Retirement: The Missing Money Lesson
What if I told you that retirement is the missing money lesson every child needs and that it should be the first conversation?
When we use the term “retirement,” we tend to mean leaving an occupation or an active working life. In the context of finance, retirement is a financial position that supports a lifestyle without relying on a paycheck. In nearly 30 years of working as a retirement specialist, I have heard practically every reason why a person doesn’t want to increase their savings rate. While there are advisable reasons in certain cases to not increase the savings rate, the common struggle with retirement savings is that we have only a hopeful idea of how much to set aside, yet are acutely aware of the expenses right in front of us. We do know the backpacking trip we want to take next year or the renovation that will beautify our home. Visualizing ourselves in retirement? We’re not old. We don’t even feel old. We’re not slowing down. Who is that person, and what will they be doing?
Finance professionals remind us of all the situations we need to be prepared for, like medical expenses, unexpected disease/cancer/natural disaster/alien invasion, but if adults drag their feet about stashing money away for things we can’t possibly predict, would it really help to teach the concept of retirement to kids?
Is it just me, or do your kids get obsessed over having a certain item, promising to love it forever, but they have said that about twenty other items and have even forgotten or lost interest in a few already? I told my daughter to get a piece of paper and write down her recent request, the corresponding amount, the date, and a star (1-5 star rating) or a note about how much she wanted that item, then we scheduled a time (Sunday at 3:00 pm) to revisit it. During the week, any time she thought of something else she wanted, she would add it to the list. On Sunday, as scheduled, we reviewed her now much longer list, which she reordered in order of most wanted. During that effort, she noticed items that she no longer was interested in and removed them. We admired how fascinating it was that interests can change. When I was 15, I dreamed of getting a tattoo of a large star on my neck. I would love stars forever, I thought. Thankfully, I did not get that inked because I am not the sk8ter girl I thought I would be. It taught me to appreciate the evolution of myself. Laughing through this star tattoo story together, we shared excitement that we can observe and learn about who she is and will become. The heart and start of retirement planning is not in the strategy, but in the dream of retirement. The strategy must remain nimble to adjust as the vision changes. This is merely an iteration of goal-chasing. So, yes, we should teach kids retirement (and adults too) because it is about holding on to something WE really want, making sacrifices or adjustments along the way, and IF that goal changes (because of our health, the economy, or we change as a person) then adjusting our strategy accordingly, but to never, ever, ever stop chasing that dream.
