Here are a few head-scratchers to be getting on with:
- How much money do you need to retire?
- When should you retire?
- What should you do after retiring?
I do not recommend you reach for your old Johnny Nash LP “I can see clearly now” because he clearly can’t – “There are more questions than answers and the more I find out the less I know”. Remember that one?
Incidentally, by retirement I do not mean slippers and telly but a move from your current job into a new phase of life.
Departing from tradition in this series of articles, I would like to include a few numbers. If you want to retire on £50,000 at age 55 you will need a pension pot of about £900,000. If you want it to go up at 3% p.a. the figure rises to £1.35m. If you sell your business and want to live off the income and not deplete the capital in real terms, you would be looking at a pot of well over £1.5m. Sobering stuff.
“When” is more tricky. I suggest it should be as soon as you reach your required income in retirement figure. Only then can you assess dispassionately what is a meaningful and fulfilling activity. It might be business-related or it might not. Ah but, you say, I am part-way through turning my organisation into Megagiantcorp plc with a market cap of several squillions. I reply “Maybe so, but the fun bit is probably in the past and now it’s all about money, status or power, or some combination thereof.” Research has shown repeatedly that money does not make you happy, status is an illusion and I personally only have respect for who people are, not what they are. Power is control and is inherently unhealthy. Remember the words of Lord Acton the historian “all power tends to corrupt”.
So what meaningful activity are you going to do after packing in the day job? And what are the factors which are likely to influence this? Studies have shown that things like caring relationships, personal choice and autonomy, acquisition of skills are the key. Influence, hedonism, security, physical thriving or money have been shown not to work.
Life after work is a serious business. I am often left speechless by people I meet who seem unable to retire, constantly seek out new challenges, travel globally, have few interests and no spare time and are constantly fiddling with their blackberries. Continuing at work is an easy choice but, I would suggest, rarely optimal.
And who will care in a few years’ time when you tell people at social functions (assuming you have any friends left) that you used to be CEO of Megagiantcorp? It’s a bit like saying “I was Eastern Region Table Tennis champion in 1974” or “I was professor of Impenetrable Studies”. Nobody really cares.
This is not to say that any continuing involvement with business is unhealthy. There are people around who just find that sort of thing interesting. I would merely pose two questions. Firstly, why are you really doing it? Secondly, have you thought about any better alternatives?
I was talking to someone recently who, in my opinion, would have liked to sell their business. There were various reasons for not doing so, mainly revolving around whether it was the best time, whether there would be any buyers and whether the valuation in these recessionary times was enough. Interestingly, there was no mention of how enjoyable they found their current activity.
So my exhortation this month is to think outside the box and look at your life creatively. Remember that one person’s focus is another person’s blinkers and that there are no pockets in a shroud.
Julian Stafford is a partner in Staffords Cambridge LLP, a leading independent Chartered Accounting company, and specialises in advising new and developing SMEs.
For more: 01223 881444 / www.staffordsllp.com