Retirement is so deeply embedded in financial planning that we rarely stop to question the concept itself. We ask clients when they would like to retire, estimate how much income they will need when they do, calculate the capital required to support that income and then assess whether they are on course. If they are not, we consider some combination of saving more, investing differently, spending less or working longer. It is a perfectly logical planning process, but it begins with an assumption that deserves rather more attention than we sometimes give it: that retirement is the destination.
For many people it undoubtedly is. There are clients who have spent years looking forward to leaving work and who have interests, relationships and ambitions that have been constrained by the demands of their careers. Being able to tell somebody in that position that they no longer need to work can be one of the more meaningful outcomes of financial planning. The mistake is not in helping people retire. It is in allowing the possibility of retirement to become an expectation that everybody should eventually want much the same thing.
I have never found that assumption particularly convincing because I enjoy working. Work gives me things that have little to do with earning money: intellectual stimulation, relationships, the opportunity to develop ideas and, perhaps most importantly, a sense of continuing to participate. There are inevitably aspects of working life I would happily change, but that is very different from wanting to withdraw from it altogether. Nor do I think this is especially unusual. For many clients, particularly those who have built businesses, developed expertise or spent decades establishing themselves professionally, work is intertwined with purpose, identity, friendship and their place within society. It seems strange that we should spend years helping them build a satisfying and productive life and then assume that success eventually means leaving a significant part of it behind.
This suggests that we need to distinguish more carefully between retirement and financial independence. They are related, but they are not synonymous. Financial independence is the point at which earning additional income ceases to be necessary, or at least becomes significantly less important. Retirement is one possible response to reaching that position. A client who has accumulated enough to support themselves without employment can stop working, but they can also continue working, work less, change direction entirely or pursue work that they previously could not afford to consider. The real achievement is not that work disappears; it is that necessity begins to disappear from the decision.
That change can be profound. Someone who has spent thirty years making career decisions partly because they need to earn a certain amount may approach work quite differently once the salary ceases to matter. A demanding five-day role might become a three-day one. Management and administrative responsibilities might be abandoned in favour of the aspects of a profession the client actually enjoys. A business owner might retain some involvement without continuing to carry the burden of running the whole organisation. Someone else may choose work that is interesting but poorly paid, start a venture without worrying very much whether it makes money, mentor younger people or contribute their knowledge somewhere it is useful. Another person may simply continue in exactly the same job, but with the considerable difference that they now know they are there because they want to be rather than because next month's salary is necessary.
This is considerably more interesting than treating the choice as one between working and being retired. It also raises a question about why we tend to concentrate so much freedom towards the end of life. The conventional pattern asks people to work more or less continuously through adulthood, accumulate sufficient resources and then use those resources to fund an extended period of freedom once work has finished. There are good reasons why this pattern developed, and for many people it will remain sensible, but it need not be the only way to organise a life.
A sabbatical is an obvious example. If a client in their late forties or fifties is already financially secure, taking six months or a year away from work may have relatively modest long-term financial consequences while offering something that cannot necessarily be replicated twenty years later. They may want to travel, spend time with children before they leave home, care for parents, study, write, pursue an interest or simply discover what life feels like when it is not structured around work. They might then return refreshed and work for another fifteen years. Seen through the conventional retirement lens, the sabbatical can look like an interruption to accumulation. Seen across an entire lifetime, it may be an entirely rational use of financial resources.
The same argument applies to partial retirement, although even the terminology is revealing. Calling a three-day working week “partial retirement” implies that full retirement remains the destination and the individual is merely moving towards it more slowly. That may be what they intend, but it need not be. Someone might work three days a week for twenty years because that combination of professional involvement and personal freedom suits them. There is no particular reason why it needs to be interpreted as a transitional state.
Health and ageing make this discussion more important, not less. The traditional model implicitly transfers time from the middle of life to its later years: work more now, accumulate more capital and enjoy greater freedom later. Sometimes that is precisely the right trade-off. But it is still a trade-off. An additional year of work might increase a client's pension and investment capital, but it also consumes a year which cannot subsequently be repurchased. Conversely, reducing work earlier may provide valuable freedom today at the cost of somewhat less financial capacity later. Financial planning is well equipped to illustrate the monetary consequences of those decisions. The more difficult part is helping somebody decide what those different periods of their life are worth to them.
This is where the argument needs some caution, because it would be easy simply to replace one assumption with another. Continuing to work is not inherently more meaningful than retirement, and nor should somebody who genuinely wants to stop feel they have somehow failed to remain productive. Work can provide purpose and connection, but it can also be exhausting, repetitive or actively unpleasant. A client who has spent decades doing something they no longer enjoy may quite reasonably attach enormous value to never doing it again.
There is also a less comfortable possibility at the other end of the spectrum. A person may say that they love work when what they actually fear is the loss of everything that has become attached to it. A successful career can provide status, recognition, routine and a ready answer to the question of who we are. A business owner who has spent thirty years building an enterprise may find selling it financially attractive and psychologically unsettling. Someone who has accumulated throughout their adult life may struggle with the idea of deliberately spending capital even when every projection suggests that they comfortably can. Continually postponing retirement can therefore deserve just as much curiosity from the planner as an insistence on retiring as early as possible.
Neither conclusion should be supplied by the adviser. The value lies in recognising that there is something to explore.
There is a further complication for financial planners because some of the tools we use inevitably encourage a more orderly version of life than the one clients may actually lead. Cashflow planning requires assumptions. We need to know when earned income will change, when pensions might commence, how expenditure might evolve and when accumulated capital is likely to be drawn upon. A retirement age is therefore an extremely useful modelling assumption. The danger arises when a convenient assumption within the model quietly becomes an organising assumption for the client's life.
Asking, “When would you like to retire?” sounds like an entirely reasonable discovery question, but it has already framed the answer. We have introduced the idea that there will be a retirement and asked the client merely to establish its timing. A broader discussion might explore what the client would choose to do if earning money were no longer particularly important, which parts of their working life they value, which they would happily abandon, what they would like more time for and whether freedom could be introduced gradually rather than arriving on a predetermined date.
This is where Map 2: Life & Retirement becomes useful to me. Its purpose is not to find a more sophisticated way of calculating somebody's retirement age. It is to place retirement within the much wider question of how the client wants to use their time and resources. Retirement may emerge as an important objective, but it should emerge from the conversation rather than being assumed at the beginning of it. The financial plan can then test whether that life is sustainable and expose the compromises involved in trying to create it.
This also changes the meaning of having “enough”. We often talk about the point at which somebody has accumulated enough capital, but the obvious question is enough for what? If enough means only sufficient assets to reproduce a particular income from an assumed retirement date until death, we have defined the client's achievement rather narrowly. Having enough might instead mean being able to work four days rather than five at 50, taking a year away at 55, accepting a less remunerative but more satisfying role at 60, helping children while that help actually matters, or simply knowing that an unpleasant job can be left without financial fear. Those are not peripheral benefits of wealth. For some clients they may be its principal purpose.
This is also why maximising wealth and improving somebody's life are not necessarily the same exercise. A client who works another five years and spends very little may unquestionably finish with more money. That does not tell us whether they have made the better decision. Equally, someone who retires at the first point at which a cashflow model suggests they can just about afford it may be sacrificing work they still enjoy for a version of retirement they have barely considered. The planner can help illuminate those choices, but there is no financial calculation capable of resolving them without first understanding what matters to the person making them.
Perhaps, then, retirement needs to lose some of its privileged position in financial planning. Not because retirement is outdated or undesirable, but because it is only one possible use of financial independence. A good financial plan should make retirement possible for the person who wants it, but it should be equally capable of supporting somebody who wants to work differently, interrupt work for a period, change careers, contribute without needing to maximise earnings or continue doing what they love for as long as they remain able to do it.
There is something attractive in the idea that a successful financial plan could progressively weaken the connection between money and work without requiring the client to abandon work itself. Earlier in life, financial necessity may dominate the relationship: work creates income and income supports life. As capital accumulates, there is an opportunity for that relationship to change. Work can become increasingly voluntary, and with that comes the possibility of choosing it for different reasons.
If we reach that point with a client, telling them that they can afford to retire is still valuable. It tells them something important about their financial position. But it does not tell us what they should do with that information.
The better conversation begins once they know they could leave.