  His efforts have stalled a bit lately so in my retirement I decided to join him, encourage him, and get some exercise as I start with a WHITE belt!  He has enjoyed having me go and I expect it is good for his self-esteem to see his father struggling with something he has already mastered.

Our taekwondo club is a wonderful organization taught by caring instructors who share a positive outlook in all they do.  One of the ways they teach respect is by requiring everyone to call each other “sir” and “ma’am” — not just to the instructors but to everyone.  It is not about a hierarchy, it is about mutual respect.  I love it — but here is where my ego went out the door!

One day, the lead instructor broke us into groups by belt and had a different black belt instructor help each group.  I was in a group of only two people, myself and an eight-year-old!  But that wasn’t all — the black belt instructor assigned to my group was SEVEN years old!

L'Eggo your Ego in Retirement!
L’Eggo your Ego in Retirement!

He LOVED teaching me as he tried to stay serious and coach me.  I obediently called out, “Yes, Sir!” upon each of his instructions and reflected on how ironic this was and how good it was for me to let go of my ego.  As CEO, I was used to directing individuals, teams, large organizations.  I may very well have been embarrassed to be seen obediently taking orders from a seven-year-old.  Yet, in retirement, I relished this experience.  I learned and enjoyed while this young man built his self-confidence.

“Yes, Sir!”  I said to my seven-year-old instructor!

During the class, as I wiped the sweat from my brow, I looked at my son practicing in his more senior group.  He was working diligently but snuck a quick look at me and smiled.  It was as if he was saying,   “L’eggo your Ego, Dad!”

I can’t wait for my first belt test — I hope to make my seven-year-old instructor and my twelve-year-old son proud.  They have already taught me so much!  What surprising insights have you gained when you take the time to reflect and learn from others in retirement?!

MyLife2.0 - The Journey and Journal, Structure for Well-Being

Retirement Well-Being Has a Structure

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The best life models are simple.  They help us see a simple structure for a complex situation.  Retirement Well-Being is no different.

In their book, What Color is Your Parachute for Retirement, John Nelson and Richard Bolles put forward a simple model for Well-Being in Retirement.  I find it powerful and compelling.  As with most simple models, you can dig deeper for more insightful nuances but the simple model provides a great framework for understanding.

They say there are three dimensions to our well-being:

  1. In our physical world, we want PROSPERITY;
  2. In our physical self, we want HEALTH;
  3. In our non-physical self, we want HAPPINESS.

Retirement Well-BeingIn a significant way, #1 (prosperity) and #2 (health) affect #3 (happiness).  Thus, the illustration puts prosperity and health as a foundation toward happiness.  There is much to explore with this model and in each dimension.

First, let us recognize that most of us have had a lop-sided stool.  That is we may have had a stronger focus on our career and earnings (prosperity) than our personal health or connections with others outside of work for happiness.  Or we may have focused so much on our personal fitness or happiness that our financial prosperity suffered.  In retirement, it is our opportunity to re-calibrate and bring balance back to the structure!  It starts with simple awareness.

Here at The Joy of Retirement, we will dive into each dimension over time — Prosperity, Health and Happiness — for now, let’s take a quick look so we can begin to understand the depth of each.

Prosperity – in today’s modern world, this is the primary way we ensure a state of well-being for our physical environment.  It consists of the “offense” (earnings) and “defense” (spending/saving) of our financial well-being.  Inputs include how much have you been able to earn, save, where you live (community and house), what type of car you drive, clothes you wear, and the type of life you lead with regard to earning, spending and control or harmony with your physical environment.

There are many choices we can make to affect our prosperity while working and in retirement.  Where we live (domestically or internationally), how we spend or save, the creativity we put toward our daily activities — each is impacted by and can impact our prosperity.  Prosperity is an area we are very excited to explore at The Joy of Retirement due to the many simple and creative ways to go with or against the cultural norms and enjoy life on a dime!

Health – this is our well-being related our physical body:  vitality, energy, strength, flexibility and endurance.  While I have worked for more than two decades in healthcare, I would argue I never paid enough attention to my own health!  Now, in retirement as I design MyLife2.0, I have the chance to focus on my health.  Even in my first weeks, I am exploring the cardio benefits of swimming, the exhilaration of biking, the social aspects of tennis, and the mindfulness of yoga.

I have chosen to explore my new “health” priority while being very mindful of “prosperity”.  By that I mean I have challenged myself to find health pursuits that are free or quite inexpensive intentionally for my overall retirement well-being.  My focus on health is also a pursuit which I can explore together with my wife — get your mind out of the gutter!  While pursuing health, and being mindful of prosperity, we can build happiness by doing things together and with our friends.

What better pursuit is there than the pursuit of happiness?!

Happiness – is about the social system we create for the well-being in our nonphysical self.  How strong is our relationship with ourselves and with others.  Do we have fun, enjoyment, a sense of purpose, or find moments of bliss?  It is our family, our relationships, our true friendships and the communities in which we participate.

Each of these dimensions affects the others.  Poor health can hurt our prosperity.  Not enough happiness can impact our health via depression.  And when pursued intentionally, each of these dimensions can strengthen the other.

Can we pursue paths to health and happiness that don’t drain or could even improve prosperity?  Certainly.

Can we ensure efforts toward prosperity have positive impact on long term health or happiness?  Certainly.

Retirement planning starts with dreams and creativity.
Contemplating MyLife2.0

For me, I had to wake up and step out of the corporate world to truly see my neglected dimensions in this simple model.  Now, I am excited to explore them, develop them, and grow on the journey.  I hope you will explore them with me and share your learnings as we all help each other.

Retirement itself and just the act of planning for retirement, is a chance to re-new, re-calibrate and re-focus on what is important.  I believe the model proposed by Nelson and Bolles is a great one to explore further.

What are your thoughts?!  Comment below or share with others! [contact-form][contact-field label=’Name’ type=’name’ required=’1’/][contact-field label=’Email’ type=’email’ required=’1’/][contact-field label=’Website’ type=’url’/][contact-field label=’Comment’ type=’textarea’ required=’1’/][/contact-form] 

MyLife2.0 - The Journey and Journal

To Give and To Receive

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The Greatest Joys in Life:  Two stories that tie together for a life lesson — stay with me!

As part of my retirement (or re-tire-ment) journey, I am pursuing a variety of learning opportunities.  One of them includes learning to play the guitar.  Wanting to be financially prudent, I found and enrolled in a community course for beginner guitar one evening a week at a local high school.

Guitar Class
Guitar Class for Beginners

I had been looking forward to the class and went last night…  thirty minutes into the hour I was about to text my wife to say, “This is a disaster!”  Fortunately, I did not send the text as the evening was about to change.

It was a wonderfully diverse class of 15 students.  All races, a variety of backgrounds, ages from 40’s to 80’s!  The teacher was very nice but this seemed to be her first time teaching a group instead of one-to-one.  She was quiet and had a hard time getting everyone on the same page, literally.  It seemed to be a waste of time as so many people did not even understand which string to play, where to put their fingers, etc. and the group was losing interest.

Instead of sending that text to my wife — I took a slow breath and turned to the lady next to me to see if I could help.  While I had learned a bit of guitar 30 years ago, she had never touched one and was completely finger-tied.  I showed her where to put her fingers, and we started to go through the first lesson slowly together.  Within minutes, we were playing the first songs together, smiling and laughing.  When we finished, we looked up and the class laughed and applauded!

The teacher had others begin to pair up in two’s and three’s and suddenly the class energy lifted as everyone got to know each other.  By the time we left (and most stayed for more than the hour) we were smiling and looking forward to next week.

By slowing down and taking time to connect to each other, the evening went from near “disastrous” to one of new connections, fun, and engaged learning.

Yoga Practice in Retirement
Yoga is a great retirement pursuit – teaching it can be even more rewarding!

The same day, my wife was about to teach one of her first yoga classes.  My wife has practiced yoga passionately for more than a decade and recently became certified to teach so she could share her passion with others.  She has realized that as much as she loves to practice yoga, teaching yoga is something else entirely for someone who has no desire to be the center of attention.

An opportunity came up for my wife to teach yoga at a home for battered women.  My wife has an incredibly giving heart and this seemed perfect for her — she could bring the love of yoga, the strength of yoga, to women who needed it.  She could teach them and share with them during their time of need.  And she wouldn’t feel as much pressure to be a perfect instructor.

She prepared for the class – reviewed her notes, prepared the music she wanted to play, contemplated what to say and how to make it meaningful for this group of women.

When she went to the designated safe house to teach the course, she found — ONE woman!  This woman was very excited for the yoga class.  My wife had to re-calibrate as teaching just one person was a different experience than teaching a larger class.  She started slowly and watched to see what the woman already knew and what she could teach her to continue her yoga journey.

A few minutes into the yoga practice, my wife in a desire to personalize the experience asked what the woman would like to focus on.  The woman responded, “Can we just stretch a bit and then lay down and breathe?!”

Again, it took my wife a moment to re-calibrate – but she helped the woman through a few neck, back and leg stretches and then they laid down to b-r-e-a-t-h-e…

The woman relaxed and after another moment opened up and started talking to my wife — about her life, about her challenges and about her dreams.  They laughed together and they cried together while laying on their backs.  The woman thanked her private teacher repeatedly.  By the time my wife came home she was exhilarated by the experience of her yoga class at the battered women’s shelter.

She had CONNECTED for one of the most meaningful and mindful yoga sessions ever.  Two women, two strangers, appreciating the peace and simplicity of breathing had connected during a time of need and made each other stronger.

What we can learn from The Joy of Retirement is that by taking a moment, taking a breath, not rushing or focusing merely on our own needs, we can connect with people in new ways that bring meaning, fun and life lessons to ourselves and our family.  I am now excited to play guitar with my new group  each week; my wife is excited to share yoga with more people and see where the journey can take her… and it started by taking a simple breath.

Retire and Breathe!
Retirement should give you the time to BREATHE!

Take a moment to breathe, look around with new eyes, and you will see opportunities to improve the world!

What similar experience have YOU had lately?!  Let us know by commenting below!

 

 

Updates

Time Magazine Article

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Why I Want a Real Retirement…

More and more Americans are wrestling with when to start their retirement.  The powerful commercial culture around us promotes “spend your way to happiness” and defines most people based on their jobs.  Thus, the daily messages we are bombarded by say “keep working — forever!”  Longer life expectancy and increasing problems with Social Security put even more pressure on us.

However, more and more Americans are deciding to start pursuing their true passions now while they have the mental, physical and energy reserves to do so.  This group initially seems to be counter-culture but what is more American than pursuing your passion and dreams?!  As always, I would rather swim upstream, take the road less traveled, and be ahead of the curve!

The fact that The Joy of Retirement taps into an increasing trend in America is again evidenced by an October 6, 2014 article by TIME, “Why I Want a Real Retirement, And You Should Too!”  The article succinctly share some of the conflicts of retirement now versus later, a brief history of retirement trends, and personal conclusion by the author and editor of Ideas at Time Magazine, Ruth Davis Konigsberg, that “I want to make sure that I have not just the time also but the ability to enjoy more than just a few years when work is no longer the priority.”

Ironically, it is, of course, published under the heading of –

Money
Retirement is NOT just about the Money!

We still have a long way to go to change the paradigms — do your part to help by sharing The Joy of Retirement with friends and family as we build an increasingly engaged community!

MyLife2.0 - The Journey and Journal

The CEO’s Epiphany

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Retirement Epiphany at the Beach!

It was a difficult day.  The company I was running as CEO was being sold by a global corporation and, while I was involved, I was kept in the dark of many elements.  Basic ones like who would be the buyer?  What would be the purchase price?  How much more pressure would this put on my job and affect the people on my team?  What changes would the sale have on our corporate culture…?

Retirement planning starts by facing your true self
Contemplating OurLife2.0

In the midst of the divestiture, I took a mental health day to go to the beach with my wife for some time to think and talk things through…  There would be a new owner and most likely they would want me involved going forward.  I envisioned it — I would work even harder than I had already been (that was hard to imagine!) and 4-5 years later I would have the chance to make several million dollars (that was easier to imagine!) when the company would likely be sold again.  Then the obvious reality struck me — I was about to become even more consumed with my already 24/7 job commitment for another 4-5 years, have the chance to make a lot of money on the back end… JUST AS MY KIDS HAD LEFT FOR COLLEGE!  I would be largely absent for some of the most important years of their life.  My situation, my life, was completely backwards from the way I would want it.

This depressing epiphany was to become one of the most liberating days of my life as I realized that I was no longer happy on the path I had chosen more than 2 decades before.  Upon reflection, it made perfect sense.  I was still pursuing the goals I had set when I was 21 years old; yet, I had now been married for 15 years, had 3 children, and my job, which I loved, had grown to consume me.  I had changed but I had never revisited my career goals.

While I had been very successful at the corporate game, I decided it wasn’t a game I cared to play any longer.

I realized I needed to reset my priorities and pursue the life I wanted to aspire to NOW, not the one I had set my sights on when I was TWENTY-ONE.

When the company was sold, I had a chance to separate and I was completely ready to embrace it.  The epiphany on the beach had taken root as a core truth and I was ready to re-take the reigns to my life.  This is MyLife2.0.  I am taking at least 6-12 months to re-tire, re-calibrate, and re-find what drives my passion – so I can let that guide my next 22 years with a new paradigm on life.

I have become a passionate student of retirement because I have realized how little information there is on retirement beyond what the financial industry wants you to know (and, obviously, they have a clear bias).  While financials are important, they are only the start and there is so much more.  Much is dependent on re-visiting your priorities and life goals.  I believe the passionate pursuit of my re-tire-ment journey will help others as we redefine what retirement means in America.  It does not mean stopping anything and everything — it means pursuing what you WANT for the right reasons and ensuring you have some level of financial flexibility to do so.  We will redefine retirement together at The Joy of Retirement.

It has been less than one week since I left my company – so far I have started this website, my wife and I are doing yoga and learning guitar, I am helping my kids with homework, cooking, and planning an RV adventure for our family.  My goal in my re-tire-ment is to create a new path that is flexible, rewarding, and fun.  It seems to me, there are many paths to choose when one embraces and pursues the new paradigm of early retirement!

Stay tuned and share with others as we learn together!

MyLife2.0 - The Journey and Journal

Ready to Retire? or better yet: RE-TIRE?!

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The truth is I don’t know if I’m retiring.

Every time I tell someone that I am retiring, they quickly tell me “You can’t retire!”,  “You are too young to retire!”,  “You have too much to give to retire!”   It’s as if every time I say “I’m retiring” they hear “I’m dying!”  In fact, in our society, retirement seems to be closely related to associations of death, instead of life!

Retirement Just Ahead
Planning the road ahead

I have been working for the same company for the past 22 years in increasingly challenging leadership roles and capacities.  I have worked in the U.S. and led businesses in Europe.  I was a Vice President of a large international corporation.  I was the CEO of a rapidly growing national company.  I managed acquisitions and divestitures for businesses and organizations.  I feel I have been successful and, fortunately, I have saved money; but I am only 46 years old, with three young children, will it be enough to last?  That is one of the fears of early retirement.

What I know is that after 22 years of an immersive work career, I want to live the rest of my life differently.  I want to spend time with my wife, kids, family and friends.  I want to spend time with myself for fitness and personal development.  I want to spend time to see how I can improve my community.  For now I will call that a sabbatical — if it makes people feel better.  However, I am pursuing a sabbatical which I hope to stretch out long term !

I may or may not be retiring right now; but I am going to

  • re-tire
  • re-tool
  • re-tread
  • re-new
  • re-calibrate
  • re-visit
  • re-kindle
  • re-fresh
  • re-juvenate
  • and re-assess life!

As much as some people think of retiring equating to death, I am looking at Retiring to Breathe New Life – MyLife2.0!

In today’s world this is the new and true meaning of retirement.  To re-visit life so you can live it on your own terms and not the terms of your corporation or the path you set when you were 21 years old.  To step back and re-focus on your priorities of today, your family’s health, personal development and new adventures.  This is the retirement I want to pursue today.  After all, why should we wait?

Welcome to The Joy of Retirement – it starts now!  Get ready for a great journey!