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Financial planning can oftentimes carry many different assumptions with it. For example, you may hear the term “financial planning” and it becomes a thought of working with a financial planner. Or perhaps it has retirement planning involved in that.
But financial planning is bigger than that. And for retirees especially, the conversation can’t just be about money. Because by the time you’ve reached retirement, you’ve likely figured out the money part (at least enough to have stepped away from your career).
The harder questions are about how money interacts with two other resources that are just as valuable, and often more limited: your time and your personal energy.
These are the three currencies of retirement. And just like with money, you can spend them well, spend them poorly, or fail to spend them at all.
The retirees who thrive learn to manage all three together. The ones who struggle usually have an imbalance – too much focus on one currency at the expense of the others.
Let me walk through each of them.
Currency #1: Time
Everyone gets 24 hours in a day, seven days in a week, 52 weeks in a year. It doesn’t matter how much money you have or how much energy you have. Time spends itself at the exact same rate for everyone.
What’s crazy to me is that Elon Musk, you, and I all have the same amount in a week.
But what makes time uniquely powerful in retirement is that you have more control over it.
For 30, 40, sometimes 50 years of your career, your time wasn’t fully yours. It belonged to your employer, your business, your clients, your commute, your obligations.
You sold most of your waking hours in time and energy in exchange for money. That was the bargain.
In retirement, that bargain ends. At least if you plan to go from full-time to not working at all.
The 40 to 60 hours per week you used to sell now belong to you.
Many retirees don’t know what to do with it, especially when it comes all of a sudden.
The mastery of time in retirement comes from three things:
First, having a purpose for your time. The retirees who do this well have things they’re working toward:
- people and a social cohesion
- causes they’re contributing to
- new adventures to undertake
The structure of work is gone, so the structure has to come from somewhere else. Often it comes from purpose.
As a fellow gardener, when one of my favorite people I work with told me she had started gardening, I realized she has a great way to spend her time moving forward. She would admit she dove right in too, which I find all the better!
Second, being honest about how much time you actually have. If you retire at 65 and live to 85, that’s 7,300 days.
A fellow advisor friend talked about how we get 18 summers with our kids, at least while they’re still technically “kids.” But the same logic can apply for retirees who make it to life expectancy.
It’s also a good idea to account for the fact you may slow down in your 70’s or 80’s.
Third, refusing to waste time on things that don’t matter. This is harder than it sounds. Filling time and using time are far different. I personally hate the term “killing time.” When someone says it’s a great way to “kill time,” it’s like saying it’s a great way to waste money or waste energy.
Why would you do that?
The retirees who master this currency view time as their most precious resource, not their most expendable one.
Currency #2: Money
This is the currency most retirees have thought the most about.
- How much do I need to retire?
- How much can I spend each year?
- When should I take Social Security?
- How do I avoid taxes?
- How long will my money last?
These are important questions. And if you’ve reached retirement with enough money to support your lifestyle, that part is largely behind you.
But the relationship most retirees have with money in retirement is more complicated than the relationship they had with it while working.
When you were working, money was something you accumulated. Every paycheck, every contribution to your 401(k), every dollar saved was progress.
In retirement, you spend the money you saved and balances go down more significantly in market downturns.
The best savers are often the worst spenders (at least, I feel this was in evaluating the retirees we work with) because they’ve had incredible discipline all these years.
Many of them live well below their means and then leave a massive inheritance to children who didn’t need it.
Mastering money in retirement means a few specific things:
First, knowing how much you actually have. What accounts can sustainably produce as income over the rest of your life? The ones who master it have specifics.
Second, giving your money a purpose. Money becomes useful when it’s connected to something it’s meant to do. For example:
- Some fund essential expenses
- Some fund discretionary expenses
- Some funds the legacy you want to leave
- Some funds the impact you want to have (charity)
- Some are saved specifically for emergencies
When every dollar has a purpose, you spend it more confidently.
Third, accepting that you’ve earned the right to spend it. This sounds obvious but it’s actually the hardest shift for most retirees who have saved with great discipline.
The money you saved was (hopefully) never the end goal. I’ve never read someone’s obituary that stated “He saved $3 million in his 401(k).”
Is that what matters? Because I’ve read cheerful obituaries that say “He loved to travel and spending his time and resources with his grandchildren.”
Which would you choose to read?
Currency #3: Personal Energy
This is the currency most retirees don’t think about until they realize they’re running out of it.
Personal energy is the combination of
- your physical health
- your mental sharpness
- your emotional reserves
- and your enthusiasm for life
It’s what allows you to actually use the time and money you have.
The tough part about this one is that you can lose it suddenly to a health event.
As a father of toddlers, I can attest to losing personal energy in several things, because…well toddlers can tend to take it out of you.
For retirees, perhaps it’s your body or mind not holding up like it used to.
The cruel reality of retirement is that all three currencies don’t move in the same direction.
When you’re working, your money is limited but your energy is generally plentiful. In early retirement, both your time and your energy are often abundant, but you may still be cautious with money.
In late retirement, you may finally feel comfortable spending money, but your energy might not be there to enjoy what you wanted to do.
Mastering personal energy in retirement means:
Protecting it. Personal energy often gets drained by
- stress
- poor sleep
- bad nutrition
- Conflict
- Isolation
- Inactivity
Audit what gives you energy and what takes it.
Using it while you have it. If there’s something you want to do that requires physical or mental energy the time to do it is when you have the energy.
Many on their deathbed (or at least, who become physically incapacitated) regret things they didn’t do, rather than the things they did do.
Investing in it. The retiree with $3 million who can’t get off the couch is poorer than the retiree with $300,000 who has the health to use what they have.
Move, find hobbies that you’re excited to wake up about, eat well, and don’t spend time with people who suck the energy out of you. We all have those people in our lives.
Accept its decline gracefully. I’m a recently retired rec basketball player. A nasty ankle injury and seeing younger, more athletic guys drive right past me was a disappointing wake up call. I used to LOVE playing basketball. Now, I find more time gardening, preserving and making food, and spending the time with my children doing what I love doing.
The same goes for retirees. What you can do at 65 may not be what you can do at 80. If you can still drive a golf ball well from the senior tees, consider it a win. If you can still walk a couple miles a week without running out of breath, don’t complain.
“Father Time” is undefeated, and “Mother Nature” shows we slow down in age, especially in the later stages. Why fight it?
The Three Currencies Must Be Managed Together
These three currencies are interconnected.
Time without money is limited. Yes, time is technically free, but doing meaningful things with your time often requires resources. Traveling ain’t cheap!
Money without energy is wasted. A million dollars in a brokerage account does nothing for you if you don’t have the health or vitality to enjoy what it can buy.
Energy without time is frustrating. This is the trap of working too long. You may have the health and enthusiasm to do extraordinary things, but if all your hours are spent at work, you can’t.
The Question Worth Asking
Am I optimizing for one currency at the expense of the others?
Balance trumps all else. The richest man in the world isn’t the one who has the most money.
It’s the one who actually uses what he has.
At Hyperion Financial, we believe retirement planning is about more than the numbers. It’s about helping you align your money with your time and your energy so you can actually live the retirement you’ve worked toward. If you’re ready to think about all three currencies together, we’d love to talk. Call to schedule a conversation.