Trail Financial Planning, LLC is a fee-only financial planning and investment management firm located in Bellingham, WA

Save for Retirement part 1: What is retirement?

Save for Retirement part 1: What is retirement?

Saving for retirement can feel like a chore, like mowing the lawn, or getting a haircut.  For me, a haircut is a chore because each month, sitting in the barber’s chair I realize that I have less to work with.  Also, I never know how to answer the barber’s question, “what are you looking for today?”

Although I know the right answer should sound something like, “A fade with #4 on the top, and #2 on the side..”, I don’t know the jargon, so I don’t really know how to craft my response.   What I want to say is, “Shorter hair please.”  

Many people feel similarly about saving for retirement, although your funds should be growing, not balding!  They don’t want to know all the details of a 457 deferred compensation plan invested in 75% large-cap value, 25% medium-term bonds or a 403b variable annuity in domestic equity indexed funds.  Those people just want to say, “I want enough money to live a great life please.” 

I get it.  The challenge is that your retirement is yours, your money is yours, and you are the only one who should be making decisions about both.  Thus, you need some information, and possibly some advice.  This blogpost is the first of a 3-part series on how to save now so that when you spend your retirement savings, you will have options. 

Part 1 (this post):  What is retirement?  Does it mean I stop doing?


Part 2:  What type of retirement account should you use?  The difference between “pay your taxes later” accounts (like a deferred compensation plan, 401k or traditional IRA) and “pay your taxes now accounts” (like a Roth IRA)

Part 3:  How does a tax diversified savings plan help to fund your retirement?  How having money in both “pay your taxes later” and “pay your taxes now” accounts can be useful when you eventually need to access your money.  

Is Retirement the right word?

What does retirement mean?  Traditionally, it is the end of work.  So, I will start there.  Stephen Covey wrote in “Seven Habits of Highly Effective People”

Begin with the end in mind.

Good advice.  I find many people in their 40s (like me) have only a blurry view of retirement, and feelings about it are not all pleasant.  While there may be more family time and more sunny cruises to Belize, there also may be a string of knee and hip replacements, and a question of “what would I do?”  While some people are eager to retire because they are ready to be done with their current job, others enjoy their current work, and fret about losing some purpose in their lives.  

Howver, when I talk with actual retirees (like my mom, or my in-laws), they are busier than ever.  They are filled with purpose.  People with strong values find purpose.  It’s just that they get to choose their own purpose, and their own busy.   I long for that choice, for that freedom.  Mentally, I exchange the word retirement for a made-up word, freedom-ment.     

It is hard to predict how I will feel 15 or 20 years from now, but as I look towards the horizon, I can get behind the idea of freedom-ment.  I want to continue to be in service to my world and community.  I don’t necessarily want to quit working, but I want more control over my time, while still making a difference.  I want to be free to use my time as I desire:  maybe to write a book, to volunteer more, to start a business, to spend more time traveling with my family, or maybe just to wiggle my toes in the warm sand more often. 

All dreams take intention, and usually, money.  Retirement, or freedom, is no different.  Although there is a complicated swarm of products and companies promising to help you “save better for retirement,” for those who are early to mid-career (in their 20s – 40s), there are really just a five things you need to do/decide on.  Two of those are simple to understand, the other three are a bit more complicated.  

Two simple things:

  • You should save regularly, like every month.
  • You should save between 10-20% of your current income.    

Three more complicated things:

  • You need to select a custodian (where your money and accounts are held)
  • You need to select a type of retirement account
  • You need to select what investments to own within the account

For the self-employed or small business owner, you have to do all of this yourself (or with the help of an advisor).  If you are employed, your employer probably makes some of the choices for you (the custodian, possibly a minimum monthly contribution, etc.)  

Make your haircut suit your lifestyle

My wife and I save regularly for freedom-ment.  We make the contributions that come out of our budget right away, before we notice the money is there.  We make it a habit.  We use a mix of employer-based plans, Roth IRAs, Simplified Employee Pension (SEP) accounts, and soon, an Individual 401k for self-employed persons.   More on those options in the next installment, “Saving for Retirement part 2 – What type of account should you use?”  

The monthly haircut to our budget is a little painful.  But, we also want to live for today.  Plus, I want to live with good hair (or at least what’s left of it).  So, I don’t ignore my need for a haircut.  I’ve tried a self-cut, and the Flowbee is tempting.  But until I go for the shaved head, I visit a professional.  If I didn’t, I would risk the mocking laughs of my wife and kids.  Or worse, I might end up looking like Shaggy.  And that would be a “Ruh Ro.”   

John Chesbrough

I am a financial planner and investment manager. I also am the owner of a fee-only, independent financial advisory firm called Trail Financial Planning. I enjoy working with people who care for others and their community – parents, firefighters, therapists, doctors, nurses, and teachers. I may be spotted at through my blog or on the many winding trails of Whatcom County. To learn more, or contact me directly, please visit my firm's website: