One of the more interesting concepts I’ve heard of in recent years is that of “lifestyle design.” I’m a big fan of lifestyle design because it encourages you to think of what it takes to live the life you want. Versions of this idea are working their way into retirement planning.
It used to be that the question “When can I retire?” was answered by figuring out how much you had to invest into a nest egg at an assumed rate of interest to hit a target retirement year of your choice — usually somewhere between age 60 and 65. Some individuals are interested in a more aggressive path and putting much more away in their younger years to retire at age 50.
My question is this: Why are we putting off enjoyment until our 50s?
This is where lifestyle design comes into play. I first heard about this idea while reading an interview J.D. Roth of Get Rich Slowly had with the author of The 4-Hour Workweek, Tim Ferriss. The subject was using lifestyle design to create mini-retirements throughout life rather than working away the prime years of your life to try and enjoy retirement later. My husband and I haven’t exactly had a mini-retirement (it’s kind of hard to do with an eight-year-old), but we do make it a point to take small trips when we can and enjoy some of our money now.
I’ve thought about retirement and lifestyle design off and on, and it jumped to the front of my mind again after reading an article from CBS MoneyWatch recently. The article addressed a strategy espoused by a T. Rowe Price financial planning director: At age 62, instead of retiring, start going on cruises and trips during your vacation days. Keep working until age 70. Then you will have enjoyed yourself and reap the benefits of allowing more time for your nest egg to grow. Plus you’ll get a higher Social Security benefit by delaying when you file to begin benefits.
My first thought was: wait until you’re 62 to start taking cruises? (Or doing whatever it is you want to do.) I think I would rather work until 65 or 70 with fun things interspersed throughout than stop working at 55 for an early retirement and try to figure out what to with my time. And there’s also the issue of what happens if the stock market crashes right before you retire at age 55. You won’t have enough to stop working anyway.
If you are going to engage in this form of lifestyle design you have to plan for it. In my mind it doesn’t give you an excuse not to put money in a retirement account. You are still responsible for planning for the future.
Another consideration is the kind of work you are doing. It’s easy for me to say I don’t mind working longer. I love what I do: working out of my home as a professional blogger and freelance writer. I can adjust my schedule to suit my goals and financial needs. However, for someone in a job they hate prolonging the agony might not be worth it. Putting in 30 years of work and saving every penny might be the way to go for the relief and freedom afterward.
What do you think? How do you plan to spend retirement? And when do you plan to retire? Have you considered mixing in mini-retirements in your life?
This article was featured in the Best of Money Carnival at DoNotWait.com.