Why plan for retirement well-being?
There’s a good reason why retirement planning needs to go beyond planning our finances. The original, old-fashioned retirement first came into existence because there was enough prosperity to allow people to stop working later in life. So at that stage in the evolution of retirement, retirement planning was entirely about money. Then, as work for many became less physically rigorous, and our lifespan kept growing longer, a whole generation gained the wherewithal to think of retirement as more than just “not working.” They created a retirement life stage that was based on leisure, and having fun. They loved the idea of being “senior citizens.”
Now we’re entering the next stage in the evolution of retirement. A stage in which, instead of just planning for enough retirement money, we can plan for retirement well-being. However, economic forces are making it much more difficult to plan for sufficient retirement income. So the new retirement life stage may start later in life, or happen gradually instead of all at once. Or even that people will cycle in and out of the work force, as interesting jobs pop up and disappear.
Hard times make it even more important to plan for well-being.
The more complex the retirement stage of life becomes, the more important it is to take care of all the parts of life. There’s a word that’s been around for a long time, that perfectly describes what it is that we all want:
Well-Being: A state of prosperity, health and happiness.
You’ll notice in the diagrams that the three elements of well-being overlap. Although the elements are each essential and distinct, they connect to, affect, and interact with each other. Your money affects your happiness and health, your happiness affects your health and money, and your health affects your money and happiness. In your life, you couldn’t separate them if you wanted to. But most retirement planning tools have been strictly financial—things like portfolio management models and retirement savings calculators. But economics and finance aren’t the only fields that are relevant to retirement planning. It’s about time we had some tools for the health and happiness dimensions, too.
We’re fortunate, at least, that we’re getting closer to comprehensive retirement planning. Researchers have been studying a variety of topics that, one way or another, relate to retirement. We can turn some of these scientific findings into tools and guidance that will help us plan for our retirement well-being.
Now, although in the real world the three elements are interconnected, research scientists don’t see the world in quite the same way that you and I do (unless you, dear reader, are a research scientist). For the most part, science breaks things into parts—and into further subparts—to be better able to study them. After all, you can’t fit an elephant under a microscope, can you? Science usually needs to break things down into smaller chunks to get a better look at them. (Remember the old riddle, “How do you eat an elephant?” Answer: “One bite at a time.”)
So scientists focus on one of the three dimensions of well-being—or one aspect of that dimension. Economics, for example. Or biology. Researchers in each field pose theories, conduct research, and create useful knowledge—but usually only within the boundaries of their own field. The knowledge piles up, but doesn’t connect with the knowledge piling up in other fields.
So what can science tell us about each of the three dimensions of Retirement Well-Being? For one thing, there are actually two fields of research for each of the three dimensions of well-being, as shown in the figure with six circles. So when you plan your retirement life, you need to look at all six fields. Each plays a vital role in your Retirement Well-Being.
You can think of Health as the Bio-Medical domain; Happiness, as the Psycho-Social domain. And for Prosperity, we’ll use a new term: the Geo-Financial domain. These labels identify the specialized fields that have been researching the three dimensions of Retirement Well-Being and offer the tools that can help us realize each of them. These six fields are full of good ideas for retirement planning.
The Geo-Financial dimension – Prosperity – is based on both Geography and Finance. The original scope of retirement planning was finance, all finance, and nothing but finance, and of course that remains a key component. Now why, you may ask, is Geography included? First, because your financial circumstances are greatly affected by where you happen to be on the face of the earth. (If you live in Manhattan, you probably couldn’t afford to retire on a million dollars. But if you live in Manhattan, Kansas, you could live like royalty!) And second, because your home is often one of your largest retirement assets. Figuring out how to use your home equity and still have a place to live is both an opportunity and a challenge for the prosperity dimension of retirement. To have the money you want for retirement, you need to be able to think both financially and geographically.
The Bio-Medical dimension –Health- is made up of Biology and Medicine. Medicine, of course, studies diseases and how to treat them. Where would you be in retirement without access to medicine? However, quite apart from the necessity of treating disease, it’s helpful to understand the basic biological processes of our body. Health means not just the absence of disease, but wellness. You’ll also see it called optimum health. To support that for yourself, you need to understand how your body works, how that changes as you age, and how you can support your body through those changes. Whether you’re healthy or sick, knowledge from biology and medicine can help you achieve optimum health—which translates to greater well-being. The sooner you start acting on your Bio-Medical knowledge, the more health (strength, stamina, flexibility, good habits, you name it) you’ll establish for your retirement. And the more health you build up, the longer it’s likely to last.
The Psycho-Social dimension – Happiness – is made up of Psychology and Sociology. Psychology has often studied unhappiness, rather than happiness—similar to the way that Medicine has studied disease rather than wellness. But psychologists are finally conducting solid research into how happiness actually works and how we can build it into our lives. How’s that for useful? On the social side, psychology has studied interpersonal relationships, and sociologists have studied retirement within society and among groups of people. We can use findings from these fields to come up with specific plans for our personal happiness and our happiness with other people.
The Well-Being Model means that we can combine our knowledge of ourselves with ideas from experts in all these fields, to make better decisions for the life we want to live in retirement!