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Death of Traditional Retirement

Since no one around the Christmas dinner table is going to bring up Bitcoin this year, how about giving them an earful of the FI/RE (Financially Independent, Retire Early) movement? Definitely can help get the conversation rolling (and maybe even help steer it away from discussing whether Canada should stay together, or go its separate ways into feuding fiefdoms).

 

What does retirement mean to you?


For years we’ve seen images of 60 year-olds drinking champagne, walking down a beach, sailing a boat, and, of course, drinking champagne on a sailboat which is anchored near a beach. 60 year-olds with golden pension plans who finished their careers spent at a single company, never to work a day again, is the traditional retirement model.

Is this the future you are looking forward to? Work full-time for 40 years before going off to enjoy life?

 

Why not shake things up a bit?


20 and 30 year olds have already out travelled their parents at the same age, and believe spending money on experiences provide them with greater satisfaction over buying things. Factor in the reality that health tends to decline with age, and it’s fair to wonder, what other retirement options are out there?

J.D. Roth at Money Boss shared a fascinating post which describes 5 different work/retirement types:

 

#1 – Traditional Retirement

  • work for 40 years
  • retire for 20 years

#2 – Early Retirement

  • work for 20-30 years with a high savings rate
  • retire for 30-40 years

#3 – Temporary Retirement

  • work for 20 years with a high savings rate
  • retire for 20 years
  • work again for 10 years with a high savings rate
  • retire for 10 years

#4 – Semi Retirement

  • work for 25 years
  • work part time for 35 years

#5 – Mini Retirements

  • work for 4 years
  • retire for 1 year
  • repeat 9 times
  • retire for 10 years

 


There are two main takeaways from reviewing these options:

  • You pretty much have to work a set amount of time in your lifetime
  • There is no “one-size-fits-all” approach

The traditional retirement path is often the default. Not because it’s your true wish, but because it’s what you perceive as the only option. Of course, if the traditional model is the path you want, there is nothing wrong with that.

A close friend of Finovo recently shared that through their employer, they have the option of reducing their paycheque by 20% for four years in order to enjoy a one year Mini Retirement but with an added bonus of a steady paycheque! They plan to work for the next four years and spend year five travelling Australia.

As for us (Kevin & Russ) at Finovo, we’re not “retiring” in the sense that we’ll be sitting on a beach for an extended period of time. Our work/retirement model (so far) doesn’t fit any of Roth’s five retirement types. Our decisions have lead us down a different retirement path. We both have worked hard for 10 years and have left the “full-time, corporate world” to pursue our long-held dream of financial planning outside of the traditional, corporate sales structure. We have operated in growth (of income) and savings mode for long enough that we can be financially comfortable taking a chance on starting up a business to help others get to where we are.

We hope this path will be a mix of Mini Retirements and Semi Retirement (where we can do part-time financial planning well into our 60’s and 70’s).

What Roth’s retirement types shows is that there are options. With smart financial planning, we were able to create the life we had envisioned, no compromising. But like every plan, there will be course corrections along the way, but having a solid plan will help keep us on track.

 

But in order to start on a path toward your own vision of retirement, you need to prepare your finances for growth. Be sure to download our free pdf below!

Free Guide to Preparing
your Finances for FI/RE