What Does Retirement Even Look Like Anymore?

Baby boomers are not embracing traditional retirement as we know it. In fact, the time-honored idea of packing up your desk and retiring to a beach on your 65th birthday may very well be a relic of the past, thanks to factors like longer life expectancies and inadequate savings.

This generation dutifully played by the rules: 81 percent of employed boomers who are offered a 401(k) or similar plan participate. The median they save each year is 10 percent of their salaries. A little more than half surveyed say that they have a “large enough” nest egg for retirement.

baby boomers retiring?
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And yet, even with all this, most boomers still don’t think they can stop the grind completely.

Four in 10 baby boomers surveyed by the Insured Retirement Institute in 2015 don’t have enough money saved for retirement. And in the past year, many boomers have struggled with their finances: Nearly 25 percent of boomers struggled to pay their rent or mortgage, according to the study. Nineteen percent of employed boomers stopped contributing to their IRA or 401(k). And almost a quarter postponed their retirement plans altogether. Is planning to retire a pipe dream?

Sixty-five percent of baby boomers plan to work beyond age 65 — or don’t think they’ll retire at all, according to a 2014 study by the Transamerica Center for Retirement Studies. Most compellingly: Of those boomers who do plan to formally retire, 52 percent say they’ll continue working after retirement, which would allow them to cash out their 401(k)s or IRAs, yet continue receiving additional income.

This projection complicates the conventional narrative of retirement, in that people can “retire” and then hypothetically start a second career or a side business. (Sunny beach and cocktails potentially not included.) Most aren’t choosing to keep working out of sheer love of their jobs, either: Sixty-two percent of boomers in the Transamerica study plan to work after retiring and/or past age 65 for income or health benefits. Thirty-four percent want to continue working for enjoyment.

"Sixty-five percent of baby boomers plan to work beyond age 65 — or don’t think they’ll retire at all."  

Boomers’ changing retirement expectations parallel lengthening life expectancy rates in the United States: A baby born in 1960 was expected to live until roughly 69½ years old, while babies born in 2013 are expected to live closer to 80, according to the World Bank. And while boomers are living longer than previous generations, they’re not much healthier. Boomers are more likely to suffer from diabetes, high cholesterol, and high blood pressure than the generation before them, according to a study published in JAMA Internal Medicine.

So, while living longer is a plus, it comes with more expenses — including growing health-care costs. A 65-year-old couple with Medicare who retired in 2013 will pay about $220,000 in medical expenses during retirement, according to a study by Fidelity (not including over-the-counter medications, most dental services, and long-term care). No wonder they plan to keep working post-retirement.

Then what does retirement even look like anymore? Is it a pause? Is it simply the conclusion of your first career?

Most boomers are envisioning retirement as a time to reduce hours or switch to a less-demanding career, and are thinking of it as a “phased transition" rather than a hard stop. Only a small minority — 21 percent — plan to immediately stop working upon retiring, according to the Transamerica study (and 12 percent are “not sure” of their plans).

But boomers’ plans don’t line up with reality: Despite the majority who have reimagined their retirement, fewer than half of employers have policies in place to shift full-time workers to part-time. And 37 percent don’t have any streamlined processes for shifting employees to less-demanding roles within the company. It seems that employers aren’t entirely ready for this new spin on retirement.

Still, amid the plans for side businesses, second careers, and part-time work, 62 percent of baby boomers say they are confident that they will be able to fully retire someday (and with a “comfortable lifestyle”); only 13 percent are “very confident.” Which means that even those who are retiring are still looking ahead toward … retirement.

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