Tuesday, October 18, 2011

NU6 - by AC, New Attitude and Paradigm

No. 2 – New Attitude and New Paradigm
ENTREPRENEURSHIP by Mr. Jorge Saguinsin
Submitted by R110083
October 11, 2011
Retirement, from a financial perspective is defined as that point in time when active income ceases and retirement capital must provide the cashflow and grow at a rate that outstrips inflation to sustain one's chosen lifestyle.  Hence, the model is somewhat linear whereby one accumulates wealth over a period called pre-retirement, and begins to utilize the total capital put together at retirement, over the succeeding phase called post-retirement until expiry.
This is the conventional model for retirement planning.  It is assumed either that one opts to retire when his retirement capital has been sufficiently put together as to be enough until death – CAPITAL FOCUSED; OR, by force of circumstance, such as mandatory retirement (60 in the private sector and 65 from the public sector), the individual has little choice but to limit his choice of lifestyle based on he was put together at the deadline (AGE FOCUSED.
For most people, the prevailing version of the model is the AGE FOCUSED one.  But what is the quality of life at age 60 or 65?
It is a fact that not only is Finance a cornerstone in successful retirement planning.  Health is too.  Massive wealth accumulation has no or little meaning if, at retirement, one is weakened by age, ailing with an illness. Pinayayaman lang din pagkatapos ang mga doctor at ospital dahil sila ang tunay na makikinabang sa kayamanan.
And so this new paradigm.
I propose… that in retirement planning… a person will have enjoyed mini retirements in the course of his lifetime… perhaps starting at the age of 40.  At 40, one can look back at at least 20 years of income generating years and with careful and determined financial planning and execution, ought to be able to accumulate a some to provide funding for a mini retirement on that year… and again perhaps in 10 years and the next 10 and so forth… Increments may be shorter if the income allows.
The idea is not to wait for a decidedly future… as in way into the future date so as to risk poor health and disposition because of age.
In this way, I believe the individual can be more focused on his personal financial management both because it is required of this model but also that there is something real and concrete to look forward to in a relatively shorter period of time when one is still in the peak of age, health and well-being as to optimize and enjoy a retirement fully.
The mini-retirement that I suggest is a period of at least one year… where one may have a sabbatical.  It would be wonderful if the private and the public sector will have infrastructure and support for such a model as to eliminate risk to losing employment.  But even without it… I believe there are benefits to stepping back and smelling the roses.
A sabbatical for example… provides ample opportunity for the individual to gain fresh perspectives on his work, on his output, on his life.  Artists and those in the creative field (including entrepreneurs and programmers, etc.) wil surely benefit from such a break.  In addition, the absence of work is sometimes enough motivation for one to increase his productivity… appreciating work even more and raring to show what else he can do upon return to work.
In this way, there is sustainability to both wealth accumulation and enjoyment of the next mini retirement phase.  This also opens the possibility of people finally or officially retiring at an even later age, say 75 or 80 as the mini retirements would have given them the chance to extend their productivity well into their advance years.
In the end, the result is a revitalized, longer productive society as a whole. 3