A Funny Thing Happened On The Way to Retirement
By Sherrill St. Germain
Q: I'm thrilled with the progress I've made toward my financial goals over the last few years. I paid off my "bad" debt, and built an emergency fund. I max out my 401k and my Roth, and rebalance my portfolio every year. I have the insurance I need. Heck, it looks like I might even be on track to retire early. So what's the problem?
I'm starting to really hate my job, my company, and… well, to be perfectly honest… the whole industry. Lately, the stress has been overwhelming, and I'm starting to see little signs that it's affecting my health. There's no way I can survive another 15 years of this! It's like I'm in prison, and the temptation to launch a jail break is getting harder and harder to resist.
There's no doubt I need to make a BIG change, but I'm not sure what it is and I don't want to make a mess of my financial plan. Any advice?
A: First, congratulations on your success with your financial planning efforts. The fact that you've come this far is a good indication that you can work through this current crisis. Not only that, the foundation you've built puts you in a much better position to make a change.
Second, it might also help to know that you are most certainly not alone. In fact, it's the rare client who walks in the door with one set of goals that doesn't evolve as life happens. And, while I don't have the statistics on hand to prove it, there is plenty of anecdotal evidence to suggest that, as life expectancies continue to rise, fewer and fewer people are willing or able to stay in one career, let alone one job, for a lifetime. One twenty-something couple even requested that we make a "mid-life crisis" part of their plan right from the beginning! This is smart thinking, especially in a world where most employers are no longer able to support the "lifetime employment" model either.
The good news is that this is what financial planning is all about. Change is not just okay, it's expected. Many people are under the impression that financial planning is primarily about figuring out how to amass the biggest pile of money in the shortest time possible. And, yes, a big pile of money can certainly help facilitate certain goals. But if amassing that pile of money means that you are imprisoned for decades in a life that makes you miserable, is it worth the tradeoff? Further, as with the health concerns you allude to in your question, such a model is probably not sustainable and will likely be derailed anyway.
So what to do? When we developed your original plan, we built it to reach what was your target destination at that time. Short of having psychic powers, that's the best we could do and it has served you well thus far. But now you know there's going to be, at a minimum, a detour, or perhaps even a whole new destination. So the plan needs to shift to accommodate that. Yes, this might mean your pile of money may grow a little bit more slowly for a while, or it might not.
The first step is to get a clearer picture of where you might want to go. Might a new job do the trick? Or do you need a whole new career? A new industry? Self-employment? More education? Financial planning is by no means an exact science, but having some idea of the destination is important because it tells us, ballpark, two things:
- When do you want to get there?
- How much will it cost?
At that point, we can assess whether you have the resources to make the shift now, or whether a transition period is required and what it might look like. If you can't figure out on your own what you'd like to do, I'd suggest getting some career counseling to explore your options.
In the meantime, keep doing most of what you're already doing… with a little twist. Even before you know the details of your new path, you can start to shift your financial plan from its current focus on retirement to incorporate this important new goal with a much shorter time horizon. Translation: Instead of directing most of your savings to your 401k and Roth IRA, you will want to shift some to more accessible accounts (read: no penalty on withdrawal) and opt for more conservative investments. We won't really be to create a firm plan without more detail, but it wouldn't surprise me if seeing this little "mid-life crisis" nest egg start to grow helped to make the dream more real to you and helped spur you on to more clarity about where you want to go. And rest assured: your status as "poster child for financial planning" will only be enhanced as you further refine your financial goals and insist on directing your resources in a way that aligns with what matters to you. Because, while amassing piles of money has its charm, this is what financial planning is all about.