In prior generations, people tend to have a one dimensional view of retirement, which was usually defined by a reaching single milestone: a specific age to retire.
But in today's dynamic world, this rigid model has lost a lot of relevance and seems to be crumbling.
For one, people are living longer now and careers are evolving, in that the nature of work has changed almost significantly.
Secondly, people's priorities are shifting. They are now seeking more than just financial security in retirement. How about the desire for purpose and fulfillment or the ability to contribute to society as a whole?
In my opinion, this shift in priorities makes the traditional retirement model, which is mostly focused on age and finances, less appealing.
Beyond The Traditional Model
Gone are the days of a linear career path culminating in a traditional retirement.
Today, entrepreneurship and freelance work are becoming a commonplace. In many ways, this presents a unique challenge for retirement planning. Age-based models simply don't apply when your income and work schedule are unpredictable.
Now is a good time to define what number is, as it is no secret that age is also a number. Here, number takes a broader approach beyond just age.
On a general view, number can be seen as white color, which happens to contain all visible colors of the spectrum while age could be seen as blue or red color. The latter is simply a subset of the former.
For example, a number could be attaining financial freedom or security. Perhaps, through aiming to build sufficient wealth that covers our living expenses and enables us to pursue our hobbies and interests, irrespective of our age.
This allows for individuals with non-traditional careers (or those who don't have an 'actual job' as society calls it) to achieve financial security and retire when they choose to. And an effect of that is it provides them the ability to continue working on their own terms, pursue passions, and find fulfillment beyond a traditional job and retirement.
Calculating A Number
In a practical term, calculating a number, such as attaining financial freedom. We first need to know how much money we need to live comfortably in retirement. This depends on our lifestyle preferences and goals.
However, a good rule of thumb is to multiply our annual expenses by 25. This gives us an estimate of how much we need to generate in income(not necessarily active income) to cover our expenses for 25 years.
For example, if I spend $20,000 a year on living expenses, my number would be $20,000 x 25 = $500,000. This means I need to have at least $500,000 in my retirement account to retire.
Of course, this rule of thumb doesn't apply to everyone or in all situations. 25 can be too much, 15 or 10 can be okay. Unpredictability is also a factor that's at play. Income, expenses, and investments can vary from season to season. In some cases, we may achieve this number sooner that expected while in other cases, it may take longer.
This is where the main challenge of a non traditional career path becomes evident. Apart from it being more actively individual centric, meaning you're mostly responsible for the outcome you get because you’re mostly in control of the input you do, it also differs significantly from the traditional path.
The latter relies on external factors like employer benefits and social security, which seemingly provides a sense of stability and security.
This is not present in the former, as the reliance is mostly on internal factors such as building personal skills, cultivating creativity and initiative.
That said, I personally prefer the challenges of the former over the opportunities of the latter i.e traditional career path. Because it unlocks a unique opportunity for meaningful contributions on an ongoing basis, independent of age-based limitations.
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