What’s Next After Early Success?

Feeling too young to retire? You may need a new vision.

It seems like more people are becoming entrepreneurs and cashing in on their successful business ideas at younger and younger ages. While these great achievements deserve celebration, what I often see with younger clients is that soon after the thrill of being flush with wealth dissipates, they feel a bit lost.

If you’ve just experienced a financial event such as an IPO or business sale, you may get tired of friends and relatives telling you that you are fortunate, or you’re wondering what to say to others who ask what you do for a living. These are common feelings as few successful, young professionals prepare for the emotional aspect of sudden wealth, and they need a new vision for a meaningful life.

So what should you do next to map out a fulfilling future? Follow these three steps:

1. Confirm that you are financially independent
2. Take a personal inventory
3. Develop a new vision

Confirm that you are financially independent

Are you sure you have enough wealth now to make further accumulation optional? Of course, working out your specific financial independence number, along with your personal trade-off between investment risk and return, should be the first item on your list when you sit down with your wealth advisor. A simple approach to determine if you are financially independent is to multiply your annual living costs times 30. The result is the minimum amount you should have in liquid assets to be financially independent.

Based upon my experience, a typical affluent family in their 30s or 40s living in Los Angeles spends between $200,000 and $600,000 per year on lifestyle costs. Many things factor into this range. Those with children are at the higher end, as private schooling and other expenses to support children can be significant for young families. Also, everyone has a different definition of a comfortable lifestyle with their desire for housing, travel, clothing, etc. varying substantially.

Using the 30-times formula results in a range to be financially secure of $6 million to $18 million. Any amount over your number may be available to pass on to beneficiaries or charities at the end of your life.

Take a personal inventory

If you stop working, what will you do with your time and energy every day? According to Pamela D. McLean, author of the book “Life Forward: The Journey Ahead,” throughout our lives we are fulfilled by six motivating passions and values. The book is an excellent reference to help you understand how to identify and proactively create your next life’s chapter by figuring out how you tick. The motivating passions and values are:

  • 1. Personal Mastery — Using your strengths and unique abilities — Knowing yourself
    Personal mastery is a natural focus early in your life as you attempt to identify who you are apart from your parents.
  • 2. Achievement — Setting and achieving your goals — Proving yourself
    In your 20s, finding and developing your unique abilities along with setting and achieving goals will serve you well to jump-start your financial success.
  • 3. Intimacy — Social interaction — Sharing yourself
    In your early 30s, as you become more confident in your personal mastery, you may add more focus on intimacy, finding a mate and starting a family.
  • 4. Play and creativity — Expressing yourself
    As you get more comfortable with the responsibility of providing for a family, you may give yourself permission to devote more energy to expressing yourself through play and creativity.
  • 5. Search for meaning — Spirituality — Integrating yourself
    A search for meaning or what it’s all about, and trying to figure out why you are doing what you’re doing, may not become important until you are at least in your 40s.
  • 6. Compassion and contribution — Leaving a legacy — Giving yourself
    Leaving a legacy may be a natural part of raising a family, accelerating as you shift from looking forward at how far you have to go in life to looking back at how far you have already come, and what you regret or are grateful for having been given.

You will blend mixtures of the above in different proportions throughout the stages of your life depending on your age, life experiences and emotional maturity. But often, people who reach for financial success at a young age sacrifice one or more passions or values, resulting in being out of balance.

For example, without a family, you may jump to searching for meaning as you contemplate your newfound wealth. Or you may have suppressed play and creativity to achieve your goals and now need more time to understand what that means for you.

When looking for a replacement for work, give yourself permission to reflect and experiment as you determine what the right mix of these six are for you and proactively design the next chapter of your life.

Develop a new vision

I’ve seen many people who stop working for a living become more active than when they were working. Why? They have acquired a more engaging vision of their future.

A misconception of people who have not yet reached financial security is that once you finally get there, you’ll rest or coast like riding down the backside of a roller coaster following a long climb to the top. Although that may happen initially, after a while there is a feeling of drifting through life or being lost without a passion. Passion is an emotion and the more emotional your vision, the more excitement it creates as you generate ideas and strategies to achieve it.

Many people who have reached financial independence in their 30s and 40s tend to have visions that split the majority of their energies between personal mastery and compassion and contribution.

Personal mastery continues to develop at every age for most successful people. Setting and achieving goals using your unique abilities generates self-respect, a requirement for fulfillment throughout your life. However, creating wealth is no longer your primary objective, so use your developing strengths toward achieving new goals.

Be aware that your success may strain your relationships with your relatives and old friends, especially those who continue to work. For example, how will you answer the question at a party, “What do you do?” You will need to be creative here. People in your situation tend to call themselves consultants or refer to the board position they hold at a charity.

Compassion and contribution are at the heart of giving and leaving a legacy. If you are raising a family, look no further for how to develop an engaging, emotional vision of the future. Your vision will come from your dreams of your children becoming fully developed and happy. If you are not raising a family or your children have left for college, many people fulfill this motivating passion by giving both their time and money to the philanthropic causes that matter to them.

If you have recently become financially independent through a liquidity event, congratulations! Give yourself permission to pause and reflect. It may take as long as a year to visualize your next life chapter. Then plan, re-engage and work with your wealth manager to successfully transition — financially, strategically and emotionally — to your next exciting adventure.

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