What, exactly, is retirement today?
The last two years of COVID-19 have changed everything—where we work, how we think about health safety, and our life goals. It has caused us to rethink how we want to live our lives. And that means the definition of retirement has changed dramatically in the last two years.
Two weeks ago I met a new client who asked me, “What, exactly, is the definition of retirement today?” She was asking because retirement now means different things to different people. It can mean a specific date that one stops working for good or, increasingly, it is more like decelerating down a hill on a curvy road.
Here’s how retirement has changed for three demographic groups:
The Greatest Generation
For our parents or grandparents, retirement used to mean dad/grampa1 working at the same company for 30 or 40 years (likely in a physically demanding job) and then stopping work completely and collecting a company pension and Social Security benefits. With many having lived through the Great Depression, saving has been a top priority and spending has always been difficult. For this group, “retirement” was straightforward because there were not a lot of financial decisions to be made. If you lived long enough to retire, you had reached heaven on earth.
‘Live forever’, Boomer Generation
Baby Boomers, on the other hand, have no intention of going quietly into the night. They have grown up in an era with a generally rising stock market and appreciating home prices. Spending has never been a problem—even when they don’t have the money (Think: cash-out mortgage refinancing). Also, health care innovation has led to improvements in care and treatments as they and their parents age. For them, retirement is the beginning of an adventure—more travel, a change from work to leisure activities, and time with family and grandchildren. Many hope for an early retirement, but those who were living in the moment during their working years may be faced with having to work longer than expected. While many say that they’ll plan to work part-time in retirement for years, statistically we know that most fully stop work once their career job ends.
Millennial’s, Gen-Xer’s
This group watched their parents lose a ton of money during the financial market meltdown of 2008-9. Feelings toward their employer are minimal at best. They know that their fulltime job is always at risk because employers seem to layoff workers on a whim. Having more than one job or always be looking for the next gig is the norm. With house values skyrocketing over the last few years, their earnings have stagnated. Retirement is so far off that it seems completely irrelevant, especially when buying their first home is either enormously expensive or out of reach entirely. They care about their retirement, but they would much rather be traveling to interesting destinations and participating in vacation “experiences” right now rather than saving for 30 years to take their first ‘round-the-world trip.
So, with each generation, the definition of “retirement” has changed. That means planning retirement for a 67 year old is going to be very different than planning retirement for a 27 year old.
Rick, Andrew and I look at each client individually. There is no “Work for 10 more years, save a million dollars and you’re set for life” plan with us. Why would we create a cookie-cutter answer when each client, like every child, is unique.
Are you wondering what your retirement could look like? Give us a call. We’re here to help. You can schedule a quick call with me by clicking HERE.
Lyman H. Jackson
Lyman@PlanWithFPS.com
617-653-3303
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1 Mom/grandma, of course, worked but most commonly in the home for no pay.
Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. FPS provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client after entering into an advisory relationship. Information herein includes opinions and forward-looking statements that may not come to pass. Information is derived from sources believed to be reliable. Information is at a point in time and subject to change without notice. Such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.