I’ve noticed a trend in my practice. I’m being approached very often by people in their early-mid fifties with senior-level jobs at big companies asking me to look at their financial plan with a view to making change. “Change” doesn’t necessarily mean retirement, though the most powerful financial driver for serious change is knowing that you can afford to pack it in all together.
Here are the circumstances and what they most often have in common:
- 50 to 55 years old
- Upper middle management at a national or multinational firm
- Well paid
- Getting tired of the constant grind
- Increasingly frustrated with senior/executive leadership, the corporate direction or the politics of the workplace
- Thinking of moving on. Looking for something more fulfilling, even if it comes with less money
On the one hand, retirement in one’s early 50s is not that common and a bit younger than the average, though not unheard of.
On the other hand, these people have been at it for 30 – 35 years already. Their mortgages are often paid, or close to it, their children are adults and they have accumulated a nest egg of savings.
Despite being motivated enough to start the conversation with me, it’s not terribly urgent or pressing. The idea of putting in a few more years is not unbearable. So perhaps this is not evidence of a looming crisis, but more so the expression of the usual patterns of life as people get to the latter part of their careers. They are old enough and have been at it long enough that retirement is starting to become part of their headspace.
It’s natural to begin thinking about it. And the more financially feasible it is to walk away, the more you start to think about it and the less tolerant you become of what you don’t like about your work. This is step one of the evolution toward retirement. “I’m probably not going to… but could I if I wanted to?”
For my part, I support them by analyzing different scenarios.
- Could they retire right now?
- What would their lifestyle look like? What level of spending would their income support?
- What are the risks and implications? Does it mean they’ll have to downsize their home by their late 70’s for example?
- How does that change if they stay 3 to 5 more years?
- What if they retired to something else; something that paid less but was also less demanding and less stressful and more fulfilling?
- How can they use different accounts – RRSPs, TFSAs and Non-Registered to get to or get past certain milestones such as when CPP and OAS will start?
- What mix of investments will deliver what is needed with as little risk as possible?
- What can we do to minimize tax?
There has been only one person who actually took action because of this. We did the sort of analysis I described, and he had the answers he was looking for about his finances. One day, we were having lunch and he said, “Just want to double-check with you… if you say I’ll be ok, I’m going back and quitting after this lunch”. And he did! Didn’t even give them a chance to sign his card and have a piece of cake for heaven’s sake.
Most people don’t take dramatic action like that. Usually, the analysis is part of the evolution in their thinking I mentioned above. The idea enters their headspace. They ask the question. They get some answers. It settles their thinking and makes bad days at work not seem so bad. It’s a powerful exercise.
It’s one of the most enjoyable things I do for people because I’m closely involved in their aspirations. It’s where their money meets their life. That’s a wonderful journey to share with them.
If you’ve had enough or you know someone who has, we should talk.