2003-10-30 / Business & Finance

Money Matters

By Randy Neumann
Money Matters By Randy Neumann There’s More To Retirement Than Just Finances

Abraham Harold Maslow was born April 1, 1908 in Brooklyn, New York. He was the first of seven children born to his parents, who were uneducated Jewish immigrants from Russia. His parents, hoping for the best for their children in the new world, pushed him hard for academic success. Not surprisingly, he became very lonely as a boy, and found his refuge in books.

He began his study of psychology at the University of Wisconsin where he received his BA in 1930, his MA in 1931 , and his PhD in 1934. One of his findings while studying monkeys early in his career was that some needs take precedence over others.

For example, if you are hungry and thirsty, you will tend to try to take care of the thirst first. After all, you can do without food for weeks, but you can only do without water for a couple of days! Maslow found that thirst is a "stronger" need than hunger. Likewise, if you are very very thirsty, but someone has put a choke hold on you and you can’t breathe, which is more important? The need to breathe, of course.

His "middle" work dealt with anthropological re-search of the Blackfoot Indians in Canada. He then began analyzing the lives of famous people, e.g., Abraham Lincoln, Thomas Jefferson, Mahatma Gandhi, et al. It is in this, his later work, the study of famous people, that Maslow found the apex to his now famous "hierarchy of needs."

Maslow believed that human beings had a natural tendency to grow in a positive and self-governing way. He showed this in a five-level pyramid of needs (see below). At the bottom level, the most basic, are physiological needs. We have basic needs - air, food, water and sleep - required to keep alive. Once these survival needs are met, there is a natural tendency to think about the next level - the safety needs: including security, order, stability and protection.

Once these needs are met, the need for love and belonging comes into play. Family, community, loved ones and affectionate relationships are the antidote to loneliness and isolation. Once the need for be-longing is satisfied, people tend to look for self- esteem. They seek status,. fame, dignity and even dominance. They also seek to rise in their own appreciation of themselves, which is self-respect.

These four levels are called deficit needs - as soon as we sense a deficit in any of these needs, we focus on meeting the need. The last level, self actualization, is a little different. There is no satisfying this need. It is the endless drive to be all that we can be.

A recent article in a financial planning industry journal described Maslow’s self-actualization to be "retirement." More and more often it is. These days people are no longer satisfied with the notion of "gone fishing" to mean retirement. Frequently, re-tirement can be described as the time in life when the primary focus of daily activity shifts from economic productivity, earning a living, to self-realization, chasing one’s dreams.

This is not to say that financial planning is an unnecessary part of retirement planning (perish the thought from a financial planner’s point of view). Quite to the contrary, if you do not project your pre- and postretirement cash flows, plan your estate, man-age your portfolio as well as your risks, you may wind up back at the bottom of Maslow’s ladder, i.e., worrying about food, clothing and shelter!

There is more to retirement than finances. When planning retirement one should consider the non- financial aspects of retirement: mental and physical health, diet and exercise, social contact, intellectual stimulation, personal relationships and spiritual balance. Amen.

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