Should your retirement date be a surprise?

kevinhead1

Kevin Press, Sun Life Financial

Sun Life Financial assistant vice-president Kevin Press has penned a retirement planning article carrying a provocative headline: “Your retirement date will probably be a surprise.”

Published at www.brighterlife.ca, Press cited the most recent survey of Sun Life’s Canadian Unretirement Index and its startling finding that only 31% (fewer than a third) of Canadian retirees said they stopped work on the date they had actually planned. This attracted a fair bit of social media commentary, including my own predictable quip attributed to deceased Beatle John Lennon in his final album: “Life is what happens to you while you’re busy making other plans.”

Employers set the date a quarter of the time

At one level, the inimicable Press is of course correct. The precise date of retirement isn’t always a variable under one’s complete personal control. In these days of corporate cost-cutting, there’s little guarantee that one’s employment in a particular firm will last to the exact and convenient day of your projected retirement. One in four said they left their jobs because an employer decided that was the way it was going to be. The decision was forced by the employer for 10% of those surveyed, while another 15% took their employers up on their offers of early retirement.

Health is another major factor

But even if they love you and are willing to throw frequent raises and bonuses your way, your health may not cooperate. Sun Life found a whopping 29% reported their work lives ended prematurely because of “personal health or medical reasons.” Another 2% left not because of their own health but because of the deteriorating health of a loved one for which they had to care. Adding 14% more who experienced unexpectedly early retirement for other “unspecified” reasons, that’s 69% who did not finish their career as they had originally planned or expected.

This is all interesting data but should not be viewed as a particularly disturbing trend. Retirement planning is as much an art as an exact science and any financial planner will tell you that, even if employers and health are in your favor, there are many variables that will change the exact finish line. Stock markets will vary, as will interest rates, currencies and other factors. Even the related concept I call “Findependence Day” I have described as a moving target: if markets go on a tear the last few years before your planned departure from the workplace, your liberation from work may happen a few years earlier than it might otherwise have been. If markets languish in an extended bear market, you’ll probably decide to hang in there a few extra years, again assuming robust health and a willing employer.

Freedom 66?

In fact, a Sun Life ebook authored by Kevin Press quantified this in the wake of the 2008 financial crisis. Based on the traditional retirement age of 65, Sun Life surveyed Canadians as to what they thought they’d be doing at age 66. In 2008, 51% thought they’d be retired by that age, and in 2009, 55% thought so. This plummeted to just 28% in 2010 and has hovered between 27% and 30% in the subsequent years to 2013.

At the same time, the percentage who thought they’d still be working full time at 66 rose from just 16% in 2008 to 27% in 2013. Two thirds of those expecting to be working past 65 said they‘ll do so because they “need to” financially. By 2010, the average age at which Canadians expected to retire had jumped from 64 (in 2009) to 68 by 2010 and 69 in 2011. As confidence has returned, this average expected retirement age has since fallen back to 66.

Press’s e-book can be found here, and includes links to several calculators that should make your rough retirement date less of a surprise.

The weeks after Findependence Day

EdAtLargeOfficeI’m addressing this edition of the blog to MoneySense readers, who may have learned of this web site’s existence because of a gracious mention in the editor’s note of the new Summer issue of MoneySense, penned by Duncan Hood, who both preceded  and followed me in the position of editor-in-chief.

The above picture, taken this morning, you could call “View from the Editor-at-Large’s chair.”

As Duncan implies at the end of his editorial, it turns out my personal Findependence Day (or Financial Independence Day) was May 20, 2014, my last day as a full-time employee at Rogers Publishing. The concept of Findependence and Findependence Day can be found in chapter one of the financial novel of the same name, and which is the chief focus of this blog and website. The introductory chapter is free and you can find it by clicking  on the Preview tab of this site, or here.

At one point in the book, I say that the day after Findependence Day may be just like the one before it, except that from this moment on you work because you want to, not because you have to. Right now, I neither have to nor want to, so I’m declaring this summer a sabbatical. After 35 consecutive years in journalism, with never more than two weeks off in a row, it’s a long-awaited chance to do a lot of reading and thinking and exploring new opportunities.

Is Semi-Retirement the best of all worlds?

Some of the books I’ve been reading are What Color is Your Parachute? For Retirement; Mitch Anthony’s The New Retirementality; Ian Taylor’s Are you ready for Semi-Retirement? and others I’ll mention in future posts. I believe most baby boomers have a lot of life ahead of them and this 61-year old (a 1953 model, as one friend puts it) intends to be fully engaged in writing, editing, speaking, blogging, book authorship, social media, reviewing books, consulting and other activities, probably until well past 70. Once they’re findependent many boomers will still want to be actively mixing a work lifestyle with a bit more leisure and learning: See  The Three Boxes of Life, a book I read decades ago. Unless you’re completely burned out by a stressful career, many of us will be in “go-go” mode for the early to mid 60s. This may become “slow-go” as you pass 65 and ultimately “No-go,” which might occur as one enters true old age and are disabled or suffering early signs of dementia: or forced to take care of a partner in that condition.

As corporate full-time salaried jobs go, the editorship of MoneySense was hard to beat. So I doubt I’ll even try to replace it: instead, I’ll probably choose to implement a “portfolio career,” the chief elements of which I mention above. Of course, if another perfect job arrived, I’d certainly consider it!

Unpacking the three boxes of life

Back to the three boxes of life. It used to be that Box One was education, devoted 100% to learning. Then you graduated into Box Two: Full-time Work. Probably most readers of MoneySense are familiar with this box, which even in my case has dragged out fully half of the biblically allotted three score and ten. Then Box Three was the traditional Retirement, with 100% leisure, typically occurring at age 65 with a gold watch and the fruits of long service in a Defined Benefit pension plan.

Now what about the timing of your Findependence Day? As a later chapter of the book explains, this can be a moving target and moved forward or backward, depending on financial markets or outside forces beyond your control.  You may even have a false alarm or two in declaring exactly when your Findependence actually arrives.

I joke that my liberation in May actually constituted my “third annual Findependence Day.” The first almost occurred when I thought I was going to take a buyout package from the Financial Post. The second was a year ago, when I turned 60 and published the US edition of the book, and celebrated both milestones with what I claimed was “the world’s first Findependence Day party.” (Hey, since I coined the term, I should be able to make that claim!)

Several MoneySense writers attended that event but as I noted at the time in a blog titled “The Day After Findependence Day,” it was a bit of an anticlimax. The following Monday I went back to the office at the Rogers Campus and continued to edit the magazine, content to declare that (as the book says), I was now “working because I want to, not because I have to.”

And I did want to at the time. But I also reasoned that by turning 60, if I no longer enjoyed it I could now collect CPP plus a few modest corporate pensions if I really wanted to. I explained this in the  Financial Independence column I wrote in the 15th anniversary issue of MoneySense, which was the last one that I was involved with from the start of the publishing cycle right to the end.

This blog is now column-length itself so I’d better draw it to a close. Up until now, the books and blogs looked at the concept of Findependence Day as something looming in the future. From here on in, I’ll be describing the twists and turns of the actual experience. It’s a bit like the difference between eating food and merely watching someone eat.

I hope to update this blog most Fridays, assuming the spirit moves me and I’m not on some travel adventure to fill up the “Leisure” component of semi-retirement. If you need to reach me, just email jonathan@findependenceday.com, or reach out at Linked In or Twitter, where I post as @jonchevreau.

My first interview since the title change:

P.S. Just as I was finishing this blog, I learned of a half-hour podcast with a young blogger with whom I chatted last Sunday. I’ll devote a whole blog to this when I get the chance but in the meantime, this blog (which is also transcribed) constitutes my first media interview since stepping down from MoneySense.

 

http://www.forfundssake.com/findependence-day-interview-with-jonathan-chevreau-editor-at-large-moneysense-magazine-audio/

 

 

 

 

 

Book review by Money Coaches Canada

Just saw a review by Money Coaches Canada of the (Canadian) edition of Findependence Day. You can find Leslie Gardner’s review here.

Here are some of the main points Leslie gleaned from the book:

  • Financial Education is paramount
  • Financial Planning is a life long journey
  • Life does not always goes as planned, but planning makes it go smoother
  • If it sounds too good to be true….. it may be (Big Hat No Cattle)
  • That life isn’t always about retiring, it’s more about living with financial freedom

Also just out is the new June issue of MoneySense, which includes a semi-regular column by me on Financial Independence.

Get your free e-book at this Digital Book Signing

bookstubNow here’s a deal! Anyone who wants a free e-book of the new US edition of Findependence Day – or three books by other authors — can do so at a  “Digital Book Signing” next Thursday.  Just click here to register, then  join us Thursday, July 18th at 3:30 pm EST. I’ll be one of four authors featured. Everyone who signs in will be emailed a BookStub [see illustration] signed by me (or other authors), immediately following the event.

For those for whom the concept of a digital book signing may be novel — it was to me as well! — click here for a short introduction to the concept or this 2011 New York Times article, Would you sign my Kindle?

In the case of the US edition of Findependence Day, readers who have already bought the hard-copy Canadian edition can now get the e-book at no extra cost. The story is much the same as the original but it’s all set in the United States, the financial terms are all American, there’s a new glossary and it includes end-of-chapter summaries of the key financial concepts learned. Apart from the Kindle, you can get the book on the Nook, iPad and most other popular e-book formats, or indeed in a format readable on laptop or desktop computers.

Of course, you don’t need to have previously bought the book to take advantage of this short window: those who have happened on this web site and were curious can now satisfy their curiosity without spending one thin dime: Canadian or American! Guerrilla frugality at its finest — hoist by my own petard!

The other three authors and their featured books are:

L.D. Nascimento; The Curse of The Golden City and The Path to the Fallen Stars 

Andrew Bernstein; California Slim

Daryl Edwards, The Guardian Corps and Book One—The Argent

Obviously, we all hope to create a bit of word-of-mouth for our respective books and ultimately to stimulate actual sales. In the case of Findependence Day I’d encourage anyone who does download the book and enjoys it to post a short review at Amazon.com, which is one of the main ways the book can be purchased (whether Kindle, paperback or hardcover). Here is a sample of half a dozen recent mini-reviews of the new edition at Amazon (click on Newest reviews first).

Recent Reviews of US edition of Findependence Day

Here is a link to several other recent reviews that appeared in and around the American Independence Day. This is a link to the Reviews tab elsewhere on this site: they appear four lines down and are grouped together to distinguish them from older reviews of the first edition.

Finally, below is the summary of key concepts covered in Chapter 4 (see earlier blog posts for the first three; others will be posted over the coming weeks):

Chapter 4: Baby You’re a Rich Man

The concept of Human Capital

• A “Frooger” is a Frugality Guerrilla.

• Froogers make frugality a lifetime habit: first to eliminate debt; later to build wealth.

• Part of being frugal entails tracking expenses and making a budget.

• If your employer has a pension plan, you’d be wise not to pass up the “free money.”

• Teachers and government workers like Sheena enjoy “Cadillac” Defined Benefit (DB) pension plans where you know exactly how much you’ll receive in retirement.

• Younger tech firms like Jamie’s employer are more likely to offer 401(k) retirement plans that go up or down with the stock and bond markets.

• Once you’re free of all consumer debt, employees should start an IRA or Individual Retirement Account. Uncle Sam gives you a generous tax break as an incentive – as long as you’re not also covered by an employer-sponsored retirement plan like a 401(k) or 403(b).

• You can save $5,500 a year in an IRA, or $6,500 if you’re over 50.

• You’re richer than you think means young people are rich in “human capital” – millions in future earning potential.

• To get diversified long-term growth in the stock market, consider exchange-traded funds (ETFs) or index mutual funds.

• ETFs and index funds are cheaper than most mutual funds because they track broad stock market indexes like the S&P500.

 

Independence Day and Financial Independence

Findependence Day US Edition

Now that Independence Day has come and gone, perhaps it’s time to start thinking about your Financial Independence Day, or my contraction for the same thing: Findependence Day.

Whether it arrives in the near future or many moons from now, we know that the day of leaving the workforce must some day arrive. The timing may or may not be under your control: health and employer willingness to retain your services also come into the picture. What IS under your control is the financial resources you can mobilize to maximize your freedom and flexibility once this event occurs. And this must be done while you’re still gainfully employed.

One difference in these terms is that while Independence Day comes around every year, Financial Independence Day is a more unique event. It’s not carved in stone, of course, and can be moved forward and backward depending on circumstances.

The illustration is from the cover of the new US edition of Findependence Day, complete with fireworks and balloons. The calendar depicted is from the future (2027), and July 4th is circled as the “Financial Independence Day” of one of the lead characters in the book – for this is a novel as well as a financial primer for young people just entering the workforce and embarking on family formation.

Recent reviews

The point, as financial planner Sheryl Garrett remarked in a recent Marketwatch.com review of four books (including this one) is that the book’s title is about making a target: a point in the future you are working toward: “Findependence Day is the day you have choices and freedom. It’s redefining retirement and reaching financial independence.” Sheryl wrote the foreword to the book, which you can access via this free preview here at Amazon.com.

You can also read a blog on the book just published at NextAvenue.org, tied to the Independence Day theme — here — as well as a podcast on the book, where  Al Emid interviews me for New Books in Investment: here.

Posted July 2nd, is this review from Book Pleasures’ Conny Crisalli, which is also posted on Amazon.com here. Click on “newest reviews.”

And finally, on July 4th (yes, Independence Day) is this interview with Preet Banerjee on his “Mostly Money” audio podcast.

The power of visualization

Anyone familiar with goal-setting and visualization will know that, as I say in the book, there’s some power in setting an actual date in the future as a goal by which something is to be achieved. Jamie feels that on the day he turns 50, his income from all sources will exceed the income he could get from a sole employer and so he will become “findependent.”

I note that there are starting to emerge other books that also focus in on Financial Independence rather than Retirement, even though the term so beloved of the financial industry and the media is Retirement. In his recent non fiction book, Financial Independence: Getting to Point X, author and financial advisor John Vento describes Point X as the inflection point when financial independence is achieved. I”ve not yet read the book or talked to the author but it seems to me that Point X and Findependence Day are very similar concepts.

It’s worth reading Wikipedia’s entry on Financial Independence, which reads as follows.

   … the state of having sufficient personal wealth to live, without having to work actively for basic necessities. For financially independent people, their assets generate income that is greater than their expenses.

I first became aware of that entry just a few weeks ago when I wrote a guest blog for fee-only planner Roger Wohlner, aka The Chicago Financial Planner.  Since I’d finished the book by then it had no bearing on the book but the concept was not dramatically different.

Seek Findependence, Not Retirement

As I wrote for Roger in a blog entitled “Seek Findependence, Not Retirement,” the two terms are not the same. To be sure, you can’t really have retirement if you don’t first achieve financial independence, but seen the other way around, you can be financially independent and yet not choose to retire. Just look around at any big success in the business or art worlds and you’ll see the truth of that. Mick Jagger is findependent but still rocking, and the same can be said for Warren Buffett, Mark Zuckerberg and any number of other artists, musicians, actors and other celebrities.

Most of us are not born on Independence Day but we can all pick a date in the future – not necessarily a birthday – circle a figurative calendar and declare “That’s my Findependence Day.”

A warning though. It’s quite possible that the day after Findependence Day will be very little different than the day before. It happened that I turned 60 in April, almost to the day when the US edition of the book was published. fireworksAs I related on my Financial Independence blog at MoneySense.ca, I hosted the world’s first Findependence Day Party, complete with balloons and fireworks. The following Monday, I was back at my day job at MoneySense magazine.

Findependence works in concert with related concepts like early retirement, phased retirement and even sabatticals and staycations. My thoughts on the latter can be seen in the blog published just before the one you’re reading now: Rehearsals for Retirement.

To everyone in America, I wish a happy Independence Day.

 

The basic financial literacy lessons underlying Findependence Day

ipad-3-concept.pngWhile Findependence Day is at one level a “novel,” complete with a multi-layered plot, characters, setting etc., it’s a hybrid creation that also attempts to weave the basic lessons of financial literacy into the story.

As indicated last post, the new US edition, including the e-books, includes a feature not present in the original North American (i.e. Canadian) edition: end-of-chapter lessons of the basic concepts learned.

In retrospect, I should have done this from the get-go since the book is first and foremost a financial literacy primer.

As I create a backgrounder for the press, I’ve gone through the exercise of extracting the 18 end-of-chapter summaries (“What Jamie & Sheena learned this chapter”) into a single document. It reinforces that if you toss out the story, there’s plenty of useful material there, so much so that I sincerely believe that if anyone took every lesson to heart, they would indeed “achieve financial independence while they’re still young enough to enjoy it.”

Those who have only the Canadian edition can view the new foreword and an example of the end-of-chapter summaries by previewing the free Amazon Kindle version here. And you can get the e-book version for $3.99 or less in most tablet and e-reader formats by clicking through the Trafford link here.

But for those who would rather not, I’ve decided I’m going to roll out the 18 summaries in this blog perhaps on a weekly basis. We’ll start with chapter 1, even though that’s already available in the sneak preview:

Chapter 1 Summary: Take it to the Limit 

Topic: Credit cards and other forms of bad debt

• You can’t start building wealth until you’ve eliminated debt.

• To save, you must stop spending.

• To stop spending, you must embrace “guerrilla frugality” and be willing to make small sacrifices.

• The foundation of Financial Independence is a paid-for home.

Findependence Day is simply a contraction of Financial Independence Day.

• The key to manifesting your Findependence Day is to pick an actual date in the future and visualize it happening.

• To reinforce the idea that saving is more important than spending, take to heart the motto “Freedom, Not Stuff!”

What the e-book has that the original edition lacks

Amazon-Kindle1If you already happen to own the original print edition of Findependence Day (now called the Canadian edition), is there any reason to also buy the new e-book edition of the just-published US edition? Perhaps there is, considering that at $3.99 or less for all but the Kindle edition, the e-books are only a quarter of the price of print editions.

The two main features in the e-book that are new are the glossary at the end, and the end-of-chapter summaries of what Jamie and Sheena learned. The latter may be useful for those who have already read the story and now just want to be reminded of the basic principles of financial literacy covered.

End-of-chapter summaries

For example, you can view the summary after Chapter 1 by clicking the sneak preview of the Amazon Kindle version here. (Amazon charges US$7.63 for it). For convenience, I’ve reposted that page below. Most of the bullet points apply to either edition, although some are focused on US-specific financial content like IRAs or Roth plans. This isn’t the case for the excerpt below, though. At some point, I will likely do an all-Canadian ebook edition but until then, readers of the original book may still find the US ebook useful.

There are also some subtle differences most wouldn’t notice unless you compared the editions side by each. The original was finished just as the financial crisis was hitting, while the new edition benefits from the insights investors have gained since 2008. There are minor changes in the technology devices: in the original, Jamie has a cell phone, in the new one, it’s an iPhone and there are more references to social media in the subplot about Jamie’s troubles with his business partner. Some names and places have been changed but the story itself and the financial lessons imparted remain pretty much the same.

Kindle, Nook, iPad & other formats

If you want the Kindle version, access the Amazon.com link shown under the Buy American edition button. For the Nook e-book, access the Barnes & Noble link under the same button or click here. For most other e-book formats, go to the Trafford.com site here, select the e-book edition and you’ll get a list of formats from which to choose.

What Jamie & Sheena learned this chapter (Chapter 1): 

• You can’t start building wealth until you’ve eliminated debt.

• To save, you must stop spending.

• To stop spending, you must embrace “guerrilla frugality” and be willing to make small sacrifices.

• The foundation of Financial Independence is a paid-for home.

Findependence Day is simply a contraction of Financial Independence Day.

• The key to manifesting your Findependence Day is to pick an actual date in the future and visualize it happening.

• To reinforce the idea that saving is more important than spending, take to heart the motto “Freedom, Not Stuff!”

News release on new edition: review copies available on request

logo_prwebThe official news release announcing the new US edition of Findependence Day has just gone up on PR Web. Click here to view. Since the publisher does not as a matter of course send out review copies to the media, any member of the press interested in reviewing the book needs to contact the publisher to formally request a copy.

The contact for this is at the top right hand of the release linked above: Marketing Services, Trafford Publishing, 888-232-4444. There’s also an email request form there. If you tried and found the process unwieldy, drop me an email at jonathan@findependenceday.com and I’ll try to expedite the request.

 

The vinyl records subplot in Findependence Day

vinylrecordsAs noted on Twitter, there have been a fair number of stories in the press lately about the resurgence of vinyl records: as recently as Friday morning on BBC World News.

When I tell people vinyl actually plays a big role in the subplot of Findependence Day, I usually get some blank stares. So I’ll summarize it here. The Jamie character is 28 years old when the action begins, which makes him an echo boomer or member of Generation Y. He carries an iPhone everywhere he goes and, like most of his generation, listens to music mostly via MP3s, although he also frequents traditional music stores to buy physical CDs and DVDs.

After he meets a financial planner (Theo) on the financial reality TV show, Jamie “gets religion” about guerrilla frugality, and starts brown-bagging it and visiting a vinyl record store in Boston. Ostensibly this is to save money but also because the proprietor is  a fee-only financial planner on the side, and recommended highly by Theo.

Will cloud-based music eventually vanish?

Jamie returns frequently for vinyl bargains and financial advice and ends up creating a hobby web site and selling vinyl through the site around the world. He starts blogging about the future of digital music, taking a bit of a “retro” approach as he champions the superior audio quality of the Boomers’ old vinyl records. He starts to fret that all the music held on the cloud and in mobile devices will eventually vanish. When a blog he writes entitled “The day the music died,” goes viral, his web site starts attracting interest from big social media sites, which spins the plot in another direction.

The other recurring theme in Findependence Day is real estate. This ties in to the vinyl subplot when Jamie decides to venture into commercial real estate, living in an apartment above a commercial unit that eventually becomes a vinyl-themed Internet cafe. When it too attracts attention for its franchising potential, the plot again advances. On top of all this, there are romantic complications, as Jamie’s marriage with Sheena encounters turbulence triggered — as is so often the case with modern couples — over disagreements about money.

You can read the first two chapters free at Amazon.com, which includes the very beginning of the vinyl subplot midway through chapter two, when Theo suggests Jamie should visit his friend Bobby at the Vinyl Cave.

Findependence Day USA now available on the Nook

product-device-nook-hdIn addition to the various e-book formats found at Trafford.com (see previous post), Barnes & Noble is now making the new US edition of Findependence Day available on the Nook, and at a slight discount to the regular e-book price of $3.99. Details here. Note that you can also peek at the first two chapters, table of contents and new foreword by Sheryl Garrett without having to commit to purchase.

P.S. I sometimes refer to the new American edition as Findependence Day USA to distinguish it from the original Canadian edition. However, the actual title in both versions is simply Findependence Day.

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