Life is a continuum—an accumulation of experiences that shape how we view ourselves, our families, and our world. And, when we reflect on these experiences, we come to realize that our lives have been and will be permeated by change.
Therefore, it is important to keep an eye on demographic, societal, workplace, and economic trends that will present both challenges and opportunities in the years ahead. In particular, here are five “life-changing” developments that are driving a fundamental shift in the way everyone should view and prepare for retirement:
1. Transfer of Financial Responsibility
The slogan for anyone preparing for retirement should be, “If it is to be, it’s up to me.” That’s because most employers have reduced retirement benefits and/or switched to pension plans that transfer accountability for investment selection and performance to employees. As a result, guaranteeing financial security in the future has become more and more the responsibility of the individual.
2. Longer Lifespans
Life expectancy has increased dramatically since the early 1900s. Not only are pre-retirees questioning how they will fund a life stage that could span more than one-third of their lives, they are also wondering how they will spend their time! Increasingly, those looking ahead to retirement want and expect this to be a time for new endeavors and meaningful activities.
3. Post-Retirement Work (paid and/or volunteer)
The concept of retirement can no longer be equated with a permanent exit from the workforce. For example, the vast majority of Baby Boomers plan to stretch out their working lives, moving in and out of new and varied careers. Their top reasons for post-retirement work include a need for additional income, desire to fill time and keep active, and the need to feel productive. The results of several studies indicate that individuals anticipating retirement are more likely than previous generations to view retirement as an opportunity to start a new career or to engage in paid or unpaid “work” that is fulfilling.
4. Healthier Lifestyles
Increasingly, individuals and healthcare professionals are recognizing the impact of nutritious food and regular exercise on the quality of life people experience in their later years. It is never too late to establish these habits, but the sooner the better! Similar to the effect of compounding interest on a financial portfolio, the benefits of early and regular investments in health and well-being will grow and multiply over the years.
5. Holistic Planning & Preparation
Most people think of planning for retirement only in terms of their savings and investments. In The Late Start Investor, author John Wasik recommends discarding this obsolete view in favor of a “flexible life plan that provides for financial, vocational, physical, emotional, and spiritual needs.”
He explains, “Unless you look at your future holistically, merely saving up a pile of money will be a meaningless act.” Although money can act as a tool for achieving important goals, financial security alone cannot guarantee that you will achieve happiness, good health, meaningful relationships, fulfilling activities, and a sense of purpose.
Therefore, a successful and satisfying life in retirement requires more than a healthy nest egg. More than ever before, retirement planning experts view this time of life as a major transition that requires planning and preparation in all areas of life.
Retirement should not be viewed as a single life event, but rather as one of many transitions in a continuum of life experiences. The skills, values, interests, positive relationships, and healthy habits that you develop throughout your life will continue to serve you well in retirement. In addition, it is important to keep an eye on trends that will influence your life in the future.
How you respond to these changes will have a profound effect on the decisions you make, the opportunities you seek, and the quality of life you create in your retirement years. In addition, when you are proactive in initiating positive change, you will improve your own life and those of others as well. In many ways, elements of the “new retirement” offers exciting options and the freedom to choose an unconventional path to creating a successful and satisfying later life experience.
Money Quotient ® Carol Anderson