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Determine Your Hierarchy of Needs for Retirement

'The New Retirementality' author shows you how to meet your money goals

By Mitch Anthony

In order to bring your life into balance and stop delaying your dreams (to get into what I call The New Retirementality) you need to first figure out the life you want. Then, you can determine how you’re going to pay for it — find it first, and then fund it.

To help you do this when preparing for retirement, I overlaid Abraham Maslow’s famous Hierarchy of Needs with financial needs to come up with a financial rendition: A Hierarchy of Financial Needs.

It’s a way to create a retirement income plan designed to simultaneously settle both emotional and financial ledgers and develop an income stream that lasts as long as you do, outpacing the inflation that threatens to rot your nest egg slowly but surely.

Maslow taught that human beings are motivated by unmet needs, and that lower needs must be satisfied before the higher needs can be addressed. We must meet people’s most basic needs (like physical survival) before they will be able to address other needs (like love).

Rather than study rats or neurotic people, Maslow developed his theory by studying people such as Albert Einstein, Eleanor Roosevelt and Frederick Douglas. The hierarchy Maslow offered was: physical survival, safety, love, esteem and self-actualization.

For the purposes of a financial/life discussion, I have taken the liberty of renaming and juxtaposing two categories: love and esteem. In the Hierarchy of Financial Needs, love becomes “gifting.” Maslow defined love as having to do with belonging — to a spouse, a family a community or a group — and gifting is most often the material expression of love.

What Maslow called esteem I have called freedom. Maslow was referring to the self-esteem that results from doing things well and being recognized for it. In the Income for Life model, this is categorized under “freedom money” because unless people have the freedom to do what they want with their occupational lives, they will be missing the esteem and satisfaction that come from doing what they’re best at.

(MORE: 8 Ways to Derail Your Retirement)

There is also an aspect of financial freedom that lets us address not just esteem, but enjoyment as well. Hobbies and trips and exploration cost money, and if we don’t prepare an income stream to address these costs, we may not realize those experiences.

I have placed freedom below gifting on the hierarchy because, from a financial point of view, it is quite unlikely that we will give money away to others before we are free to pursue a fulfilling life ourselves.

Following are the phases of financial preparation we need for Income for Life planning:

Survival Income

Survival income is money that we have to have to make ends meet. If you stripped away the frills and thrills and just paid the bills of survival, what would it cost?  Most people have never taken the time to answer this most basic financial question: What is the cost of survival?

Safety Income

Safety income is money we must have to meet life’s unexpected turns. It has been said that “life is what happens while we are making plans.”

Financial risks exist in every category of our lives. A leading risk in the minds of individuals approaching retirement is the risk of outliving their money. Other top-of-mine risks are health, investment risk, loss of income and financial needs within the family.

(MORE: 10 Keys to Retirement's Holy Grail)

As much as possible, we want to protect ourselves against catastrophes to our bodies, our money and our material things. In many cases, this can be accomplished with insurance.

It would behoove us all to get an objective opinion on the level of insurance we are carrying toward death, disability and catastrophe. The money needed to guard against these risks is your safety income.

Freedom Income


Freedom income is money to do all of the things that bring enjoyment and fulfillment in life. What is the exact cost of the activities and indulgences that bring you pleasure and relaxation?

Travel, adventure, sports and personal growth/education are some of the considerations to include when calculating the amount needed to fund your freedom.

Gift Income

Gift income is money for the people and causes that we care deeply about. As we move up Maslow’s pyramid — securing our survival, safety and freedom — our money can be utilized in the higher calling of bringing blessing to those people and causes that matter most to us.

The money needed to pay for gifts and benevolent annuities is your gifting income.

Dream Income

Dream income is money for the things we’ve always dreamed of being, doing and having. Some would call it their “bucket list” money. What do you want to be? What do you want to do? What do you want to have?

Essentially, this is about paying the bills of self-actualization.

For some people, only a career change will bring them to this place. For others, it may require part-time involvement in activities more closely aligned with their sense of passion and purpose.

Paying the Bills

The final phase of the Income for Life discussion is matching your income sources against your income needs — which sources will pay for which needs.

If you find you only have enough money to pay for survival and safety at this point, you will at least have the comfort of knowing those two critical bases are covered.

You will also have a clear picture of how much you will need to meet your other needs. Then, you can set goals around saving and budgeting to expedite achieving the income necessary for funding these important needs of freedom, gifts and self-actualization.

If your income isn’t enough to meet your needs, you may have to negotiate with your needs.

Begin to view your income not as just a way to pay the bills but as a means to funding a life — the life you want.
Excerpted with permission of the publisher, Wiley, from The New Retirementality: Planning Your Life and Living Your Any Age You Want, 4th Edition by Mitch Anthony.  Copyright (c) 2014 by Mitch Anthony. All rights reserved. This book is available at all bookstores and online booksellers.

Mitch Anthony is founder and president of, a consulting firm that works with financial services companies to promote transparency between advisers and clients. He also hosts The Daily Dose, a radio program heard nationwide, and is a columnist. Read More
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