One of our co-workers at the Retirement Income Industry Association is living an aspect of retirement that we tend to ignore, because we do not experience it often before then.
In the past few months, he has been attending funerals at a rate of about one a week. Indeed, a rarely discussed aspect of retirement is about looking back at lost family and friends.
While this is a real aspect of retirement, it does not have to be the central feature of retirement.
Life is not about looking back and losing friends. Life is about growth and making new friends.
Retirement is also about growth and making new friends because somebody has to pay for it.
As a long standing family joke, my older daughter reminds me before Christmas to give her nice presents, because she is the one who will choose a nursing home should it become necessary. My response to her is that I am counting on it, because she and her siblings are my retirement plan.
Recently, RIIA members were discussing the importance of not only financial capital but also of human and social capital in preparing reliable retirement plans.
I mentioned my daughter's comment, and to my surprise many in the group has not made the vital link between children and retirement. Many had not thought through the fact that their assets and claims are only worth something because their and other people's children will be producing the goods then that will make these assets and claims worth something.
Whether it is your own children who will take care of you from their own efforts and earnings or whether it is other people children, your social capital and financial capital assets are only worth what today's children will produce in the future when you exercise your claims.
Your human capital is what you produce yourself. Their human capital is what makes your social capital and your financial capital worth something that you can exchange for the things you need in retirement.
In the end, funerals notwithstanding, retirement is about life, growth and making new friends. Our children, all grown-up or otherwise, are all about life, growth and making new friends.
Much like our personal story about growth vs. funerals, a founding member of RIIA points out that accumulation connotes increased revenues or profit because the current business model of financial institutions prices by the pound.
On the other hand, decumulation implies less and financial institutions have not yet figured out how to increase revenues or profit from "less."
What is the business story here?
