Retirement, for all intents and purposes, is no longer a specific event that’s planned to happen at a specific time. The traditional notion of retirement, that a person would work until they reached the age of 65 and then stop completely, relying on Social Security and investments to pay their bills, is no longer the norm. Indeed, as overall life expectancy increases the actual amount of money that a person needs after they retire has gone up considerably and, in many cases, is practically unattainable during their “normal” working years.
The situation is problematic at best as many people who are in their “retirement years” are forced to continue working, sometimes in jobs that pay minimum wage and aren’t exactly what one might call “prestige” jobs. This is certainly far from the traditional idea of retirement and much different from years ago when the average adult’s life expectancy was much lower than it is today.
Imagine for a moment what things were like when the average life expectancy was under 50 years old. Back then of course the average worker was a male and, in most cases, they were working up until the day they passed away. The limits of medical care at the time were such that most people, when they fell ill with an acute medical problem, usually died quite quickly. Put together, it meant that just 7% of a person’s adult years (or a brief 3 years) in the early part of the 20th century were spent in what we would today call “retirement”.
What happened over the next half century is quite interesting, especially during the depression in the late 20s. As more men (and some women) stayed in the workforce, the federal government decided that it needed a way to induce older workers to get out of the way for younger workers that were desperate to make an income. It was for this reason that, in 1935, the Social Security Act was born and the actual term “retirement” was actually coined.
The problem is, what seems to have worked well in 1935 and for about 60 years after is definitely not something that appears to be working today, in the year 2013. With life expectancy pushing past 75, the average person who lives to see 65 can expect to live at least another 10 years if not 15 or 20. While living longer is, in some cases, a good thing, the Social Security Act was designed when very few people actually lived to even see their 60s and was never designed to handle the numbers, and the ages, that have now become the norm.
What this means is that it’s time for us to take a long, hard look at “retirement” and completely rethink what it means and entails. Turning 65, while commendable, certainly has no inherent meaning nor does it spur some type of magical change that forces a person to stop working and start sitting on their front porch in a rocking chair. The fact is, technological advances in the last 20 to 30 years have made possible a true shift in the economy to one that is service oriented, giving adults who are 65 and older plenty of work opportunities.
The question thus becomes this; if retirement is due for a change, what exactly should that change be? In most expert opinions the answer is simple; retirement is up to every person individually and, with the increased retirement planning flexibility available today, creating an individual retirement plan is not only advisable but quite feasible.
Retirement in many cases today simply means cutting back on the hours that a person actually works and, in some cases, switching from one type of job in a specific industry to another. A full-time teacher, for example, could enjoy their retirement years as a substitute and a plumber as a guide or mentor to a newcomer in the field. Many an opportunity exists for a retired person to create an online business today as well, allowing them to work from practically anywhere as well as work the hours that they choose rather than having to punch a time card.
What all of this means is that, if not actually changing the term “retirement” to something more fitting, the planning involved for a person’s retirement years needs to be changed to fit the new way that people enter into said “golden years”. And when we talk about planning we’re not just talking financial we are actually talking about plans for what to do when one job stops and another, newer job is needed to start. Just like waiting too long to prepare yourself financially, waiting until you actually hit 65 to start thinking about what to “do next” maybe a little bit too late.
Certainly there are still some people that, once they hit that enchanted age of 65, will be able to retire in the traditional sense and spend their remaining years enjoying the fruits of their labor (and their investments). The facts, however, point to very few being able to do this and so, unless you are completely set financially, some planning for the second part of your life is truly a necessity.
If you need help or device about planning for your new retirement, please let us know and will do our very best to answer your questions and show you what your options are.