Tuesday, September 6, 2011

The New Retirement versus The Old Fashioned Retirement - How Is It Changing?

It looks like the old fashioned retirement is just a pipe dream for many. Dreams of retiring to a care free life after many years of working are going up in smoke. The bad economy and decreases in your retirement investment balances are just some of the reasons. The rising costs of daily life with the additional rising costs of health care are causing many to postpone or even cancel retirement.

My father's generation looked at retirement as working as long as you physically could and then sitting on the porch waiting for the inevitable. Well, things have changed. Today's retirement will be different for many reasons, and as the leading edge of the baby boomers trade in their work shoes for golf shoes, let's take a look at why their retirement plans will be different.

Even 30 years ago, the norm was to work until 65, retire and die less than 10 years later. Retirement was a short period that was relatively easier to fund and was often with the assistance of a company pension plan. New retirees are now living longer, are more active and will be busier. The goal will be to experience all of those things they did not have the time or money to do while working.

Advances in medical science are allowing us to live longer and in better general health. But, all this can add up to a more expensive retirement. Many people find themselves busier in retirement than they were before at work. "Retirement" could now last 20 to 30 years and it is entirely possible that you could spend more time in retirement than you did in the workforce, and we need to finance that extra time.

For those struggling to make ends meet with their current retirement income, part-time work may be essential. It is amazing how earning even a modest income in retirement will stretch your nest egg by reducing draws from your savings.

My grandparent's generation did not plan very many Caribbean vacations or Disney cruises with the kids while they were working. People are re-evaluating their work-life balance and opting to enjoy life to the fullest while their health is good and they are physically able to do what they want. Phased retirement may not only be good for retirees, but good for the economy. The sheer numbers of baby boomers moving into retirement will create strains on the workforce as fewer workers will be available to replace those moving on. Employers will need to find creative ways to keep older workers engaged and around to pass on valuable skills. I expect to see a rise in part-time employment, flexible work times and job sharing to accommodate these workers in transition.

The idea a working retirement is starting to become the norm because many have failed to plan and many plans have failed to bare fruit. Finding ways to save on living expenses and implementing new part time sources of income are the only way to save retirement for many.

Living longer and healthier has become a blessing and a curse. Mom and Dad didn't worry as much about money as we do now. Because today all the things like cell phones, computers, and other things we spend money on, they didn't have.

Retirement means different things to different people and a healthier much more balanced lifestyle is the goal for many. You will need to determine what is important to you, decide what "your retirement" will look like and plan to make it happen.

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