Retirement Planning: The Time Versus Money Conundrum

For decades, the standard approach to retirement has looked the same for most people - build a career, save consistently, and enjoy the results once you eventually stop working. The difficulty is that a good number of people who follow this path arrive at retirement only to discover they have accumulated more money than time.

The psychologist Carl Jung described what he called the two halves of life. The first half is about building - career, income, family and status. The second half, Jung argued, has a different purpose altogether. It stops being about accumulation and becomes about meaning - working out what all that earlier effort was actually for.

Many people never make that shift. They continue working and building well beyond the point where it serves them, and by the time they do stop, they no longer have the years, or the health, left to make full use of what they have built.

Perhaps the most important question in retirement planning is also the one most people never explicitly answer - how much is enough?

When John D. Rockefeller, once the wealthiest man in the world, was asked how much money would satisfy him, his reported answer was simply "a little bit more." It is a telling response, and one that mirrors how a great many people feel, regardless of how financially secure they already are. Our financial planners often see people who are, by any reasonable measure, comfortable, yet who continue working and building well beyond the point of necessity - deferring the life they say they actually want to live.

• A few questions are worth sitting with honestly:
• If money were no longer a constraint, would you still work - or would your life look completely different?
• If you had five to ten good, healthy, active years left, how would you choose to spend them?
• What would you most regret not doing – more time with grandchildren, a long-delayed family trip, or simply more time with a spouse?

None of these questions have a perfect answer, but the exercise of asking them matters. Until you have a working sense of what "enough" looks like for you, it can be very difficult to feel that you have reached it, no matter how large the number in your account.

Deciding when to retire is rarely just a matter of hitting a savings target. It depends on your spending needs, how those needs might change over time, what income sources you already have in place, how long your money realistically needs to last and how comfortable you are with uncertainty. Getting this wrong in either direction carries real cost - retiring too early risks running out of money, while working longer than necessary risks running out of time.

This is where a financial adviser can add real value, beyond simply managing investments. A good adviser will help you translate a vague sense of "enough" into a concrete, testable plan, built around your actual life rather than a generic rule of thumb.

One of the most useful tools for answering the time versus money question is cash flow forecasting. Rather than looking at a single savings figure in isolation, a cash flow forecast models your income, expenses, assets and liabilities forward over time, allowing you to see how your finances might play out under different scenarios.

This matters because a lump sum on its own tells you very little. A cash flow forecast can help answer far more useful, specific questions, such as:

• What happens to my finances if I retire two years earlier than planned?
• Can I afford to gift money to my children now, rather than waiting?
• How would a market downturn early in retirement affect how long my money lasts?
• What is the actual cost of continuing to work another few years, in terms of time rather than money? 

For internationally mobile families in particular, cash flow forecasting can also help model the impact of currency exposure, differing tax regimes and the cost of living in more than one country - all of which add complexity that a simple savings target cannot capture.

Working out when to retire is ultimately not really a savings question at all. It is a question about what decades of work have been building towards, and whether you are giving yourself permission to use it. Wealth is the means. Life is the point. The real risk is spending so long focused on the means that there is little time left for the point itself.

A regulated financial adviser, supported by proper cash flow forecasting, can help you move from a vague sense of "maybe soon" to a clear, confident answer about exactly when the right moment to retire actually is.

If you’d like some expert guidance making this important decision, we can help! Contact us for a free, no-obligation chat to find out how we can help.