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Posted by on Jun 27, 2014 in ETF Strategist

Why Do People Have Such Different Ideas About Retirement?

Why Do People Have Such Different Ideas About Retirement?

By Roger Nusbaum, AdvisorShares ETF Strategist

Over the last few days I had the chance to have very similar conversations with two different friends about their plans (or lack thereof) for when they will retire. Both friends are close to me in age (one exactly my age and the other four years older), both are at least moderately successful in white collar jobs and while I don’t know how much either has accumulated they have been putting money away such that neither of them has reached 50 years old (or close to it) with only $10,000 in the bank.

This type of conversation is logical to have in a social setting (one was at dinner in San Diego and the other on the trail here in Walker) starting at some middle age. If you are in your 50’s or older and reading this then you probably know what I mean.

Friend A is the one exactly my age, wants to retire at 50 but doesn’t think he will be able to—I got the sense there was still a remote possibility but highly unlikely. Friend B who is four years older than me (he will be 52 in September) wants to retire in general terms but he says it will be a while.

I have a lot in common with both friends but I don’t want to retire (this is a point I have made many times over the last ten years of blogging and I concede that the 55 or 65 year old me may view this differently than the current version), I do however save as if I am going to retire.

The point is three different people with a lot in common with different thoughts about how to retire and different priority levels for retirement.

The conversation on the hiking trail was more in depth and my friend made a comment that I think would interesting to financial professionals and to someone interested enough in investing to read this blog. It will be interesting to FPs for obvious reasons and I think it will be interesting for do-it-yourselfers to the extent, as I have contended previously, you are probably the go to person in your social circles for investing and personal finance advice.

I told my friend he doesn’t necessarily need to hire someone (he has a guy) but there are no short cuts in doing it yourself; you need to put the time in. For most people doing it themselves is simply a function of time available and inclination. He is smart enough but simply prefers not to spend that amount of time on it and has the self-awareness to realize that if he doesn’t want to spend the time then he needs to hire someone who will. He wants to know what is going on but wants to delegate the heavy lifting.

The friend hoping to retire at 50 is in part influenced by his father who retired very young which amuses me as part of my belief of never retiring is influenced by my father who will be 88 next month and still works (he does not draw an income is a full time volunteer along the lines of how I volunteer with our fire department).

The point of this post is to try to create some context for disparate views that exist regarding financial matters even with people that otherwise have a lot in common. A financial professional can’t tell a client their beliefs are wrong, only point out what things might be in their favor and what obstacles they might incur. As an individual with some influence, your belief system is no more or less valid than anyone coming to you for advice, just different. A great example of this difference might surface in the desire to leave an inheritance. For some people it is a very high priority and some folks, like the musician Sting, don’t believe in leaving (meaningful) money to their children.

It is also important to realize that what you think you want in the future might change substantially, be open to that possibility and try to factor that into your plan if at all possible.