To thrive in retirement, live with purpose

COVID changed a lot of things, including the way we work—and maybe the way we retire. In the first 18 months of the pandemic, roughly 2.4 million more Americans than expected retired,¹ according to a Joblist survey. A year later, the majority had returned to work. Although money and economic concerns were reasons for some, the survey showed that 60% of people unretired because they needed something to do.

The idea that work provides benefits beyond financial compensation isn’t new. For many people who initially retire, reentering the workforce provides structure and meaning to this stage. So what is the definition of retirement today, and why do we retire?

Longevity a new retirement challenge

One aspect affecting retirement is that we’re living longer than ever. Between 1960 and 2015, life expectancies for men and women grew by almost 10 years—and may increase by an additional six years by 2060.² The concept of retirement compounds the problem. By retiring at the traditional age, you must now prepare to secure your finances for a longer span. And you’ll also need to prepare yourself mentally to have a fulfilling retirement for this period.

Knowing your purpose helps

It helps to think of your retirement as a threshold instead of a continued state of being. Once you pass through it, a new and meaningful era can begin. What will your obligations be in this third stage of life, and what will you want or need to do? These could be hobbies that fill your daily life, passions you want to pursue, or an overarching goal you work toward.

Rob Miles, a managing director at Truist Wealth, says values are vital to retiring with purpose. They determine how you’ll spend your retirement and what you’ll pass on—both tangible and intangible—to the next generation.

“Identifying values is an extremely helpful and necessary exercise,” he says. “And as families create significant value it can be these values that help drive critical decisions such as family governance type strategies.”

Understanding your values is an essential part of exploring your purpose—the “why” of your life. And once you have discovered your purpose, you can align your retirement activities with that purpose so that you’re living each day with intent. Aligning your purpose with your portfolio and estate plan can add a dimension of satisfaction to your retirement because you’ll know your financial plan is serving your aspirations.

And when there’s market volatility, which can be unsettling for retirees relying on income streams from investments, “Knowing your purpose will help you stay the course with your financial plan,” says Oscarlyn Elder, co-chief investment officer at Truist Wealth.

A transaction is not a transition

Retirement can be especially challenging for business owners. Lee McCrary, head of the Strategic Client Group at Truist Wealth, says many owners don’t prepare for a transition to retirement because the transition out of the business is often unexpected. And since many business owners view their companies as a core part of their identities, the sudden shift to retirement can be jarring.

“They don’t spend enough time on their wealth and transition preparedness,” he says. “They’re working on a lot of other issues related to building value for the transaction, and they leave no time for their own journey.”

McCrary suggests planning for the transition early to increase owner satisfaction when the time comes to sell. Many of the conversations he has with clients center on their purpose and priorities to map a successful transition plan or family legacy plan.

“Think of it as a road with off-ramps,” he says. “Each ramp is a strategic decision a client could make with their business.”

So, by working with your advisor on a road map earlier in your journey as opposed to later—and being informed by your purpose—you may have a better chance at a satisfying retirement.