Retirement Planning: Kick Entropy to the Curb

Retirement planning may not be rocket science, but it does require an understanding of the laws of physics. The Second Law of Thermodynamics states that left alone, systems tend toward disorder — called entropy. This concept can be applied to retirement, where the best-laid plans can drift over time. Experts suggest that retirement isn’t all that different from a garden, where chaos takes over when things are left unmanaged.

A study found that only 4% of retirees said they were ‘living the dream,’ while 15% reported they were struggling. Meanwhile, 63% wished they had done more planning prior to retiring. This highlights the importance of having a system in place to sustain life in retirement. The first law of retirement is to accumulate enough wealth to live off of, but the second is to sustain that life through structure. This can be referred to as the Second Law of Retirement: left unmanaged, your time, money, and energy will drift toward disorder.

Understanding the Second Law of Retirement

Knowing what you want from retirement is far different from building the systems to get there. As wellness author James Clear wrote, ‘You do not rise to the level of your goals. You fall to the level of your systems.’ Patrick Huey, a principal advisor, puts it more bluntly: ‘If you don’t drive the agenda, time, money, and energy will slip away on someone else’s terms.’ This emphasizes the need for a structured approach to retirement planning.

So, how can you kick entropy to the curb? The answer lies in a three-step system. These steps are designed to help you conquer the ‘endless Saturday’ or ‘do it all’ trap, adopt a flex-spending baseline, and beat energy drift. By following these steps, you can create a system that will help you sustain your life in retirement.

Step 1: Conquer the ‘Endless Saturday’ Trap

Most people associate retirement with ‘freedom,’ but treating every day like a blank slate has its drawbacks. The ‘endless Saturday’ trap refers to the situation where retirees find themselves sleeping late, watching too much TV, or agreeing to unwanted obligations out of guilt or aimlessness. Others go in the opposite direction, cramming their schedules with travel, hobbies, and big-ticket items, burning themselves out by trying to ‘do it all.’ Neither approach is truly satisfying if it’s not intentional.

The solution might be what most of us take for granted during our working years: routine. Research shows that routines improve mood and reduce stress. Anticipation itself has measurable benefits to mental well-being. People who had something to look forward to were happier and more resilient. It’s easy to underestimate how much time needs to be filled. If you remove a 48-hour workweek, that’s roughly 40% of your waking time. Without something to fill that gap, even freedom can feel like a burden.

To help with the transition, it’s suggested to ease into retirement with a phased schedule. This can involve cutting back gradually — from six days a week to four, then to three. It gives you a chance to adjust to the new rhythm of life and find a routine that works for you. A time audit can also be helpful in identifying how you spend your time and where you can make adjustments to create a more fulfilling routine.

Step 2: Adopt the Flex-Spending Baseline

The second step involves adopting a flex-spending baseline to combat U-shaped spending drift. This refers to the situation where retirees spend more than they need to, either due to a lack of planning or a desire to make the most of their retirement. By adopting a flex-spending baseline, you can create a budget that is flexible and adaptable to your changing needs.

This approach involves identifying your essential expenses, such as housing, food, and healthcare, and then allocating your resources accordingly. It also involves creating a buffer for unexpected expenses and having a plan in place for handling financial shocks. By adopting a flex-spending baseline, you can ensure that your finances are sustainable and that you’re making the most of your retirement resources.

Step 3: Beat Energy Drift

The third step involves beating energy drift by ensuring daily social, physical, and purposeful activity. Energy drift refers to the situation where retirees experience a decline in energy and motivation, often due to a lack of purpose or social interaction. By incorporating daily social, physical, and purposeful activity into your routine, you can help to combat energy drift and maintain your physical and mental health.

This can involve activities such as volunteering, joining a club or organization, or taking up a new hobby. It can also involve scheduling regular social events, such as coffee dates or outings with friends. By incorporating these activities into your routine, you can help to maintain your energy and motivation, and ensure that your retirement is fulfilling and purposeful.

What Should You Do About Retirement Planning?

Taken together, these developments show, retirement planning is not just about accumulating wealth; it’s also about creating a system to sustain your life in retirement. By understanding the Second Law of Retirement and following the three-step system, you can kick entropy to the curb and create a fulfilling and purposeful retirement. It’s essential to drive the agenda and create a system that works for you, rather than letting time, money, and energy slip away on someone else’s terms.

Retirement planning is not rocket science, but it does require an understanding of the laws of physics and a structured approach to creating a system that will sustain your life in retirement.

By taking control of your retirement planning and creating a system that works for you, you can ensure that your retirement is everything you hoped it would be. So, take the first step today and start building the systems you need to kick entropy to the curb and create a fulfilling and purposeful retirement.

Retirement Planning – Disclaimer

This article is for informational purposes only and should not be considered as professional advice. Retirement planning requires individualized attention and consultation with a financial advisor. Outcomes may vary based on individual circumstances, and it’s essential to consult a qualified professional before making any decisions.