The face of retirement is changing and the American psyche needs to catch up! Perhaps the greatest disservice bestowed on our culture is the mindset created by advertisers, advisors, and individuals — the notion that retirement is a gray-haired person, sitting in a rocking chair on a porch with a pocket watch in hand, with nothing to do but stare off into the sunset! The definition of the word “retirement” is even less inspiring: the act of withdrawing from active life.
At least for Millennials and Generation Xers, there is no single life event called retirement anymore. The Bureau of Labor Statistics even shows that Baby Boomers born from 1957 to 1964 changed jobs, on average, 11.3 times between the ages of 18 and 46. The old adage that workers stay with one employer and have one life change is outmoded. While some researchers suggest that the average American changes careers seven times during their life, the methodology does not carry because there is really no consensus around what constitutes a career change. What we do know is that average American workers spend about 4.1 years with the same employer.
Even if you can’t wrap your head around the distant financial future, it is important to consider that the choice of when to retire may not be yours. According to the Employee Benefit Research Institute, in 2014, 49 percent of workers retired unexpectedly for a variety of reasons, such as disability, layoffs, or taking on a caregiver role. So the chances are pretty much one out of two that you will need to be prepared for the transition sooner than you might think. No one wants to be the person who thought she had enough money to retire, but finds out too late that she doesn’t!
Moreover, thinking that retirement is a one-time, far-off-in-the-distance event also fails to encourage savings. The same EBRI study found that 60 percent of American workers have saved less than $25,000, and 58 percent of working individuals have debt problems. Even more daunting is that 62 percent of Americans lack the reserves to weather a financial emergency in the short term. We need to rethink the whole concept of retirement to include planning for optionality and reinventing ourselves for the next chapter, whatever that may be. Preparing yourself properly not only for the financial, but also the emotional changes in a major life transition, takes some planning. Most experts will agree that you should consider easing into any new life plan. A study at the University of Maryland found that men and women who kept working in some capacity tended to have better physical and mental health. Notably, the researchers discovered that the hours a person worked did not seem to matter. The idea is to give yourself a sense of purpose in retirement and keep engaged.
In our series, “What to Expect When You’re Expecting Retirement,” we will address both the financial and emotional aspects of transition. We want to show you how to replace the word “retirement” with “optionality” — the ability to redefine yourself post-career in whatever style you choose. If we think of financial security more holistically, an ongoing process rather than a one-time event (in the same way we consider an exercise program or a healthy lifestyle), more people would be engaged in the process. If we accept that retiring is about more than just numbers and that the idea of optionality can be integrated into mainstream thought, we believe the American crisis in financial security will be closer to a cure. Tune in to our next installment: “Tips on Building Your Nest Egg.”
Although this information has been gathered from sources believed to be reliable, it cannot be guaranteed and the accuracy of the information should be independently verified.
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Deborah Stavis is a member of the DailyWorth Connect program. Read more about the program here.