Ask Smart: Is It Time to Redefine Retirement?

This month, we’ve got an interesting look at redefining retirement in our Ask Smart Financial blog series, where Smart Financial CEO Steve Martin or COO Dr Mark Todman answer your financial planning questions.

Remember Mark or Steve could be answering your question next month. Simply tweet us using the hashtag #AskSmartFinancial or email us and we could be answering your question in a future post.

This month, Steve has some strong opinions on Arianna Huffington’s take on retirement, Vogue magazine’s take on bottoms and why traditional retirement planning advice works.

“What do you think of Arianna Huffington’s recent remarks on redefining retirement?”

“A recent article by author and publisher, Arianna Huffington, focuses on the need for us to redefine retirement.

“The article makes some interesting points about how we should change our view on our lives being divided into ‘work’ and ‘non-work’, and challenging the perception of retirement as a time of ‘withdrawal or retreat’.

“I like this idea but I felt that some parts of the article demonstrated ignorance.

“Arianna makes the point that working to achieve a ‘number’, a certain amount of money to retire on isn’t enough. I’d argue that the securing of ’the number’ is the key to living the life in retirement that you desire!

“I agree that seeking an arbitrary number is usually nothing other than ego and will routinely provide either too much (meaning too much time spent accumulating) or too little (not enough to deliver on that lifestyle) but it’s imperative to think about how much money you need for the retirement you want.

“This article is no more a redefining of retirement than Vogue’s attempt to redefine the approach to bottoms!

“Retirement has always been about doing less of the things that you don’t want and more of the things that you do; spending more time with family, friends, doing charity work, going on holiday or taking up a hobby. What the 2014 iteration allows is ever-greater flexibility around the transition between work and non-work assuming, of course, that the employment market continues to see you as employable.

“It should be allowing people to be wealthier than ever and therefore have more choice, however that choice is only really available to those with money.

“There is a simple question I was taught to ask clients years ago, ‘If you spend everything you earn, what are you left with?’ The answer is the same in 2014 as 1998 – nothing.

“To that extent, retirement is merely an extension of life prior to retirement. If you manage your affairs within your income and spend on things that really matter to you rather than get caught keeping up with the Joneses, you are likely to be able to perpetuate that into a long and happy retirement.

“Truly understanding what is important in your future materially affects how long you have to wait for it! If retirement is all about possessions, you will have to work longer and save more money to be able to afford that lifestyle. If your aspirations are more modest (assuming all else is equal), you can work less, much sooner.

“The choice is and has always been, what do you want to do, how much will it cost and how do you generate sufficient assets or income to achieve it?”

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