5.9 | Deconstructing and Revisioning Retirement

> Isha Vela: Welcome to Waking Up Wealthy, the podcast for visionaries and rebels who are ready to revolutionize their relationship with money and create powerful collective ripples with the money they make. I’m your host, Isha Vela, trauma psychologist, somatic practitioner, financial professional, and minimalist, bringing you practical money tools, unconventional wealth perspectives, and Aquarian era business strategy to guide you in building wealth that’s aligned, ethical, and empowering. Let’s wake up to the true meaning of wealth together.

>> Isha Vela: Hello and welcome to the Waking Up Wealthy podcast. And today we’re going to flip the script on retirement. And as you might already know, one of my bigger intentions with both this podcast and my finance business is to co create a new money system. And I believe we begin to do that by changing it from the inside. That means two things. The first being more rebels, revolutionaries, change makers, spiritual gangsters, infiltrating the current economic system by participating in it, meaning that you get educated on the current system, becomes someone who influences it, by making decisions, regulated decisions, and also by acting in integrity with your heart, with your ethics towards being a more compassionate and humane system. Right, Just by our behavior and our actions and how we run a system or a financial system, that we just create a better system. And it’s not to say that it doesn’t need to be broken down, it does, but I think that much like a, like ah, an insect that sort of like breaks out of their old skin, we create a new one. So I want you to imagine that just have that as imagery of like you’re like molting and sort of like breaking out of the shell or like a snake sheds its skin, there’s sort of a new, a new, a new animal emerges essentially. And then number two, right, so changing the system from the inside also means breaking down specific belief systems, attachments and conceptualizations. Whether it’s about debt, wealth, ownership, what that means, consumption, retirement. And retirement specifically is something that I’ve been thinking about more recently since I moved, but over the last couple of years, mostly because the bulk of my work is really helping people figure out how to plan for the future and plan for a time where they’re no longer working. And I’ve been thinking about it for myself because as I approach, right, my own official retirement age, I’m really wondering, well, what do I want my life to look like now? And I’ll talk a little bit more about that in a moment. But here’s what I see a lot of when I broach the topic of retirement. So I see that most People are in survival mode, living month to month. They don’t have the cash flow to make any sort of investment in their future. A lot of people’s lifestyles are at the same level as their income. And as their income has increased, their lifestyle has increased right along with it, making it so that they don’t have any discretionary income to do anything with. and to be honest, that’s not always people’s fault. Right. things are expensive. And again, I’ll touch upon each of these things. I don’t want to get ahead of myself. some people are unable to see past the next several years, let alone 10, 20 years. when you’re in survival mode, you’re just building towards the next immediate task, whether that’s making a repair. Ah, making like a home improvement kind of repair, planning for your children’s education, purchasing a car. Right. Just sort of the next thing. And most people struggle to answer the question of how much money they want in retirement on a monthly basis when they are retired, even when I encourage them to kind of, you know, even do it in today’s money, not even counting inflation. They just, Most people don’t know what they require to live and feel like they have enough. And for those of us who grow up in a culture of consumerism, we have no idea what enough is until we have a lived experience or lived experiences that help us truly discover what you actually require to live a contented and internally wealthy life without necessarily having sort of the comfort of material wealth or resource. And over the last 30 years, let’s say, and more acutely in the last 10, I’ve been exploring, both intentionally and through unintended life circumstances, what it’s like to live with less challenging myself, to reduce, without feeling, without the feeling of withholding from myself or feeling deprived. this started, I would say, like maybe 10 years ago where I decided not to buy any new clothes for a summer. And I love to buy new clothes. I used to make shopping at Marshalls kind of like a weekly treat. And I stopped doing it and I was like, well, I’m still using all my clothes. All my clothes are fine and I don’t feel deprived. and I felt like I didn’t even miss going to Marshalls necessarily. So that’s just one small example. Another one is making my own health products, using coconut oil as facial cream, or making my own toothpaste or those kinds of things, and not necessarily buying or consuming sort of like, oh, this hair product, or even wearing, not wearing makeup or you know, just these little things that just have accumulated over time to add up the experience of resourcing myself and not reaching out to being influenced by marketing or by, hey, you’re going to look great in this and buy this and the seduction of having more. And it’s been an epic journey. I’ve felt like I’ve touched into pretty intense rock bottoms as well and life situations where I expected to feel pretty uncomfortable and surprised myself by not feeling that uncomfortable. one of those examples is when I had to evacuate the home I owned. I had to be evacuated because a tree fell into my living room and there was asbestos in my roof. And so I obviously I had to evacuate even without the asbestos. But, I bounced around through five different AirBnBs s in three months. And mind you, this was in the fall of 2020 where Covid was still very much a thing. And I found that I had never been happier to reduce my belongings to what I could fit in my car. And most of it was kitchen stuff. It was like my food processor, my blender, and just m. Some of my favorite kitchen tools. I left in. What was it. It was at the end. It was the mid. It mid Aug, mid August that I needed to leave my house. And so by November I still had like summer clothes that I was wearing that I had and then I got like a couple of sweaters from Goodwill and I was like, wow, I’ve never been happier. And that experience laid the groundwork for selling, giving away all of my belongings before moving abroad. So in addition to many people not having the experience around, like being able to know what is enough for them, we as a culture, as subjects or as participants in a consumerist culture and the being inside of living inside of capitalism, being born inside of the system, are not really allowed the freedom and the room to think about what we want our lives to look and feel like. Do you want to stay connected?

>> Isha Vela: Go to my website www. DoIsha Vela.com and download Prosper, my three part money course that dissolves money shame and dives into the five most common unconscious beliefs that get in the way of.

>> Isha Vela: Making more of it.

>> Isha Vela: You can also sign up for a free financial strategy session where someone on my team will guide you through the six steps of financial independence and provide you with a tailored holistic plan to build wealth ethically. All of those links and more are in the show notes.

>> Isha Vela: Yes. And so the experience of living inside a capitalist str structure where you are groomed from very on to be a. A cog in the wheel of that system. And B, someone who escapes that fate by becoming rich and powerful, for example, to keep things very simple cannot be underestimated. Right? That’s such a powerful and deep conditioning, especially since you are born into it from day one, you do not know what it’s like to live outside of it because you never have had the experience of anything else. Right? You’ve been fed someone else’s dream that serves to narrow your perception on the choices you have. And then on top of that, we aren’t really allowed the room to think like, especially women are not you, us, having us, being so attuned to what other people need and what other people want and what other people want for us that we often sacrifice our preferences, we sacrifice our needs, we sacrifice our choices. When it comes to crafting our own lives, when it comes to really thinking about, well, what do I want? What do I really want that doesn’t involve taking into account everybody else’s opinions, happiness, pleasure, or displeasure or disappointment. And like I said, we do things for our children, for the benefit of our children, and our parents in order to, we don’t want to disappoint them. We don’t want to interrupt the comfort and regularity of their lives with something that we want. So we say, oh, no, we won’t do this or we won’t do that. and that conditioning is really deep. It takes years, even decades, to fully tune in and design your dream life. Design a life that feels congruent. You know, we often talk about designing a business that feels congruent, but then that business also needs to be congruent with our, the life of our dreams. And you have to do, you know, all of that. You have to take into account how you work, not only where you work, right. What you do or in what field you work, but how you work. How much, how much do you need to exist and live and maybe even where, where you want to live, to feel satisfied with the quality of your existence and your experiences. And every single person I sit down with, and I was once in that seat as well, every single person I’ve sat with doesn’t know what their financial independence number is. And again, I didn’t know either. and your financial independence number is the number you need to have saved by the time you retire that you’ll be living off in the 20 plus years that you’re in retirement, that you’ll not be working, hopefully. And if you are working, you’re working without necessarily needing to Pay attention to the financial exchange that results from energy output. Right? You’re really giving from a place of pleasure, abundance, freely, not necessarily looking to get remunerated. And to calculate your financial independence number, you want to figure out how much money you need to invest or save to sustain your lifestyle without working. So step one of that is knowing your actual living expenses. So you want to be asking yourself, how much do I spend a year to live comfortably? And you want to include housing, food, insurance, travel, self care, debt payments, kids expenses. And I’m guessing that, if you were planning on, if you’re thinking about living comfortably and depending on when you decide to do that, if youn toa do it immediately, or if you’re planning for maybe 10 years ahead of now or 20 years ahead, maybe kids expenses will be factored in, maybe they won’t. Maybe you won’t have debt, maybe you will. So you want to do all of those calculations and do you expect those expenses to go up or down in retirement once you stop working? So step two would be deciding your withdrawal rate. This is the percentage you’d withdraw from your investments each year. And the most common rule is 4%. So this is based on historical averages. It means you withdraw 4% of your investment each year and your money is likely to last 30 plus years. But you can also use 3.5% to be more conservative or 5% if you’re okay with more risk or have a shorter retirement. So step three is to use the formula. So the financial independence number equals your annual expenses plus your withdrawal rate. So with the 4% rule, let’s say your annual expenses comes up to $80,000 a year, right? So you divide that by 4%, which equals $2 million. And I’ve done this in other episodes. I just thought I’d bring it in again, so you don’t need to dig around. So that means you’re going to need $2 million invested to live on $80,000 a year indefinitely. Then there’s an optional step four. You Wantna adjust for inflation and lifestyle. So I strongly suggest you adapting or adjusting for inflation because inflation is a real thing. And when I calculate these numbers for people, when they come up with a number that feels comfortable for them, that often doubles 10, 20 years from now. So you want to definitely account for inflation. So you want to be adding 3% per year of you’re accounting for inflation. So you know, some of the questions you want to ask yourself is do you plan on living more luxuriously later on? Do you want to Travel more? Will medical or family expenses increase? So those are all the adjustments that you’re wanting to make in addition to inflation. So I’m winding around a little bit because I want to provide both a practical value in this podcast. In other words, I want you to at least walk away from this episode with your financial independence number. And on the more conceptual side, I want you to really begin redefining retirement for yourself, redefining what that means for you, and really beginning to think about and ask yourself, what do you want your dream life to look like? And what is often sold to you as your dream life is sitting on the beach. And what is often marketed to you is sitting on a beach. And it’s funny because the pictures that I’ve been posting on my social media are actually of me sipping, a freaking coconut on the beach, because this is what people do here. So in a way, I feel kind of funny saying that because this is actually what my life looks like. but what is sold to you is sort of this idea of doing nothing, of really just sitting around and doing nothing. And I want to kind of shift that for you today. When you think about it, retirement in and of itself is a totally boomer concept. And, the idea being that you work for an employer, meaning that you’re creating someone else’s dream during the most vi_br and productive years of your life. And then once they’ve used up your life force, then they put you out to pasture, right? They’okay we’re done with you here. You are released from bondage, and then adding insult to injury, then you walk away with a 401k instead of a pension. So essentially they’ve garnished your wages for 40 years so that you can pay your own pension in the future. That’s some disturbing shit right there. Okay, so just to give you a little bit of backstory on how that switch happened, like how people used to just stay at one job, stay for the pension, stay for the benefits, and then it shifted to 401ks and people are investing in 401k, and then all people had were their 401k s. So let me give you a little bit of historical context for that. So here’s the educational piece. Before the 1980s, most retirement benefits came in defined benefit pensions where employers guaranteed a set of a certain amount of monthly income in retirement. And the responsibility for saving and investing was entirely on the employer. And there was like a loyalty between the employer and the employee for that reason. In 1978, Congress passed the Revenue act, which include a provision called section 401 of the internal Revenue Code. And originally it was designed to clarify tax rules and bonuses for bonuses and profit sharing plans, that let employees defer income like stock options and bonuses and things like that. And the intention wasn’t to create a new retirement plan, but that’s what ended up happening. So Ted, Ben, he was a benefits consultant. He masterminded the 401 thing. He realized that employers could offer a tax deferred savings plan where employees could contribute part of their wages before taxes. And he helped a company implement the first 401 style plan in 1981 and that allowed employee contributions with employer matches. So he designed that whole thing and the IRs improve. They approved this new interpretation of that 401 provision. And employers quickly jumped on that because it kind of got them off the hook from having to provide a pension that basically cut cost, reduced, liabilities like pension liabilities, and it reduced costs to the company. they basically phased out the whole pension thing in favor of 400 ones. Employees also like to have more control over their investments, although I would say that nowadays most employees have no clue as to how their money is being invested, let alone the ridiculous fees around having 400 ones. People don’t know about the fees and talk about other types of fees, but they don’t realize the fees they’re being charged. And 400 ones are now, as you probably imagine, the primary retirement savings vehicle for most U.S. workers in the private sector. the problem with 401 is that people are putting most of their eggs in that one basket without really considering the impact of taxes. Because these are all tax deferred monies. This is, when you pull out that money in retirement, you’re going to be having to pay taxes on it. And in addition to having had to pay for your own pension or pay into your own pension, the government is then going to take a third of it. They’re going to take a third of it. Right now the max tax is 32%. But we don’t know what that’s going to look like in, right, 20 years, 10 years. And that for me is absolutely criminal. The fact that you’ve had to pay for your own pension and that the government is going to take a third of it. When you start to pull that money out in like the most supposedly like the years of your life where you’re supposed to be resting and relaxing, that is like, wow, that’s frgin unacceptable. and what if taxes are like 50% in 20 years. We don’t know that like currently things are like, we don’t know what’s going to happen with taxes and there are currently laws being passed that we have no idea what the impact is going to be tax wise. So, anyway, back to the concept of retirement. So here’s a breakdown. I wanted to offer you a breakdown of seven reasons why retirement is an outdated concept and what’s replacing it with some questions of reflection at the end. So please listen until the end. So number one, like I said, retirement is designed for boomers. And even earlier than that, in the earlier 20th century, like when life expectancy was around 60 or 65 years old, people are living relatively healthier and longer lives, usually about 20 or 30 years more. So that’s why side conversation, long term care has become an important, an even more important thing to integrate into your financial plan. And oftentimes people look at me confused as to why I’m talking about long term care to someone who’s in their 30s and 40s and it’s because like yo, this is going to matter. This is a real thing that you need to plan for because the cost of that is prohibited. If you are in your 50s and if you have a parent who is s in the process of retiring or if you have a grandparent who is going through maybe looking forward, some type of elderly care, you know, what a big deal or what a big impact that this having on your parents. Maybe you are experiencing this yourself with your elderly parents. yeah. And lots of boomers especially have not thought about long term care because their whole work culture, the way they were raised from like even from a developmental standpoint, like developmental wounding, they have been raised in a way that is hyper independent. They think they are indestructible and so they can never even imagine themselves being vulnerable enough to require long term care. And so it’s really hard to overcome that conditioning when meeting with those folks. all right, so two, retirement assumes a linear life path. For example, you get educated, you work for 40 years and then you stop working. And that’s not how most people live their lives. Life is non linear as you might have noticed from your life. people shift careers, they start businesses later in life, they start multiple businesses, they stop a business, they start another business, they get education at different phases. And number three, retirement also ignores purpose and fulfillment which is becoming more and more important for every generation. Following the boomer generation people, and especially young people, meaning they crave more meaning young people, Younger generations are craving more meaning. People are becoming more spiritual. people are using work as a source of identity, not subsuming all of their identity into work, but it is one facet of their identity out of many aspects of their identity, and it is part of their contribution and purpose as well. People want to have their work feel like it’s part of their sole alignment. And the old retirement myth is, once I stop working, I’ll be happy. And that is just not the case now. People say, I want my work to fulfill me. I want my work to nourish me and to make me feel alive, not take away from my aliveness or detract from my aliveness. Many people feel lost or depressed after retirement because they lose the structure, the community, and the purpose. And they essentially lose their identity in a lot of ways and have to start from zero. And people are not willing to do that now. People want to experience that happiness in the present moment with the work they’re doing now. Number four, retirement is financially unsustainable for most people. So it’s a really sad fact that many of the financial independence numbers I come up with, and even the number that we came up with during this episode, which was 2 million, it’s not lower than 2 million because most people don’t want to live off $8,000 per year. They want to live off a minimum of $120,000 a year. And as I mentioned, there are fewer pensions than ever before. There’s also a very heavy strain on Social Security, and I don’t even calculate Social Security in my retirement income formulas because we don’t even know if it’s going to be there. And I’d rather have people create their own sources of income, create their own pensions independently, rather than rely on collapsing structures. Then you have healthare, then you have living expenses going up, making it so that, you need to save more now in order to live relatively comfortable later. So the question becomes, how do you fund 20 or 30 years of not working when you might only work for 40 years? Right. Number five, retirement also perpetuates a scarcity based mindset where you’re having to hoard money for a future that’s not guaranteed. So boomers were willing to delay joy. But young people, like I said earlier, are not willing to postpone their dreams until age 65 when they don’t have the physical health and wellness. Maybe they do, maybe they will, but we don’t. Nothing’s guaranteed, right? We may not have the physical wellness, and the mental wellness to Fully enjoy life. Right when we’re 65, know our bodies are a little. Our bodies do age. Even though we’re incredibly healthy, our bodies do age. And I became aware of this as I started to plan other people’s retirements. And through my own embodied wealth work, I became aware of the fact that I was 50, 51 years old and that I had about 15 more years to really live the best life I could possibly live in. A body that still had the flexibility to have some more intense physical experiences like jumping out of an airplane or going, yeah, doing some other extreme sport or surfing or kite surfing and doing any of those things. And because I had my kids at 38 and 39 years old, I wanted to be able to provide those experiences soon as possible. So the new paradigm is to create a life that you don’t need to retire from. And you’ve probably heard this many times before. So the idea being that you can enjoy life, you can build well and contribute to society with a sense of purpose. So number six is entrepreneurship. And living a spiritual life has changed the game. So entrepreneurship for many people has provided, at the very least time, flexibility, where you can choose the rhythm of your day and create work that’s aligned with your talents, with your energy level, with your capacity. And I want to say something about financial freedom here, because financial freedom doesn’t necessarily equal not working. Financial freedom means the choice to rest, to pivot, to create, to play in ways that are in step with your energy signature, with your desires, with the phase of your life that you’re going through, with your nervous system capacity, wherever that happens to be. And when you think of it this way, work becomes something sacred. It doesn’t become this thing you do and that you like. It’s a toil. It’s a burden. Work is sacred. Work is purposeful. Work is life giving. Work is a. It becomes an extension of who you are, an extension of your life force and maybe even your dark, karmic purpose. If you live and lead and work from a place of mission, then there’s no real endpoint to that. There’s no necessarily retiring from that. Number seven. The future is cyclical, not linear. So as we become more attuned to the natural world, as we dissolve our separateness from nature and listen to our own internal rhythms, whether it’s a moon cycle or your menstrual cycle, or your cycle of play and rest, we have become more aware that we don’t need to move in linear ways. We can recognize just from the way our Life has moved. And even how we heal and grieve, none of that is a linear process. That all happens in cycles and in spirals, right? We come back into places of healing where we touch back into places that we’ve touched into before, but we come at them from a different perspective. And there are also phases and seasons in our lives. Even in our season of our relationship to money, maybe there are seasons where we work more, other seasons where we take time off. There may be times in your life where you have to step away from being employed to raise your children or to provide care for an elderly parent. There may be seasons where you step away to travel or engage in spiritual work. I’ve been meeting lots of people, who maybe end businesses to world school for a year. People who, end or pause businesses because they become aware that they need to heal something and then they start other businesses. And of course, there are seasons when you invest a ton of energy into building a new business and new venture and true wealth. And includes time, flexibility. It includes freedom, energy, sovereignty, emotional fulfillment. It’s not just a nest egg thinking about that, right? Taking all of that into consideration, these seven ways that I want to flip the script on retirement, I want to leave you with a few questions that you can reflect on. So number one, first question, what did you learn about retirement growing up? What relationship did your parents have with retirement? And if you’re old enough, how are they experiencing retirement now? What did you observe as they were moving through, as they shifted into that season of their life? Number two, how do you want your life to look like at 50, 60, 70 and 80 years old? Write it down, Write it down. And maybe, you know, do a meditation where you imagine yourself at 80, looking back into your 40s, 50s, and 60s. There have been studies done about, like, regrets of the dying, right? I think there was a book that was written about people wish that they had worked less and been more present in their lives, right? So when you are, thinking about that, right? Consider that same perspective for yourself. And when you are calculating your monthly desired inconolal. For example, what kinds of things do you want to doing at 50, 60 and 70, 80 years of age? Do you want to travel? Do you want to be gardening? do you want to be, yeah. Do you want to be stewarding land or drinking lemonade on your porch? I often joke with people that, like, when you’re, you know, the lifestyle, when, when people tell me that they want to live off $5,000 a month, I’m like, okay, Then you’re going to be drinking lemonade on your porch. You’re not going to be doing anything but sitting at home and drinking lemonade, which some people prefer to do. And that’s fine. but I say that jokingly as like, okay, you’re not going to be doing anything. You’re not going to be going on any adventure. You’re going to be at home. Number three, question number three. Do you want to stop working or do you want to stop doing work that drains you? Some people are really focused on retirement because they don’t enjoy what they’re doing Right now. They’re looking at retirement as a way to escape the golden handcuffs. So is that you really ask yourself that question. So, number four, so as a piggyback on that third question, if you’re doing work that’s draining you, what would be work? What would be work that fulfills you? And how much permission can you give yourself to go in that direction? How much permission are you willing to give yourself and who are you afraid of disappointing when you do give yourself permission? When you think about giving yourself permission to go in that direction? Question number five. How has this episode shifted your idea of retirement and building wealth towards retirement? If you’ve had a light bulb moment or an aha moment, I’d love for you to share it. in the comment section of social media when I share this, I want you to maybe share your reaction in a story on Instagram or on Facebook and tag me in it. I’m sending you so much love and I want to invite you to set up a tailored financial plan that can answer some of these questions. And the goal is to provide you with a personal money system that can support you in creating a life that feels satisfying and fulfilling to you right now. And of course this is complemtary and the link is in my show notes always. And of course, if you want to join me in being one of the disruptors and one of the rebels and revolutionaries, that is recreating or not recreating, but disrupting and revisioning, reimagining a new financial system from the inside out. I’ve also included an application in the show notes as well. All right, sending you so much love and I’ll see you on the next episode.

>> Isha Vela: Thank you for listening to today’s episode. Remember to hit the subscribe button to get notified of new episodes dropping on the new and full moons of each month. And if you haven’t already, leave us a five star review on itunes to make sure that everyone who needs this transmission receives it until the next episode. I’m sending you fierce, fierce love.