By Cathy Severson
When you were a young child and wanted a new toy or a piece of candy, your parents most likely told you to clean your room, take out the garbage or wash the dishes to earn whatever money you needed to purchase the desired object. Your life as a wage earner had begun.
The work ethic of Americans is ingrained deeply in our psyche. We all know of the history of the pioneering men and women who settled this country working by the sweat of their brow. You’ve been taught you can do or be anything you want if you’re willing to work hard enough.
While an important aspect of the American identity is that of a worker and a money earner, retirement is welcome break. But, it forces people to look at their relation to money in a new way.
The key component to retirement success is a strong financial foundation. Retirement money involves both the practical matters, as well as the emotional or psychological aspects of wealth.
A number of years ago I read Rich Dad, Poor Dad by Robert T. Kiyosaki. A primary theme of the book is most of us are financially ignorant. As a middle-class American, you’ve been brought up with a great work ethic. You’ve been instructed to work hard, spend more and indulge every whim. Most of us didn’t learn how to make our money work for us.
The change of going from being a wage earner to living off your investments is a tremendous shift. When you earned a living, you felt a sense of control over your life. When you make the transition into retirement, there is a feeling of vulnerability. You have moved from being a wage earner to being on a ‘fixed income.’
There are actually a number of dynamics at work here. The first is the shift in your identity from earning income. In our culture, there is great value placed on making your way in the world. We love the idea of pulling ourselves up from our bootstraps and making it good, regardless of where we started. There is a tendency to look down on those who aren’t able to find financial success. “What did you do wrong?” is often asked of those unable to adequately compete.
This thinking has led us to value conspicuous consumption as demonstration of success in our society. If you’ve got it, then you should flaunt. Of course, there has also been the opportunity to flaunt it whether you had achieved actual success or not. The ability to look the look of success has in recent years been more important to some than the actual achievement.
The number one fear people have about retirement is outliving their money. Ironically, the fear exists regardless of how much money they have. The person who is worth five million dollars is just as likely to be afraid of not having enough money as the person who has one hundred thousand dollars. It’s not until people have over ten million dollars they are able to relax a bit and not worry about money.
Fears and beliefs about money play an important role in our sense of well-being. Taking the time to look at these, as well as your balance sheet will help you establish a solid financial foundation.
While there are specific things you need to do with your money as you approach retirement. You also want to shift the way you look at yourself and your beliefs about money, work and self-worth.
