Finding – and Funding – Your Purpose

7 minute read time.

Think about the essentials for retirement. What’s on your list? For many, things like enough savings, family and friends to spend time with and keeping up with your fitness routine likely make the cut. But there’s a big one that should be at the very top: Purpose.

As Richard Leider – Education Fellow in the Alliance’s Retirement Income Institute, and author of the recently released fourth edition of his bestselling classic, “The Power of Purpose: Find Meaning, Live Longer, Better” – describes, purpose in retirement isn’t just something that’s nice to have. It’s absolutely essential. “Purpose is not a luxury in any age or stage,” shares Leider. “It’s fundamental to health, to healing, to happiness, to longevity, and ultimately, to retirement.”

Numerous scientific studies have shown that having a strong sense of purpose in retirement contributes to improving our physical and mental health, from lowering cardiovascular disease and other chronic health conditions to reducing stress and increasing happiness.

But how do you find your purpose for the next chapter of life, especially when a career you’re leaving may have defined your purpose till now? And just as important, once you’ve identified it, how do you pay for it? We spoke with Leider, as well as Margarita Perry, Senior Vice President at RBC Wealth Management and a top financial advisor, to answer both of those questions.

FIRST, KNOW THE DIFFERENCE BETWEEN “BIG P” AND “LITTLE P” PURPOSE

While tools like the Alliance for Lifetime Income’s “Find Your Purpose, Fund Your Purpose” workbook can help you hone in on your aspirations for retirement, Leider says one of the first steps is to think about purpose in two ways: The first is “Big P” purpose, which connects us to a worthy cause that establishes a theme for our lives. Second, is “little p” purpose, which is about the simple things we do on a daily basis that contribute to the lives and well-being of others.

Here’s how that might look in real life. For Leider, his “Big P” purpose is to help people unlock a sense of purpose in their lives. His “little p” purpose is to make a positive difference in one person’s life every day – whether that be a thoughtful email he sends or a keynote presentation he delivers on finding one’s purpose. “Another way to think about this distinction is that “Big P” purpose is the path, while “little p” purpose refers to the practices we engage in along that path,” he says. “‘Big P’ addresses the why; “little p” answers the how.”

NEXT, ASSEMBLE YOUR RETIREMENT PREP “TEAM”

As you define your “Big p” and “little p” purposes, you’re going to want to ask yourself some key questions. Ideally, this will be done with assistance from a financial professional who will help you develop a plan to fund your purpose in retirement. That’s something Perry has been doing with clients for decades. “When I ask the questions, ‘What’s your dream? What do you wish to accomplish in your life after retirement?’ they catch people by surprise because they’re not sure what the next chapter in their life holds,” shares Perry. “I think that gives people anxiety and stress because they’re so used to being identified by their job and their work.”

Working with a financial professional can alleviate some of that anxiety, but as Leider notes, the best retirement prep “team” will include other key people, too. For example, friends and family who you can bounce ideas off of, as well as people thriving in retirement from whom you can learn.

Finding the right people to help guide your retirement journey can take time. It did for Leider, who recently switched to a new financial planner who better understood his desire to keep working into his 80s. “The future of retirement is a new life phase and that new life phase has to be holistic,” he says. “It has to look at all aspects that are essential with transparent guidance.”

REFINE YOUR RETIREMENT SPENDING STRATEGY

Once you’ve assembled your team and started defining your purpose, it’s time to put the magnifying glass to your financials. Unfortunately, many retirees skip this step. According to a new survey from the Alliance for Lifetime Income (ALI), fewer than a third of respondents (32%) said they have a specific income plan for retirement, and 41% said they don’t know how to stage withdrawals from their accounts.

As Perry explains, putting together a decumulation plan (which is basically a plan for how best to spend your retirement savings) gives you the opportunity to see what changes you need to make in order to fund the retirement you’ve envisioned. “Do some exploration, look at things, open doors, close doors, before you make some choices, and then take a deeper dive into some of those choices with your financial advisor and say, ‘Can I do this?’” she suggests.

One of the biggest mistakes Perry sees clients making as they put together their retirement spending plan is not being realistic about their habits – especially when it comes to travel. “Everybody underfunds their travel budget because they’ve never taken into account the weekends away,” she says. “You go for a long weekend just to get away for one or two nights. That’s $1,000 and it adds up.”

Perry says the other big thing those in or near retirement need to remember is that putting together a plan to spend down their retirement savings isn’t something you do just once. “It’s an active, dynamic conversation you have with a client all the time. It’s not something that’s one-and-done,” she stresses.

ALWAYS HAVE A PLAN B

Perhaps one of the biggest reasons to have a retirement spending plan that evolves is the fact that people are living longer. Recent ALI research shows that 51% of consumers between 45 and 75 feel they do not have enough retirement savings to last their lifetime, and 32% are not confident they will have enough to cover basic monthly expenses. “Living longer is a big fear of most of my clients, that they’re going to outlive their money,” says Perry. “By having a plan and looking at it on an annual basis, it brings the temperature down…if you have a plan, you’re back in control.”

With living longer comes the increased likelihood of experiencing a life-changing event – for example, the death of a spouse, a divorce, or being diagnosed with an illness. “I’ve been doing this for so many decades now, and I’ve seen a lot of unfortunate situations and how it can derail their purpose and their retirement,” says Perry. “That’s where a good planner can come in and really help them look at and plan for the “what if” scenario.”

If you’re faced with a major life event, Perry adds that it is key to remember not to make decisions hastily. “Don’t make any big decisions for a year,” she adds. “You have to kind of ease into it and figure it out.”

PLANNING TO FIND AND FUND YOUR PURPOSE = “THE GOOD LIFE”

While their expertise is different – Leider helps people find their purpose, and Perry helps people fund their purpose – the two agree these aspects of planning are key to what Leider calls “the good life.” “Having a reason to get up in the morning offers resilience,” he says “Purpose is not a luxury. It’s fundamental. It [funding your purpose] is not easy. It’s a disciplined practice that you do, hopefully preventatively, ahead of time.”

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