What is a Successful Retirement? We answered that in the last chapter of my book, 3D Retirement Income. If you haven’t read or listened to it, it’s included in our free membership community: RetireMembership. Below is that chapter of the book. Even if you have read it before, it’s worth a second time.

A Successful Retirement

Living and Leaving a Legacy

“In the end, it’s not the years in your life that count. It’s the life in your years.”

~Abraham Lincoln

Flip this book over and read the headline on the back cover. “Turn Your Nest Egg into an Income to Retire Successfully and Stay Successfully Retired.” That is the goal—a successful retirement from start to finish. 

That tagline is not only for this book. It is also used in my podcast. “RetireMentorship: Your Mentor to and through Retirement, helping you Retire Successfully and Stay Successfully Retired.” 

Planning for people to achieve this result is the mission of my financial planning practice, La Crosse Financial Planning. My professional calling is to guide people to this glorious outcome. It is the tagline on my LinkedIn profile. 

Two Ways to Fail

Anyone can retire successfully, but not everyone will stay successfully retired. Far too many people will trade long-term uncertainty for short-term security and fall prey to their mortal enemy. These people will not stay successfully retired. The fear of this outcome will cause many more people to delay retirement for so long that they miss out on precious years. These people did not retire successfully. 

I aim to help you do both through this book on retirement income, my podcast on growing knowledge, deepening belief, and inspiring action, and my practice of planning for people to reduce taxes, invest wisely, and retire secure, among many other outcomes. What do we mean by a “successful” retirement? 

I focus on working with people within ten years of retiring on either side—ten years out from or ten years into retirement. My experience working with the demographic and reading the relevant literature and studies suggests four primary elements contribute to a successful retirement. They are: 

• Relationships
• Health
• Security
• Impact

Let’s unpack each one. 

A Successful Retirement 1: Relationships

Humans are relational beings. We were built to be in relationships with other people. Look no further than having children. Stack up the costs of raising children in money, time, and energy, and weigh them against the economic benefits. The score will surely be one million to one. We don’t do it for the economic benefits. We do it for the relationships. 

People with strong and healthy relationships in retirement are happier, more satisfied, and report deeper levels of joy and fulfillment. In all this discussion around retirement finances, do not forget that money is not the goal. Money funds the goal.

Relationships are the goal. People with healthy relationships in the following four categories have the most successful retirement. 

Relationship with God

Those who have a deep and abiding relationship with God have joy and peace that surpass understanding. I’m not talking about a religious rhythm or superficial masquerade. I mean a genuine relationship that exhibits all the best parts of human relationships, lacks all the bad, and encompasses aspects you cannot experience anywhere else. 

Knowing God personally and walking with Jesus through daily life enhances it and fulfills a deep intrinsic need. And the peace of knowing and believing not just where you will go when you die, but with whom you will be, provides security no money can buy. Your hope is not in your money, banks, insurance companies, equities, the economy, or governments. Nothing can shake you.

If you’ve never experienced a relationship with God, I urge you in the strongest possible terms to start that journey now. You can add religion, too, if you want. But first and foremost, it is the relationship that we want. He is the one constant in an ever-changing and volatile world. 

For those of us who are in a relationship with him already, do not neglect him. Abide with him and pursue him in return. It will pay bigger dividends than any equity fund ever could. 

RetireMentorship.com/Books provides a list of books I’d recommend if you want to start or deepen a relationship with Jesus.

Relationship with Spouse

If you’re married, your spouse can be a source of great joy or great strife, and maybe some of both. Those with great spousal relationships report retirement satisfaction far more than those in poor marriages. It doesn’t matter how much money you have if you’re miserable with the one with whom you’re spending it. 

There are many jokes and cartoons about spouses who have recently retired, most revolving around all the time you now spend together. Beyond the humor, one of the largest demographics for divorce is recent retirees. Without work to distract them, they realize they don’t like being together anymore, and many choose not to fix it. Surely the grass is greener in another pasture. 

We have a misguided view of marriage that supposes it should be easy, isn’t much work, and there isn’t anything else we can learn about it after so many years together. Wrong on all three counts. Everything worthwhile is hard and a lot of work. And the only profession that hears the phrase “I wish we had known this years ago” more than financial planners is marriage counselors. 

Invest in your marriage. Go to conferences. Read good books about it together, or with a group of friends. The book list mentioned above contains recommendations for relationships as well. Start there. 

Relationship with Children and Grandchildren

The number of jet-setting retirees who give up sunny beaches and warm breezes to settle in the frigid Midwest “to be close to the grandchildren” when they arrive is all the proof I need that these relationships trump money. If you have great relationships with your children and grandchildren, you don’t need me to talk about it or encourage you to invest in those relationships. You already are. 

This is a primary motivation for me to help people retire successfully. Far too many work far longer than they must and miss out on relational experiences with the spouse, children, and grandchildren. Usually, they are paying on expensive insurance products and are loaded up with fixed-income investments. You either need to save up a lot more or make your retirement much shorter (by working longer) so that the poor returns of fixed products can support a rising income. A 3D Retirement Income matched with a comprehensive financial plan enables people to retire sooner and enjoy their relationships more. Money is not the goal. It funds the goal. 

Relationships with Friends

This relational category suffers for many people who retire. Far too many people realize that their co-workers aren’t truly their friends until they no longer work together. We can spend so much time working around people that we forget that we won’t see them daily anymore when we retire.

Invest in genuine friendships. Those who have real friendships and community live longer and happier lives than those who watch television in solitude. 

All the money in the world won’t make you happy or your retirement successful if you don’t have great relationships. Invest in those relationships. Invest time, energy, and yes, money into the relationships. The only thing better than owning the best businesses in the world is owning the best relationships in the world.

A Successful Retirement 2: Health

Even good relationships are hard to enjoy with prematurely declining health. If you aren’t healthy enough to enjoy your retirement, how can we call that a success? 

Invest in your health. No, I really mean invest. Pay money to get and stay healthy. Far too many people are overly concerned with funding their retirement accounts and not concerned enough with cultivating their health.

Don’t confuse health insurance with health care. Care is what you need to get and stay healthy. Insurance is a method of paying for it. In the United States, we spend way too much on our health insurance and not nearly enough on our care. 

Invest in your health. Spend money on a health coach if you are not currently healthy. 

“But it’s expensive!”

Not as expensive as a triple-bypass surgery. 

Financial planning helps you pay the least amount of taxes over your lifetime to keep more of your money in your pocket and leave the IRS weeping. It also helps you pay the least amount on healthcare over your lifetime. It can do that by helping you get the right insurance, sure. But part of that equation should be this conversation.

The Conversation

“Chuck, we have two health plans for you, A and B. With Option A, we can spend $600 per month on this health insurance plan, with $200 per month in prescription meds for the rest of your life. 

“With Option B, we can advance you $300 per month to get a personal trainer and health coach and increase your grocery budget by $200 to increase the health quality of your food. That should get you to a healthy place inside a year.

“We can then drop all those expensive medications you’re taking and get you on a $200 per month insurance plan. We’ll reduce the health coach budget to $100 for maintenance and keep the $200 in quality groceries. 

“Option A is going to cost you $800 per month for the rest of your life, plus inflation. That’s about $420,000 over your lifetime. And we haven’t factored in any ambulance rides. 

“Option B will cost you $500 more per month in the first year, but then only $500 per month after that. That’s going to cost about $270,000 over your lifetime. You’ll feel much better and save $150K to boot. There are a few extra vacations, gifts, and experiences I think you can spend that on.”

Your health is one of your greatest assets. It costs less to keep it than to get it back. Do not be afraid to spend money on your wellness. You will enjoy retirement more and save money by being healthy. That’s why it’s the second ingredient in a successful retirement. 

A Successful Retirement 3: Security

Financial security is the driving force behind many decisions. One’s appetite for risk wanes, and their desire for security waxes as they age. A misguided sense of security causes so many to rely on fixed income.

People believe that stock market losses are their biggest problem, being taught that equity investing is “risky.” They reduce their equity holdings and buy annuities and other insurance products to protect against market losses. They have confused “volatility” is with “risk” and a temporary decline with permanent loss. This categorical difference requires revisiting one last time. 

Value vs. Currency

We conflate value with currency. Money, or currency, is the actual cash and deposits we own. Most of our assets will not be in currency but instead are in assets that are worth money. Your ownership interests in the best business are not currency. They are worth money. They have value but are not currency. 

The great concern with our equity ownership is that we can constantly see the fluctuations in the value. Every time equities go up, our value increases. Every time they go down, our value drops. But we have not truly gained or lost “money.”

Consider your home. It also fluctuates in value. Your house’s value isn’t purely a function of the cost of wood, windows, shingles, and shakes. Your home’s value is primarily a function of what someone else will pay for it. I’m convinced that if the value of your home was posted above your door and you had to see it fluctuate each day, fewer people would buy. 

Home Example

Suppose you purchased your home for $200,000. Some years later, you want to move and post it for sale at $280,000. You get many showings the first weekend and offers pour in at around $300,000. The value of your home has increased by $100,000. 

Have you made $100,000? No. You only gain when you sell. It is currently “unrealized gain.” It is an asset that is worth more, but you don’t have the money until you have the currency. 

A storm rolls in overnight while you are deliberating on offers. Lightning strikes the house next door, and it burns to the ground. The family was away, and no one was injured, but it left a smoking crater where the house used to be. What is more, the heat of the fire melted the siding on the side of your house and singed your lawn.

Due to the damage to your house and the eye-sore next door, all the offers on your house are immediately rescinded before you have a chance to accept any of them. Insurance will cover the siding on your home, and the grass will grow back, but that doesn’t stop the offers from disappearing. 

You still want to move, though, so you keep the house on the market. But now, the offers are much less—around $220,000. Overnight you “lost” $80,000 on your home. 

Or did you? 

Digging Deeper

First, you bought the house for $200,000. Even selling it at $220,000 would be a gain. You haven’t lost anything in that sense. But you wouldn’t want to sell at that price knowing it had just been worth far more. 

Second, you haven’t “lost” anything. The value of your home, as measured by what people are willing to pay for it, has temporarily decreased. You only lose if you sell. Instead of selling it for $220,000, you pull it off the market. You can wait. 

Insurance pays a contractor to re-side your house—the whole thing! You get brand new siding in an updated and trendy color. The grass grows back. A crew comes and completely rebuilds the neighbor’s house. Frankly, it was a bit outdated, and the new house brightens the neighborhood. The street is back to normal. 

You put your home up for sale again. Offers pour in, and you sell the house for $320,000. You have realized a $120,000 profit on your home in cash. You weathered the storm (literally) and came out ahead on the other side. Congratulations.

The Key Distinction

You never “lost” any money. The value of your home fluctuated. By waiting until the value of your home recovered, you were able to sell it later for more money. 

The same is true of your equities. Their value will fluctuate. But you only make or lose money when you sell. If you sell them high, you make money. You never lose money if you avoid selling your equities while their value is low. 

Suppose you didn’t have the luxury of waiting for your neighborhood to recover before selling your house. Suppose you had to sell it because you had to move, and your financial condition was such that you could not maintain the mortgage payment on it for six months to wait for a $100,000 increase in value. That would be a shame. 

Those whose financial condition is so poor that they cannot wait for their equities to recover before selling, and those who lack the temperament or an advisor to keep them from selling, will lose. That’s a shame. 3D Retirement Income provides the framework to fix your financial condition so that you never have to sell low. A trusted financial planner will help ensure you don’t get slain by the Fourth Horseman. 

Do not confuse value with currency. Value fluctuates, but your lifetime money will continue to grow with the right plan. 

Time and Risk

Over time, the “risk” to Red Bucket and Blue Bucket is the opposite. Equity volatility, the chance that your Red Bucket will temporarily decrease in value, is high in the short term. But the chance decreases to the point of vanishing in the long run that the value declines below your principal.

Inflation, the certainty that costs will increase permanently, is low in the short term. But over time, this mortal enemy will slowly gobble up the value of your Blue Bucket. Over your lifetime, inflation is the greater risk, and fixed income is the riskier asset. 

We carry only enough Blue Bucket to carry us through the very short-term chance of temporary decline. The rest is placed in Red Bucket to earn the permanent ascent of equities. This generates true long-term security.

Thus, 3D Retirement Income provides financial security no other strategy can—an income that outpaces inflation, outlives you, and outperforms others. 

There is one final element that makes up a successful retirement.

A Successful Retirement 4: Impact

The best legacy is not solely the one you leave but the one you live. You have a chance to leave an impact on the ones you love, your community, and perhaps even the world. You live and leave that legacy in two ways. First, you invest your time, energy, and money into meaningful relationships. 3D Retirement Income will provide the money. You must provide the time and energy. Second, you leave an impact through generous giving to causes you care about. 

This book is mainly about the three dimensions of income. Direction: income that grows faster than the cost of living. Duration: income that lasts longer than you and yours. And Diversion: income that flexes better than the stock market.

But there is a fourth dimension only possible when you have the first three. 

Donation: Income that Impacts Greater than Any Other

Booker T. Washington said, “Those who are the happiest are those who do the most for others.” Or, as Dave Ramsey puts it, “Giving is the most fun you can have with money.”

The most common reason cited for why people don’t give money is “We don’t have enough for ourselves.” We know this isn’t true because there is no correlation between how much money you make and how generous you are with it. I know families that make $40,000 a year who faithful give 10% of their gross earnings. And I know families who make $400,000 per year who don’t give a dime. I know this for a fact because I prepare their taxes, and there is a big fat $0 on the line for the charitable giving deduction available to everyone.

To be a generous person, you must want to be generous. Whether or not you give is not correlated with your income. If you want to live and leave a legacy as a generous person, that starts with a fundamental mindset shift about money.

Money is not the goal. Money funds the goal.

If accumulating money is your only goal during your working life, you will not be generous while earning it. And if “protecting” and “preserving” your money in retirement is your goal, you will not be generous while living on it. 

But if impact is your goal, if living and leaving a legacy of love for those close to you and supporting causes you care about is your goal, then you will want to be generous.

The Quantity of Your Impact

Whether or not you give is not correlated to your income. But if you are a giver, how much you can give is completely tied to your income. As generous as the family who gives 10% of $40,000 is (and I could go on and on about how genuinely generous they are), $4,000 per year can only do so much. 

3D Retirement Income provides an income that outperforms others. An equity-based income that realizes its trend-line returns will undoubtedly outperform a fixed or flat annuity-based income. You will have more income to make a more significant impact following this strategy.

In the Bible, Jesus tells the Parable of the Talents. A wealthy businessman gives three employees talents (a valuable form of currency). He instructs them to get a return on his money while he is away. He gives ten talents to the first, five talents to the second, and one to the third. The first two go out, invest the money, and double what was given to them. The boss is very pleased and gives them great promotions. 

The third employee returns the one talent that the boss gave him. Instead of investing the talent, he buried it because he did not want to lose it. That employee was fired. 

But this is precisely what so many retired people do. You have an extraordinary ability to live and leave a legacy of love and blessing to the world around you! But, because we are afraid of “losing” our money, we “bury” it in banks and bonds, in CDs and annuities. We don’t invest it. Neither do we attempt to increase our impact. We don’t try to win. We only try to avoid losing.

But you can do so much more! 

What if, instead of a flat annuity income, you had a rising income that grew faster than your need for it? Rather than a strategy that only supported a 4% safe withdrawal rate, what if you had one that allowed you to withdraw 5% and as much as 6 or 7% in good years? What if you gave that money away? What if you made an impact? 

4D Retirement Income provides the opportunity to create an impact beyond what any other strategy can support. You can give more while you are alive and leave more when you pass. 

A Picture is Worth a Thousand Words

Flip this book over and look at the front and back cover together as one image. It is, in fact, one image. You see a series of mountain ranges rising from the far left of the back cover to the spine. The ranges closest to us trail off and fade to the ground before reaching the right side. Others stay relatively flat or even grow to the end. 

I designed the concept for this cover to reflect the various courses your retirement portfolio can take. The back cover is your working years, the spine is your retirement, and the front is your retired years.

The dark mountain ranges in the front are those portfolios built on fixed income. In the introduction, we discussed the popular notion that life comes in two phases: the accumulation years, climbing up a mountain as our nest egg grows, followed by the decumulation years, walking down the other side as we spend down our nest egg. These dark mountain ranges reflect that strategy—hoping you run out of time before you run out of money. 

The lighter the ranges get as they move toward the background, the more equities in the portfolio. The dark ranges are more stable. Their value does not fluctuate as much. They are “safe” until they run out of money. The light mountain ranges are much more “unstable.” But those who adopted them early in their working year had more when they retired and more at the end of their life. 

Look Forward to a Successful Retirement

You cannot go back and change what happened on the back cover of your life. It is already passed. Where you invested in the past has generated how much money you have now. The past is the past; the back is the back. We cannot change that.

But you can impact what happens on the front cover. You can choose what happens with the rest of your life. You can choose where your mountain ranges end up. Will you walk down the mountain, hoping you don’t get to the bottom before you pass away? Or will you keep climbing? Will your mountain range fade off into nothing, paying your funeral expenses and leaving a paltry sum to your loved ones? Or will it continue to grow throughout your retirement, generating an income that encourages generosity and leaving a legacy to your children and grandchildren, churches, and charities?

Choose the better option for your family. Make the choice, now, to forsake Door Number Two: The People Outlive the Money. Choose Door Number One: The Money Outlives the People and Leaves a Legacy of Blessing to the World.

© 2021 3D Retirement Income. Reprinted with permission.

This article is educational only and is not intended to be investment, legal, or tax advice or recommendations, whether direct or incidental. Again, this is not investment advice. Consult your financial, tax, and legal professionals for specific advice related to your specific situation. Never take investment advice from someone who doesn’t know you and your specific situation. All opinions expressed in this article are the opinions of the people expressing them. Any performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be directly invested in.