We need to remember that smart retirement is about everything other than money – Financial Post

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FP Investor talks retirement planning with author Mike Drak

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Mike Drak is the author of Retirement Heaven and Hell. As with his previous book, Victory Lap Retirement, his new book takes a less common approach to planning. Drak is more focused on lifestyle planning, so retirees can actually enjoy themselves. Its not, he reminds us, all about money (though it helps to have it as well).In some ways, Draks approach shares a lot with the FIRE (financial independence, retire early) movement. But as he explains, following the RE part can get you way off course and even make you miserable. It turns out the best mix for most of us is to retire and keep working.

FP Investor: Mike, many of us spend our lives saving and investing for retirement, yet both your retirement books are about almost everything but money. Is the problem that people focus too much on money? Or that they have the money part figured out and just dont know what to with their money and themselves once they actually retire?

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Drak: The financial services industry has conditioned people to believe that transitioning to a successful retirement is simply a math problem that can be solved by simply saving more money. Thats wrong. You need to have a good handle on what the money you saved is for the retirement lifestyle those investments are going to fund for the next 30-plus years. Unfortunately, most people have no idea about the type of lifestyle they want to enjoy in retirement.

The advertisers complicate things further by brainwashing us into believing that a successful retirement is based 100 per cent on leisure, which is also not true. The truth is, to enjoy a successful retirement you need to know what type of retiree you are and you need to find a way to satisfy your own unique needs, values and wants. Again, this is something that most retirees have no idea about.

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FP Investor: You have a spouse who can manage your money. Most people dont. What do you advise people to do when they ask you about building wealth?

Drak: Simple, either learn how to do it on their own or engage the services of a trusted financial advisor.

FP Investor: You had about 38 years in banking. What are the best lessons those years taught you about the value and role of money?

Drak: The most important lesson I learned was about the power of compounding. I also learned that carrying debt was a bad thing and debt needed to be eliminated as quickly as possible. Over the years I watched many people crash and burn because they lived beyond their means and had no savings to fall back on.

FP Investor:You write about becoming a retirement rebel. What exactly is that and who are you rebelling against?

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Drak: I love retirement rebels because they are boomers just like me who are rebelling against the old-fashion beliefs about old-people and being retired. They are the trailblazers who are putting their own spin on the long-established retirement rules and showing us new ways of living and working.

We have been led to believe that people arent supposed to be celebrating their 100th birthday by going skydiving, or attempting an Ironman in their 80s, or starting a new business in their 70s, or going back and finishing that degree they never finished in their 90s, but they are and they are the people having all the fun in retirement.

Retirement rebels remain kids at heart, living on the edge, exploring their potential, travelling to new places, meeting new people, learning new technology, entering marathons in different countries and posting all about it on social media.

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The advertisers need to change their old-style retirement commercials and tell us stories about what other retirement rebels are doing today for inspiration and to serve as role models.

FP Investor: Reaching financial independence and retiring early sounds like a great idea if you can do it. What is it about the FIRE people that sets them apart?

Drak: I like the FIRE concept and it is something Ive taught my kids about. I just dont like the RE part. Everyone that I know who achieved FIRE early is still working to some degree. There is a message there. The beauty about FIRE is that you get your freedom back and can choose how you want to live out the rest of your life.

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FP Investor: How diverse is the FIRE community? There are devoted subgroups on Twitter who worship dividend stocks, and some are globetrotters, while others live happily in their vans.

Drak: There are many different FIRE levels. It all comes down to what type of lifestyle you want to enjoy post-FIRE. For example, you could live in someones garage and be financially independent, but do you really want to live like that? I guess you could describe my lifestyle as FIRE-plus. Im still generating some active income as a buffer against longevity. Benjamin Graham would refer to it as a margin of safety.

FP Investor: When you meet your readers, what do they usually want to ask you?

Drak: After writing my first book Victory Lap Retirement they asked me to write a book that would show them step-by-step how to transition to retirement. Retirement Heaven or Hellis a DIY retirement transition guide and its all about retirement lifestyle design.

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When I meet with my readers its fun to talk about the lifestyles they have designed for themselves and how they managed to find purpose in retirement. I love hearing their stories and how creative they were.

FP Investor: How important is it to have a financial adviser and for what service?

Drak: People who are not well-versed in investing should use the services of a financial adviser. Everyone needs to have a financial plan that works for them.

That includes widowers who had their spouses manage their money and who know little about investing and have no intention of learning, and need a trusted financial advisor. So many widowers are scared about investing so they keep the bulk of their savings in cash or short-term investments, which drives me crazy because inflation is killing them. Also, they need to be protected from the sharks out there, which sometimes includes their own family members.

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FP Investor: What for you was the biggest adjustment in learning self awareness and changing your own behaviour and attitude to retirement?

Drak: I had to relearn what made me happy and what my values were, something that I had forgotten while working in the corporate world. I then needed to find a way to satisfy my values, needs and wants on a regular basis or I wouldnt be happy.

I also had to become the real me, if that makes sense, and become authentic. In the corporate world I wasnt. I was a fake.

FP Investor: What is the biggest difference someone who is 35 today should be thinking about versus for you when you were 35?

Drak: Back when I was 35 it was all about working hard, providing financial security for my family and putting some money away for retirement. Today, because of job insecurity, stress is much higher for someone that age. To be honest, I dont know how some people can sleep at night, especially if they have a large mortgage along with a couple of kids.

Because of increasing longevity, people will need to work longer. And instead of having retirement as a goal, they should focus on achieving financial independence as early as they can. That is what Ive told my kids.

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We need to remember that smart retirement is about everything other than money - Financial Post