Financially Speaking
The Two Sides of Retirement: Money & Mindset
Perhaps you are familiar with the phrase, “Youth is wasted on the young,” a quote commonly attributed to George Bernard Shaw. I remember hearing it often when I was younger, living my best life in our first shore house – 10 guys in a two-bedroom garage apartment with no screens or modern amenities.
One of my friends once responded to that quote by saying, “It’s a shame retirement is wasted on the elderly.” He joked that it would be great if we could retire from ages 18 to 35 and then work the rest of our lives. At the time, it seemed funny, though clearly a juvenile way of thinking. Now that I’m 70, I understand it differently. When you’re young, you lack the wisdom and experience to fully appreciate your freedom and health.
When you are young and single, your money is your own. You can do whatever you want. When you get married, it becomes our money, and you have to consider your spouse’s priorities as well. Once you start a family, it can feel like you have no money. Your focus shifts to putting food on the table, keeping a roof over your heads, and planning for your children’s education. Then come weddings, often with the expectation that you’ll help pay for them. Finally, when the kids leave the nest, you can begin to focus more seriously on saving for retirement. Life is a marathon.
The reality is that you spend most of your life working toward retirement so you can enjoy a good life while you’re still healthy. Early in my career, the most common answer to the question, “At what age do you want to retire?” was 55. Unless you have a trust fund, you will need to save for your own retirement. And with people living longer, the inheritance many expect to receive may be smaller, or delayed.
Do you remember when you first started saving for retirement? For many, it was when they began their first job. If you were fortunate, your employer offered a retirement plan such as a pension, 401(k), or 403(b). If not, you may have opened an Individual Retirement Account (IRA). Today, both 401(k)s and IRAs offer Roth options, meaning contributions are made with after-tax dollars, and the growth can be withdrawn tax-free under the right conditions.
These days, I don’t hear many people saying they want to retire at 55. There is greater awareness of inflation and the risk of outliving one’s savings. Retiring early is still possible, but it requires discipline, sacrifice, and consistent saving.
Fidelity Investments publishes “Fidelity Viewpoints” on a regular basis. In a recent report, it shared average 401(k) and IRA balances for 2025:
Baby Boomers (ages 61-79): $249,300 in 401(k)s and $257,002 in IRAs
Gen X (ages 45-60): $192,300 in 401(k)s and $103,952 in IRAs
Millennials (ages 29-44): $67,300 in 401(k)s and $25,109 in IRAs
Gen Z (ages 13-28): $13,500 in 401(k)s and $6,572 in IRAs
How do you compare? Keep in mind these figures don’t include non-retirement investments, bank accounts, or real estate.
You spend much of your life accumulating wealth for retirement, but when the time comes, you may find that spending your nest egg is more difficult than saving it.
If you are already retired, think back to your first day. How did you feel? For some, retirement brings a loss of identity. Many people spend more waking hours with coworkers than with family, so leaving work can also mean losing important social connections along with the security of a steady paycheck. These changes can impact mental health.
I remember one of my first bosses struggling with this transition. He had overseen 80 people and was used to having the final say. He was a voracious coffee drinker, and his staff gave him an oversized mug labeled “The Boss.” He loved it. However, that title didn’t translate well at home. One morning, while reading the paper, he began critiquing how his wife ran the household – everything from laundry schedules to grocery shopping. She quietly walked over, took his mug, poured out the coffee, and threw it in the trash. Then she reminded him that she had run the household quite efficiently for the past 40 years. She suggested he go back to work, and he did.
While having enough money is essential for retirement, the psychological aspect is just as important. There are many decisions to consider:
Do you take Social Security early at a reduced benefit?
Do you wait until full retirement age (67 for those born in 1960 or later)?
Or do you delay until age 70 to maximize your benefit?
Do you have a pension that provides guaranteed income for life?
Should you consolidate your retirement accounts into one IRA for easier access?
Over the years, I’ve spoken with hundreds of people about retirement. Those with pensions often faced the choice between a guaranteed monthly income or a lump sum to invest. Initially, those who chose the pension felt secure because their basic expenses were covered. However, over time, inflation eroded their purchasing power, meaning their monthly income didn’t keep up with inflation. Meanwhile, those who invested their lump sum sometimes did better, provided they didn’t panic during market volatility. There are ways to have both a guaranteed income to meet your monthly expenses, as well as to keep pace with inflation. I’ll explore those in a future article.
Personally, when I sold my business three years ago, I wasn’t concerned about having enough money. I had practiced what I preached. I had completed financial plans over the years and was well prepared. My biggest concern was how I would fill the 60-plus hours a week I had spent working throughout my career. As it turns out, I’ve figured it out, and I can’t believe how busy I am today. The lesson is simple: Take the time now to plan for retirement – both financially and psychologically.
Now that you have something to think about, head to the beach with your chair, book, and favorite beverage.
Fred Dunbar, CLU®, ChFC®, RFC®, AIF®, is the former President of Common Cents Planning. Fred’s team may be contacted at 610-361-0865, by e-mail at info@commoncentsplanning.com or by mail at 239 Baltimore Pike, Glen Mills, PA, 19342. Investment advisory services offered through Planning Directions, Inc., d/b/a Common Cents Planning a Registered Investment Adviser. Fixed insurance products and services are separate from and unrelated to Common Cents Planning.
This commentary is meant for general informational purposes only and is not intended to be a substitute for professional financial, tax or legal advice. Investing involves risks including the potential loss of principal. Past performance is no guarantee of future results. All indices are unmanaged, and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results.
