Ten Retirement Lessons from the Smartest People I Know

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.Paul Merriman

Since the mid-1960s, I have helped people manage their money and their lives before and during retirement. I have seen the good, the bad and the downright ugly. A successful retirement, like a successful life, rarely happens by accident or default. It happens by design. I’ve had the good fortune to know thousands of very smart people. Here are 10 lessons they taught me.

Lesson One: Happiness in later life is not a direct function of how much money somebody has.

This is hard for many folks to accept, but it is never a surprise to the smartest people I know. Happiness depends much more on attitudes and behavior than on the numbers in somebody else’s computers. In today’s world, essentially that’s what money is: numbers in distant computers.

Lesson Two: Wealth comes from choices people make, not chances they take.

Smart people do not wait for luck to make them wealthy. Every day, they cultivate habits and follow rules that others don’t. Live below your means if you want to be wealthy. Pay yourself first and build wealth, not a lifestyle that saddles you with expenses. When you save and invest, make your money work hard for you. My new book contains eight chapters that tell exactly how to do that.

Lesson Three: Those who plan also prosper.

Smart people plan for retirement – in writing. I know a written plan has no magic of its own. People who are serious enough to put their plans in writing are likely to identify where they are, where they want to go and what they must do to get there.

Lesson Four: Don’t wait to start saving.

Smart people learn early in life how to defer gratification. If you are in your 20s, retirement seems pretty remote, but time gives you an opportunity to do a lot, for a little. A one-time investment of $5,000 when you are 25 will grow (at 10 percent) to $140,512 by the time you are 60. If you wait until you are 45, you need to invest $33,638 to get the same result.

Lesson Five: Retirement belongs to those who are still with us.

Smart people take care of their health. If you want to retire rich, you need to live long enough to retire and be healthy enough to live it up. Smart people see their doctors periodically and follow the doctor's advice. They do not neglect their mental health, either.