Thoughts on Planning for Retirement

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Retirement is on my mind lately.  I guess that is a silly statement to make, since I have been studying and helping hundreds of people plan their retirement for over twenty years.  Retirement is pretty much ALWAYS on my mind.

The past few years, however, my thoughts have turned more toward helping people understand variations on the standard retirement theme.  The thing is, retirement ain’t what it used to be.  And the sooner we understand that fact and adapt to this new reality, the better off we will be.

“Old school” retirement

In my parents’ and grandparents’ generations, there was one main version of retirement: get a good job, work there your entire career, and then retire with a pension from your employer and a Social Security benefit.  This vision of retirement often included moving to a warmer location and spending your golden years enjoying life.

What that old school retirement vision typically did NOT include was work.  As in, paid employment during your retirement years.

In the generations before my grandparents, there really was no concept of retirement.  You worked until you couldn’t work any longer or died.  Retirement is actually a fairly recent phenomenon, having arrived on the scene in the form of Social Security in 1935.

Bye-bye pension plans

For the past few decades, the winds have shifted for retirement.  Companies have moved away from providing costly pension programs in favor of offering employee-funded retirement plans, such as 401(k) plans.  This move has saved corporations tons of money and shifted the burden for retirement saving to the individuals.  In theory, this move could have worked if the workers had received two things: increased wages to facilitate saving for retirement and detailed, ongoing education about how to save and choose investments for retirement.

Instead, the unspoken message was that workers were “on their own now” to provide a retirement for themselves.  Sure, some companies are diligent about providing educational opportunities for their employees, but let’s face it: most people don’t understand investing, they don’t want to understand investing, and they don’t have time to devote to this extra burden.

This shift in responsibility for retirement savings has also been hindered by another phenomenon: employer and employee loyalty.  Gone are the days that employees go to work for a single company and work their entire career there.  In fact, the average worker will change jobs five to seven times during their career.

This consistent upheaval in work not only brings the stress of change, but also causes gaps to occur in retirement savings.  Most times a new employee must wait for a period of months, or even a year, before being eligible to contribute to the company retirement plan.  If the average statistics hold true, that might mean a person spends five to seven years of their working life NOT saving for retirement.

Social Security is not enough

A second factor in the demise of the “old school” retirement is the inadequacy of Social Security.  Let me be clear: Social Security was never built with the intention to provide 100 percent of a person’s income in retirement.  Moreover, when Social Security was introduced in 1935, people retiring at age 65 were eligible to receive the benefits, and their life expectancy was at best a handful of years.  These days, a 65-year-old person might live another 25-30 years.  Social Security was not built to provide income for so many people for that many years.  (Note: Full retirement age for Social Security benefits is now 66-67, depending on your birth year.)

In addition, we just don’t have a clear view of how Social Security may change going forward.  The system as it stands today is not sustainable.  But that is a rant for another day, my friends.

Where we stand today with retirement

Today, we have additional pressures on the concept of retirement.  Pensions are as extinct as dinosaurs and Social Security remains inadequate to fund one’s retirement.  We also have tremendous uncertainty about our health care system in the United States.  As healthcare costs continue to skyrocket, an increasing number of people are becoming bankrupt due to overwhelming medical bills.  With longer lives comes the likelihood of added medical costs.  And long-term care is also incredibly expensive.

People are increasingly concluding that retirement is not in the cards for them.  It seems impossible to believe that they could ever afford to not have a paycheck coming in regularly.  Instead, they are electing to work longer.  They either accept that retirement is not an option, or some sort of alternative idea of retirement is necessary.

The good news (finally!)

I know, this article has been a major downer.  If you have read this far, I have good news for you!  All is not lost when it comes to your dream of retirement.  What is required, though, is a new attitude about retirement.  I like to call it getting a new Retire-mentality.  I have written about rethinking retirement quite a bit over the past few years, and I am super excited to say I have a comprehensive course in development now on this very topic that will be available at the end of this year.

There are several reasons people can be more optimistic about retirement.  One of those reasons is a decline in ageism.  For many, many years, older workers struggled to stay longer in the workforce due to ageism.  Corporations found it was fiscally beneficially to force older workers out of their jobs in favor of new, younger, cheaper employees.

This phenomenon always made me shake my head, because the older workers were the ones with the experience and knowledge.  I think it was a huge mistake for corporations to focus on compensation savings and completely neglect the fact that quality suffers when people on the job don’t know what the hell they are doing.  But I digress.

Ageism certainly isn’t completely dead.  And yet.  The shift in our economy toward side-hustles, this so-called “gig-economy,” has completely changed the game.  Older workers now have far more opportunities to provide value and get compensated to do so, outside the confines of corporate bottom lines.

Technology is another area of optimism.  Technology is playing a major role in keeping older people connected with friends and family and mobile.  Through the use of online and mobile apps, even those with no transportation can travel to participate in activities that are meaningful to them.

Health care will also continue to be impacted by ever-improving technology.  Between improved mobility and better access to health care monitoring, people can expect an upgrade in their retirement experience.

Technology is also playing a role in how we work, regardless of our age.  Advances in the technologies themselves, coupled with ever-increasing creativity in how to use technology in order to work smarter will allow people to work longer into their lives without it feeling like it is a punishment.

And a final reason for optimism: many people simply like to work.  Choosing to work throughout what would traditionally be the “rest and recreation” period of our lives is a rebellious act!

Bottom line

Because of all of this, I think we should be feeling grateful and optimistic about the final decades of our lives, versus feeling we’ll never get a break from work.  Restructuring our mindsets about what retirement looks like is the first step.  We need to abandon the notion that our lives must fit the pattern established by our parents and grandparents.  The days of becoming educated, getting a job, working that job until age 65, and then retiring to a decade or so of the “good life” are over.

But that is great news!  Because now, we have the ability to write our own story for our lives instead of following an established pattern.  How exciting is that?

I’ll have more to say about retirement in the coming weeks, but I have included some past blog posts on the topic of retirement in the links below.


What are your rebellious ideas for retirement?  Share below!  Or if you want to start a discussion with some like-minded friends, join the free SimpleMoney Community on Facebook to share your thoughts!

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