Navigating the new retirement landscape
Young or old, we are bombarded daily with a barrage of media exhortations giving retirement advice and warnings.
The messages range from “If you don’t save for retirement, beware of the future,” and “Purchase this guaranteed annuity that will provide income for the rest of your life,” to “Ten mistakes retirees make that torpedo retirement plans,” and “Save (X) amount of money each year with an estimated return of (Y), and you will never run out of money in retirement.”
These inescapable warnings, generic advice and sales promotions are so incredibly annoying they almost border on retirement harassment.
Since it is so often touted that these “retirement experts” are the only ones that can solve your retirement problem, it makes you wonder whether the industry is implying that you somehow lost the capacity to think for yourself. They have all the answers, if only you follow their mantra about what to do with your money.
Baby boomers — those born between 1946 and 1964 — are said to be retiring the world over in the largest numbers in history. There are more of us, right now than any other generation after us. No wonder, we are the focus of retirement advisers, government pension actuaries, and campaigning politicians.
In all of this current retirement financial noise, how many times do you see an ad that says, “Do you really want to retire? Would you like to take a different path in this next phase of your life? Is retirement for you?”
But, what if you decide that you don’t want to retire? Aren’t you capable of managing your finances and life choices?
The 65/35 year equation is escalating, particularly in Bermuda where more residents than we realise are reaching centenarian age — and in relatively good condition.
Retirement at 65 years old leaves many with up to 35 more years before ascending to glory.
What are you going to do with yourself? You will be retired almost as long as your entire working life. Think about it. You will spend 45 years in the now endeavouring to save enough to support your new 35-year post retirement lifestyle.
My personal observations over the years as an international financial planner, together with volunteer feedback from Royal Gazette readers regarding the whole retirement landscape, are illuminating.
a) Many individuals have often voiced that they do not want to retire. “I love my job. I am extremely good at my job. When, I had to leave, they had to hire three people to replace me and my skills.”
b) Relationship renegotiations do not always go smoothly, especially when finances are slim.
For example, take a couple where the husband worked a high-powered job and the wife was out straight with her career — both are independent type-A, “take-control” personalities.
While they were working they saw each other comfortably 12 hours a day, a bit more on weekends, and it worked for them. They both made money decisions, together and separately, without problems.
Then, they retired. Time together doubled and while it is enjoyable, every money decision, no matter how trivial, now has to be negotiated. The anticipated fun is wearing thin. Emotions are getting quite fragile.
c) Identity depression sets in. The former career person felt valued, respected, and part of a great working team. Now, he or she feels out of the loop, invisible (the grey hair doesn’t help), nameless, and no longer a contributor to society. The feelings become a real sense of a loss of self, for the first time, some express that they don’t know who they are any more.
d) Earnings are still very important. They feel they must work, besides they cannot conceive of not getting that paycheque every month. The longer they work, the more can be saved and capital can be preserved.
All these are very valid reasons to retire, or not. This is probably the most important decision in one’s life besides marriage, children, and personal faith decisions.
Co-incidentally, in 2014 a Bank of America Merrill Lynch study, in partnership with Age Wave, found 72 per cent of people over the age of 50 want to work in retirement because Americans found later life without work to be impractical and undesirable.
“Based on a nationally representative survey of more than 7,000 respondents, Work in Retirement: Myths and Motivations is a comprehensive study exploring and challenging commonly held beliefs about work during retirement — a phenomenon driven by longer life expectancy, the elimination of most employee pensions, financial need and the reimagining of later life. The study also offers lessons learnt from more than 1,800 working retirees surveyed about their own experiences, including tips to help prepare for a successful retirement career.
Results from the study indicate previous generations viewed retirement as a permanent end of work followed by continuous leisure. However, modern-day reality for many pre-retirees and retirees is a dynamic future that the study defines as “The New Retirement Workscape,” represented by four different phases:
1. Pre-retirement. Planning for a different working environment at retirement starts around five years before that age.
2. Career intermission. About half of those surveyed indicated they needed a break (my children call this a rest period) from their intense working career — to retool and recharge.
3. Reengagement. Re-entry into the workforce combined new challenges with new ventures, flexibility and more life balance.
4. Leisure. The fourth phase was envisioned for much later in life where individual’s priorities changed again from work to focus on relaxation, relationships, and maintaining healthy lifestyles.
Millions of people around the world never really stop working. They contribute so much. Their wisdom, their experiences, their respectful dialogue, their survival competence, their ageless integrity.
Luminaries who worked, or are still working, into late elder ages range from Sir John Swan, Nelson Mandela, former US President Jimmy Carter, to Ruth Bader Ginsburg, Warren Buffett, and John Lewis. There are many more.
If they can, then everyone who wants to contribute to their society, whether in a small or large way, should be able to work without impediment.
So, the mantra. Do not retire.
Image of “The New Retirement Landscape”. http://www.ml.com/publish/content/image/jpeg/GWMOL/MLWM_The-New-Retirement-Workscape_2693x1555-jpg.jpeg
Martha Harris Myron CPA CFP JSM: Masters of Law — international tax and financial services. Pondstraddler Life, financial perspectives for Bermuda islanders with multinational families and international connections on the Great Atlantic Pond. Contact: firstname.lastname@example.org
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