Are you someone who looks forward to retiring? How soon would you like to retire from working? Retirement is a such big word, it’s a major transition in life. A lot of people look forward to it, especially those who have been working all their lives to provide for their personal and family’s needs and wants. To most people, retirement is the longest holiday and the longest coffee break.
When we talk about retirement, we always think about retiring in our 60s or 70s. While the younger ones that I get to meet always want to retire within the ages of late 30s to early 40s. And the common notion on retirement is to stop working and just live life free from working. But it’s not always a function of age. It’s more of how ready we are to retire. It’s a function of money. Can we really live without having to work for money?
Allow me to enlighten you that we go through different phases of retirement. When we understand these phases, it gives us an overview of what we’ll go through so we can more or less be prepared for retirement and gauge if we are already set for retirement.
Phases of Retirement
Phase 1: Pre-Retirement
The first phase is what we call pre-retirement. This is when we start thinking about retiring from our work and on to our life of freedom. This phase happens about 1-15 years from retirement. This is when we hear employed people that they are already tired from working and they look forward to retiring. This is also the time when business owners start thinking about succession planning and passing on the baton to the next generation. We’d often hear people in this phase say, “siguro mas masaya ang life after work.”
Phase 2: Retirement
Another phase of retirement is the actual act of retiring itself. During this phase those who retire either go for honeymoon, immediate retirement, or rest and relaxation. Those who go through the honeymooon stage enjoy their new found freedom of time by travelling, going out with friends, and enjoying life. Those who go through immediate retirement are the likes of professionals such as doctors, financial advisors, business owners, and all those who are accustomed to a flexible lifestyle and don’t work at the usual time frame. It’s much easier for them to transition into retirement. Those who go through rest and relaxation are those who have been working so hard all their lives and they just want to stop and be quiet for a while.
Phase 3: Disenchantment
The actual act of retiring from work may seem so enjoyable especially during the first 1-2 years because of the new found time flexibility and being able to do many things without having to report to work and without the pressure from deadlines and work targets. However, those who are in this phase will soon realize that never-ending vacation is no longer fulfilling.
They start to feel a uncertainty, a sense of loss, and a lack of purpose. They feel that there’s hole in their routine, unplanned days, and they miss their feeling of productivity. This is similar to the experience of Robert De Niro in the movie “The Intern.” Try to watch it online. You’ll know what I’m talking about.
Phase 4: Re-orientation
This now leads us to another phase which is what we call re-orientation. This is when those who retire evaluate their lifestyle, assess what’s working and what’s not working. Then they start to create a life that is more satisfying and enjoyable. They create new sets of activities, and they become more involved in their community and with different organizations.
Phase 5: Routine
After re-orienting themselves, then they go into their new phase which is the routine phase. This is the longest time in during their entire retirement. This is when they are adjusted to the new lifestyle and their new identity. Their system and resources are in place, and they get to spend time better. They now have stability and contentment.
Phase 6: Termination of Retirement
Not everyone gets to the routine phase. Some people terminate their retirement because of some life circumstances. Some lose priority on their routine because they gott sick and will need to focus on their health, or they take care of a sick family member. While many terminate retirement because they need to go back to working because they need to work again for money.
As you can see, retirement is more complex than it seems. It’s more than just ending your work or profession and living on the pension that you receive from your social security and/or your company retirement. It is something everybody wants but find it not easy to achieve.
Retirement is not just a function of age, it’s about being Financially Free
However, because retirement is not always a function of age, it does not always have to happen during our old age. We can even retire as early as possible. To me, retirement means being financially free. Financial freedom means being able to live on your desired lifestyle without having to work for money or rely on others for your income.
One can choose to live a simple lifestyle, have a steady stream of passive income, and as long as it’s able to fund his or her desired lifestyle, then that’s already retirement or financial freedom. But as humans, we are created to explore, to expand our horizons, to connect, and to grow. So when we retire young, we still want to do more. We want to stay occupied and be productive. We still have much ahead of us.
Retirement doesn’t always mean that we have to stop working. We can always work because we WANT to, not because we HAVE to. Those are two different things. It’s always great to be productive, do what we want or love to do, and get paid or earn from it in the process. I have seen a lot of people who are already retired and financially free who are still making a significance doing the things that they love.
They mentor people, they act as consultants, they sell products or services, and they start or fund businesses. Even if they stay long hours at what they do, they don’t seem to mind because they are happy doing it. As the saying goes, “find a work that you love and you won’t have to work for the rest of your life.” This is exactly what working because we “want to” mean.
Visualize and Measure Your Retirement Lifestyle
During retirement, it’s important that we visualize our desired lifestyle. Do we want a luxurious life or a comfortable life, or a very simple lifestyle. Of course, we don’t want to rely on our children or other people as much as possible when we retire. This is why we need to make sure that we prepare well for retirement. Then we need to make sure we measure and quantify our retirement lifestyle.
When we measure or quantify our desired retirement lifestyle, we need to ask ourselves important questions like what age do we retire, where do we want to retire, how long would we want to retire, who do we retire with, and how would it cost to live a life in retirement?
You’d also need to include healthcare during retirement as it is also big expense. Our answer to these questions will guide us and will tell us how ready we are. A good financial planner can help you quantify and create your retirement budget.
Earn During Retirement
Once we’ve measured our desired lifestyle, we then have set up several streams of income to support our retirement lifestyle. It could be a combination of both active and passive income, but more importantly, passive income. Passive income is where we work less and the money keeps on coming in on a regular basis. Below are some ways to earn passive income during retirement.
Income from Real Estate Rental
Having a property to rent out during retirement is a good source of income especially when you have a very good location and when the property is fully paid already. You just receive money on a regular basis and can even be long term.
If you don’t have a separate property to rent out, you may opt to rent a part of your property, just like the ones in AirBnB. If you have money to invest, then you may opt for commercial properties like vacant lots, office spaces, warehouse, parking space, and even a space for advertising billboards or LED displays.
Income from Investment Accounts and Paper Assets
This is a great way to earn money from your money. You several choices from conservative to aggressive type of investments. You can earn steadily from fixed income securities such as government or corporate bonds, fixed income funds or money market securities. You may also earn more from stock market investments.
You may earn dividends and learn to trade it to help you shares of stocks grow. You may also put your money in riskier alternatives like forex and cryptocurrencies. You may even get a steady stream of income from your annuities and cash values of your life insurance policies.
Income from Businesses
You may earn from the yearly profits and dividends of your business. This is also great if someone is running or managing your business, and you’re just acting as the owner or one of the owners or investors in the business. If the business does well, then it could give you a good source of retirement income.
Pension from government and/or company
This can be helpful especially for those who have been employed for a long time. Some companies offer a retirement pension to their employees. If you’re working in the government all your life, you also receive pension from your GSIS contributions.
If you happen to have a lot of liquid cash, you may lend a part of it to others and earn interest from it. You may earn better interest rate from this ranging from 0.5% to 3% per month depending on your arrangement. This is great for short term from 3 months to 1 year.
It would be best though to lend it to people who need it as bridge financing or extra capital for the business, because that can help assure you payments.
Because of technology, more and more people are relying on the internet for many things. People shop online, pay online and connect online. You may want to learn the ropes of doing business online and earn both actively and passively.
For passive income, you may consider earning as an affiliate, selling online courses whether yours or someone else’s, you may also create a mobile app and earn from ads or subscription.
Even if you earn passive income, at some point, you will always want to feel productive and earn actively especially when you are still young and you still have many years ahead of you.
The key to working during retirement is to do something that you are good at, something that you love to do, and get paid doing it. Even if you put some pressure in you or work longer hours, it won’t really bother you because you love what you’re doing.
Here are some ideas on how you can earn active income during retirement.
Most people who have been working for many years have gathered knowledge, wisdom and certifications. They have built their credentials and experience through years of experience in their fields. A good way to monetize this would be to do consulting work where you help businesses within the same industry grow, improve their current situation or solve their problems.
Consultants get paid well while at the same time enjoy flexibility of time. My dad is a consultant to several companies because of his decades of experience in his field. He likes what he does and even jokes around saying he’s got a PhD, “pa-half-day half-day lang.”
Using talents, skills and expertise
Because of the availability of time, one way to earn is by using skills and talents to make money. When there was still Uber, I have experienced having a drivers who are senior citizens and I got to interview some of them. There were some of them who chose to drive their own cars during off peak hours from 10am to 3pm because they want to stay occupied and productive.
They say they still feel young and they have the energy to do things, and earn from it in the process. Aside from driving, what other talents do you have that you think can earn you money? Could you do work online? Could you bake, cook, or do arts and crafts? Can you manage a business?
Selling products and services
Selling is a skill that can be done even when we’re old. Not everyone is good at it. But if it’s your skill, then might as well use it to earn money. You can sell your own products and services and you can sell other people’s products and services.
I have seen a lot of people who have been selling all their lives and continue to do so even during their senior years, and they get paid very well doing it.
Write a book, teach, coach and/or mentor
When you have something great to share, and you believe you can help people grow, then this may be a good income source for you. Not everyone is capable of teaching and coaching. But people need good mentors and coaches. You can do this for a few hours a week or fulltime. When you write a book, you can even earn from the royalties every time someone buys your book.
As you can see, retirement is not really a function of age. It’s more of your readiness to retire and having steady streams of income to support your retirement lifestyle. There are many options available for you, and it’s important that you study them carefully, find out what suits you best. It would also be great to consult your trusted Registered Financial Planner to help you assess your situation and guide you in your preparation.