How Will You Define Retirement?

There was a time not that long ago that when the subject of retirement came up, we all pretty much had the same vision of what it would look like. We would work to about age 65, retire and live comfortably on our company or union pension, social security and whatever savings we had in the bank. It was similar for everyone. Retirees would kick back on the sofa, visit grandkids, travel and do this for the rest of their lives which was typically only 7-10 more years, give or take. Retirees didn’t have to worry about something called Long Term Care yet and medical costs were still somewhat manageable with your old Blue Cross Blue Shield indemnity plan pretty much taking care of everything. Bottom line, retirement was more streamlined, easier in some ways to prepare for, but overall much shorter than it is today.

That traditional and very typical retirement structure is not dead but certainly on life support for a variety of reasons and not all of them bad. Most in what I call the “New Retirement” play by different rules. The goals and dreams of our parents are no longer our vision of how we want to spend our “golden years”. If you are not retired yet, you will need to define what your vision is and not think about it necessarily as a destination but perhaps more so a change of course of how you will live in the next phase of your journey.

I am noticing with our own clients that there are now three very specific templates they are deploying or targeting. I think our group is probably a good litmus test for what will continue to evolve over the next 20 years. The three structures are as follows:

1. Traditional Retirement- Yes, it didn’t go away completely. Some have saved enough spendable assets to properly budget for living expenses and plan for contingencies. They do not have a driving desire to work any longer and primarily spend their time… well… doing whatever floats their boat! This group however is very small and no longer typical. With longer lifespans our parents’ retirement may soon be a lifestyle of the past.

2. The Semi-Retirement Retirement- This group represents what’s becoming the largest segment of today’s successful retirees. They have enough assets and don’t have to work but continue to want to do something productive with their lives, very often in a different capacity. This group realizes that if retirement today can last as long as 30 years, it is more desirable on their terms to spend it on starting a small business, consulting in their past careers part time or choosing to make money at something they love doing. The semi-retirement retirement will be available primarily to those who still value proper financial planning and have saved enough to provide for flexible work for fun options.

3. The Working Retirement- Yes, an oxymoron but this in my opinion will become tomorrow’s prevalent structure based on current planning and savings habits of young baby boomers. The prior two scenarios will not be an option as one or both spouses will have to remain in the workforce doing what they may not love in order to provide the necessary income for basic living expenses. I believe this group will do the best they can to take extra time off to find some diversion, but the live for now habits of the past 30 years will have caught up with them. My biggest fear is whether a job will be available to them to stay in the work force. If this does in fact become the predominant structure of the near future, where one or both spouses work full time forever, will the demographics of an ever aging population along with college graduates just joining the work force provide for enough employment opportunities? A very risky proposition but in reality, isn’t how this group has played it all along?

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