What Is Your Retirement Scenario?

Retirement and the process of saving for it is not a new topic for anyone that has ever read a finance blog before. The question that few people ask however, is what exactly is retirement?

If we want to go the dictionary route, retirement is simply: “The period of one’s life after leaving one’s job and ceasing to work.”

That’s all fine and good, but to really plan for retirement we have to get a little more specific. Retirement means different things to different people, to accurately plan for yours you have to decide what your definition of retirement is.

  • For a large number of Americans retirement is something that only happens when they’ve become too old to work anymore. They didn’t save anything on their own during their working years and will live out the rest of their life relying on social security or a pension if they were lucky enough to have one.  This type of retirement is the equivalent of being sent out to pasture. Working for 40+ years and having little to show for it isn’t the way most of us want to spend our later years, but the lack of emphasis on saving and the need to “keep up with the Joneses” makes this a reality for all too many people.  
  • The most popular version of retirement is one where retirement represents a time starting in your 60’s where you’re finally able to do all the things you couldn’t do during your working years. It’s a time where you travel the world, golf everyday, or move to an expensive retirement community in Florida. This version of retirement requires diligent saving in a 401(k) or IRA in addition to any pension or social security that may be received. Typically when you hear or read about retirement planning or advice, this is the version that is being talked about.
  • For a growing number of people, especially those in the younger generations, retirement in the traditional sense isn’t a goal at all. For these people financial independence is the goal. They don’t strive to stop working so much as they strive to stop needing to work. Retiring from the corporate world is only an opportunity to begin focusing their attention on projects of passion. To achieve this retirement scenario requires a true dedication to saving, investing and creating multiple streams of income. If your goal is to retire early you’re going to need to do more than live off of savings, having your money work for you across multiple avenues is a necessity.

In reality, the only difference between the last two scenarios is the age at which they happen. Financial independence is required for a lively retirement regardless of the age you wish to make it happen. That means whether you want to retire at 30 or 65 you should focus on creating streams of income to replace your paycheck. You should focus on  saving more than you spend and you should focus on building a large investment portfolio.

My version of retirement involves reaching financial independence as soon as possible. I have no desire to cease working altogether, but not having to work out of obligation is the overall goal.

Now I’ll turn it over to you, the readers… What is your goal for your retirement? What steps are you taking to achieve your goals?


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24 Responses to What Is Your Retirement Scenario?

  1. Pauline says:

    I would hate the second kind of retirement. Waiting all your life to golf or go traveling? What if you don’t make it until 60? If golf is a passion, I’d rather play every week, even if it means delaying retirement age by a year or two.
    My kind is the third one. When money is not an object and you can live life on your own terms, without a boss. For that I am ready to sacrifice a higher lifestyle and many luxuries.

  2. Number 3 all the way for me. Reach FI at a very early age will be liberating. If you want to continue to work you have the freedom to see about working part time or take more risks if your job allows. Obviously if you’re designing the structural inside of a building you can’t take the risks, but if it’s more of a creative position then you don’t have to worry about rocking the boat as much since you can already support yourself. Personally I plan to take a little bit of time off after I hit FI just to kind of relax, but I’ll be spending time volunteering and most likely going back to work at least part-time somewhere, maybe at a small business in my area.

    I can’t even fathom doing number 1.

  3. We are doing the second route but please don’t mention retirement. I prefer to think of it as ‘I don’t have to be employed if I don’t want to be’ )may count as financial independence I suppose) but intend to work till I am able to. John, well he has no intention of stopping.

    Given the way ’employment’ is going, I suppose most of us will live as ‘work nomads’ and ‘retirement’ will become a thing of the past.

  4. Brian says:

    Mine is a hybrid of 2 and 3. I can see myself working until 60 because I like what I do, but I am striving to not have to work until I am 60. That way I can travel (more than I do now, which I do travel quite a bit) and pursue whatever passion I have.

    Like others scenario number 1 just sounds plain awful!

  5. I want to achieve FI as soon as possible. But I’ll probably keep on working long after that. And I’ll probably still be at my corporate job (so long as I don’t get laid off), because I really like it there.

    I don’t have any kind of super passion like you see with these kids who want to quit the corporate world and go work in some save-the-world startup or nonprofit. I like being productive, and in turn being acknowledged for that productivity. My current job fits those needs.

    If I did lose this job post FI, I would knock out my bucket list for this region of the country and then relocate somewhere cheaper.

  6. We’re definitely 3 all the way. Just had a meeting with a financial advisor this morning, and learned some interesting stuff about how to make it happen!

  7. I’m going for option number three. With the added twist that I’m sure that I’ll be working a new career doing something I love for a lot less money. That would be my version of Financial Independence and Semi-Retirement. Which is why I’m working on paying off debt and building net worth now!

  8. I’m a bit of both 2 and 3 as I don’t want to wait around so I’m doing all I can while I’m young. I want to be able to retire early so I can pursue passions although I do love my job.

  9. Integrator says:

    I’m shooting for financial independence at 40 on $50k/yr in dividends. I dont expect changing much in terms of what that means for what I do day to day. This will just give me more flexibility in what I pursue.

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  11. We’re looking at #3 ourselves. We have family that have gone down the #2 path and honestly it can be a bit sad because they really do nothing. Sure, we’ll want to travel more but we plan on being actively doing things and being productive and having multiple income streams. It’s part of the reason why we started our own business, to be able to achieve it.

  12. Squarely in category three for me! Finding and focusing on a combination of investments, intentional frugality, and overall commitment to your dreams will lead you to wherever you want to go. Life is best lived when pursuing it aggressively!

  13. Well, maybe not the saving and hoping that social security will be sufficint part, but I’m in category #1. I only want to stop working when I’m unable to work any more. I’m only half joking when I tell people that my goal in life is to work so long that I call in dead one day.

    I actually have a co-worker for whom the idea of getting too old to work fills him with so much dread that he hopes to die of a heart attack around 50.

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  15. I reached my retirement goals last year in 2012, but I’m working to shoot for an incremental 200K/year by 2015 by improving my non online passive income. Stretch goal, but why not!

  16. Dalene Quisenberry says:

    When contemplating retirement the majority of us seem pre-programmed to only consider the far reaching financial implications of never bringing in an income again! But the fact of the matter is that there are many more things to consider if planning on retiring abroad, not to mention the fact that many retirees overseas pick up odd jobs and part time positions advising and assisting other expatriates with their lives and businesses anyway!

  17. Michelle says:

    We are working on option number three.

  18. I love #3, but identifying what retirement means is a great exercise.

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