By FPA member John Nelson
Last Updated: January 5, 2010
Your retirement values have probably taken a beating over the last year or so.
You're likely still mourning over the losses in your retirement accounts. Your ongoing deposits might be less than you'd like, too — whether that's due to lower contributions from your employer, or your own household budget. You're probably not optimistic about home equity being able to provide a secure source of retirement income. Who knows when home values will rebound? On top of all this, the long term effects of the recession could compromise your ability to keep working (and saving). If you're forced to retire sooner than you'd like, your poor accounts may never recover. Then, you might even need to work part time, to avoid drawing your retirement values too quickly.
It doesn't seem fair.
You may have sought good advice, created a sound financial plan, and done everything right — only to discover you'll have less retirement income than you thought. The reality is becoming obvious: No matter what you do, you won't be able to afford the retirement lifestyle that you expected. End of story.
But is that really the end of the story?
There's another way to think about "retirement values" that has nothing to do with Individual Retirement Accounts (IRAs) or 401(k)s. It has to do with core values — those guiding principles we use to make sense of our lives. Research shows that we find fulfillment when we live according to our core values. In the current economic situation, it may be that the stage of life we call retirement is only partly about what lifestyle we can afford. Perhaps retirement is more about choosing to live by our core values, regardless of our income level. Perhaps retirement is less about the lifestyle we consume — and more about the life we produce.
Financial planning is attractive, partly because it's data-driven, quantitative and conclusive. In comparison, the subject of human values may seem vague and elusive. However, over the last two decades, Professor Shalom Schwartz of Hebrew University has used tens of thousands of responses from over 60 countries to develop and validate his data-driven Value Theory.
Schwartz discovered that humans recognize essentially the same sets of possible values — whether they personally hold those values, or not. Moreover, through statistical analysis, he discovered that humans recognize specific relationships between those sets of values. That is, holding some values precludes us from holding others. Schwartz' Value Theory maps out a values universe that we can peer into, and use to illuminate our own core values. This universe of values helps us see the relationships between the values we aspire to hold. It helps us see why some of our values are in agreement, while others are in conflict. It helps us see the constellations of values that we want to live by.
Clarifying and aligning with our core values helps us to navigate the rough seas of volatility and recession. Similar to the tools of financial planning, practical tools for working with our values will soon emerge. These tools will help us make values-based planning decisions. But you don't need to wait for the tools. You can intuitively identify those core retirement values that will help you find greater fulfillment. In the trying times that lie ahead, could it be that your deepest values are less about social recognition — and more about a sense of belonging? Less about indulging your wants — and more about appreciating what you have? Less about personal success — and more about responsibility to those you love?
For the coming year (whether your retirement values go higher or not), you can choose to live by your highest values. May this next year, be your most fulfilling, ever.
John Nelson is a speaker, coach, the co-author of "What Color Is Your Parachute? For Retirement" and a member of the Financial Planning Association®.