The top 5 new retirement trends and how they will affect your retirement
One hundred years ago, the concept of retirement did not exist. We started working at the age of 15 (usually at a job that required physical labour) and we statistically died at 47 years of age. As jobs changed, life expectancy grew and social patterns developed, so did the concept of retirement. In fact, retirement is a relatively new concept. Since then retirement has changed a lot and change will continue as our demographics change, our culture evolves and as we age. Here are some of the newer retirement trends we recognize for today and tomorrow:
Related article: The changing face of retirement
Definition of retirement
When you talk about trends, the place to start is clearly the definition of retirement is changing. At one time, retirement was about a time to relax and take it easy. If you think about retirement 30 to 40 years ago, we worked till age 65 and then we statistically dies at age 70 to 72. Retirement was a very short period and happened because we were getting old. Many retirees back then retired into ‘old age’.
The retiree today is different. The retiree today is younger, healthier, fitter and sharper than any generation before. As a result, retirement is about life and living and keeping busy. It’s about staying active and having fun. Today’s retiree is not only younger in age but also younger in heart and in the soul! The retiree today is busier than we have ever seen. I’m sure you know these people . . . the ones that are busier in retirement than they were before retirement. Not only are they busier but happier too… doing things on their terms and on their schedule.
As a result, the definition of retirement is changing. There are more options for retirement than ever before and as a result there is no universal definition of what retirement means and being able to envision your retirement lifestyle.
Related article: Building your retirement vision
Retirement is not about stopping to work
In my opinion, the biggest future trend in retirement is that you will see more people working in retirement. The difference is that people will work doing more of what they love and not what they have to do. We are seeing it today. I know a 61 year old gentleman who is working at the local Home Depot store part time, not because he needs the money but because he loves the interaction with people. I know retirees who have retired from large organizations like Telus or ATCO only to go back and continue to do part time consulting projects working on their terms instead of someone else’s. I know other retirees who have turned their lifetime hobbies into businesses enjoying a little extra income at what they love to do with their time. Retirement today and tomorrow will be full of these types of examples where more and more retirees will work in retirement.
Related article: Are you planning to work in retirement?
Traditionally retirement happened on a specific date. For my father retirement happened on a specific date related to his defined benefit pension plan at work when he hit his 85 factor. Retirement was about one day working and the next day relaxing.
When the baby boomers start to retire, not only will the boomers need to get more creative about how this transition is going to happen but so will their employers. For employers, there is a risk that because of the demographic bulge. Some organizations have felt the challenges of not having enough people underneath to replace all the boomers that have and want to retire. As a result, we have seen more phased retirements where instead of retirement being a point in time, it will be phased over a period of time. For example, you might see someone going from full time, five days a week to 3 days per week to 1 day per week to a full retirement. You may see more job sharing in the future. You may see more contract workers. Whatever the case, retirement maynot always be a cold turkey event.
Long term care planning
According to Patricia Randall, author of The Care Years, “Long term Care Planning is an essential component to a retirement plan. In fact, if you do not incorporate care planning into your retirement plans, then you are missing out on one of the biggest financial issues that most Canadians will have to face in retirement.” People are living longer but along with that comes the increasing likelihood that you will be exposed to illness or injury. Make sure you take the time to plan properly in case you become dependent and need care.
Related article: Understanding Long term care insurance
Lifestyle retirement planning
When most people think about retirement planning, they think about money and more specifically, they think about how much is enough. Although money is important, retirement is about more than just money. I know people who have enough money for retirement but they still aren’t happy. Today, retirement is about being happy. In many cases, more money can mean more happiness but not always. Today, people planning for retirement need to think differently. They need to think about life and what life means to them in retirement. It’s about soul searching and determining what is most important to you. When thinking about retirement you need to think about what you are going to do with your time, how you are going to maintain your health and who is going to be part of your retirement in terms of friends, family and other social groups. Money is important but money is less important if you do not have your health, your friends, your family and all the things that give you pleasures in life.
Related article: Lifestyle Retirement Planning is important
As you can see, retirement is changing right in front of our eyes. Retirement is busier and full of more choice. Your success at retirement is really dependent on you and the choices you make. Studies have shown that the more you plan and think ahead, the more likely you are to enjoy a happy retirement. After all, retirement is supposed to be the Golden years and the Best years of your life. Only you have the power to make it happen.
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One of the best books that I have read on what to do about retirement if you have no money and maintain your income using your job history is on Amazon. It is called “55 And Scared Sh*tless”. It describes how to save your retirement if you do not have enough money. It is also on Smashwords in pdf form.
I really like this article: it touches on the history of retirement, what to do once retired and the help we may need once very old.
Of course, today, everything pivots on money, more so than statistical death which is being pushed back all the time.
I have had all these topics in mind for a long time but I couldn’t relate all of them in a cogent story like you did.
I’ve had relatives die very young and others very old and I’ve wondered how the very old ones survived financially. One relative was widowed, lived independently until he died at 92. Another was also widowed, but had lived through the 20s and 30s depression era and was always fearful of “being without”.
I became concerned, maybe worried about living too long and running out of money. I’m one of the 60% of Canadians who didn’t have a corporate or taxpayer funded pension fund. I also had low to middle incomes so that my retirement capital barely covered 6 years of retirement.
Retirement income became an obsession, a requirement. There was just no way to allocate the budget cash most RRSP calculators come up with. And I’ve lived through the 18% Canada Savings Bonds as well as the 1-2% CSBs.
My fundamental message about retirement funds is that we don’t know how long we will live and that incme is more important than capital. If we die young an RRSP is extremely onerous when liquidated. If we die very old, we may run out of cash for food, medical assistance or whatever.
Governments have recently increased CPP premiums which is expensive for corporate and government employers and reduces disposable cash for the employees; and these funds still cannot support a retired person, today, let alone in the future.
We need to learn about managing our Personal Pension Plan and making it generate as much income as possible while working as well as once retired.
CPP, OAS, GIS all safety nets for retirees: they are definitely not pensions plans.
Jim, your list of “retirement ages” in the past 100 years or so just shows how the future is unpredictable and we need to actively participate personally in the creation and monitoring of our Personal Pension Plans. We can then react to the unpredictable future, in control rather than in fear.
The hardest thing to convey to people is the need to start saving early. The longer you wait the harder it is to save enough. I wish I had known the value of a pension plan years ago and insisted on only working for an employer who offered one.
The hardest thing to convey to people is the need to learn to manage your Personal Pension Plan.
The motivation is the missing ingredient.
My portfolio had doubled in value since about 2002. My portfolio has been grossing 14% every year since 2006 or so. Some of that income is reinvested, some is used for trips, the rest if for living expenses.
I have been using this income since 2007 or so for everything.
Managing your portfolio is like learning to prepare meals for yourself: you don’t need to be a chef to make sandwiches and spaghetti sauce.
If you start when younger, you’ll save tons of money on restaurants and learn about foods, shopping for food, impress your dates; you’ll have an incentive.
Corporate or taxpayer funded pension plans imprison you, especially when you don’t like your job. And remember that not all corporate pension are paid: think Nortel, some GM employees/retirees, many other bankrupt companies.
Demystify money: it’s just a tool.
Working longer or indefinitely is almost a certainty. Cash flow has replaced asset based planning. Corporate workers will need to find alternative income sources after their careers end.
The opportunity to live longer is a blessing and there are lots of ways to supplement your income. I’ll take this conundrum any day.
Terrific review of the 5 big trends Jim. Plenty of food for thought!
“Cash flow has replaced asset based planning.”
This should be a bumper sticker.
The asset – the Personal Pension Plan capital – is only useful if it generates sufficient income to provide all living expenses without depleting the PPP capital.
The primary focus at any time, as a worker or as a retiree, is to use the PPP capital to generate as much income as possible. As the song says: “Nothing else matters.”
How? TMXMONEY and Google Financial have TSX (and other) stock screeners to search by Yield and many other criteria. The biggest Yield combined with the most acceptable risks (volatility, liquidity, reliability, asset types) is what one needs.
Go fishing. Don’t look for fish handouts.
I always wonder if I’ll ever truly retire. I often think I’ll try to pick up consulting gigs or something in my later years. Just something to keep the mind sharp and some money in my pocket while I travel as much as I can. On the other hand…having enough money to travel where ever I want would certainly make me highly consider ever going back to work.
Retiring may not be your choice. The normal assumption is that you will retire, hopefully when you choose.
Hopefully money will not be the impediment to that choice because you have prepared today.
Thanks for the post. In looking at the first two trends (the changing definition of retirement, and retirement is not about not working), one important concept that connects these is financial independence. If anything, we might say that while the definition of retirement is changing, it will likely be too limiting. I find financial independence more helpful as it doesn’t imply I am going to quit working (which I plan to do to some degree as long as I am able).
I would like to add that financial independence cannot guarantee long term retirement unless the retirement capital generates enough income; if the retirement capital is reduced persistently, it is a mathematical certainty that the capital will deplete more and more quickly.
I have a job in retirement: make sure my retirement capital generates enough income for my financial independence and a satisfying retirement experience that includes pampering, trips, good food, better health care, volunteering, etc.
Claude, thanks for sharing your comments. Personally, I do have a company DB pension and can begin drawing from it in 22 months from now. I’ll be age 57-1/2.
Will I stop working completely? No. Firstly, from what this article and a number of books I’ve read keep telling me, keeping yourself busy is necessary for a fulfilling and healthy retirement.
Second of all, from a money standpoint I have no idea how much will be enough – too many unknown factors. Is my company pension reliable? Is CPP reliable? Will all my dividend paying stocks keep paying and not cut their payout during the next inevitable downturn in the economy? With government debt seemingly out of control, how will that affect me as a taxpayer/responsible saver? Inflation is low now, how about 10, 20 years from now? How healthy will my wife and I be in the future?….So in other words, will I outlive my savings?
I hear from so many – “I love early retirement, wish I would have done it sooner”, “nobody on their death bed said they wished they would have worked longer”. I’ve read books such as Retire Happy, Wild and Free which gets high ratings because the author tells people what they want to hear. However I never hear anything from those widows/widowers in their 90’s, or from those who are currently living in expensive retirement homes. Did they end up saving enough?
Here is an interesting article on savings and poverty levels of Canadian seniors…..
If inflation runs at 3% per year (don’t know about you but the government figures don’t reflect what I see) then my pension and savings are then worth half in about 24 years or so. This of course is assuming that the value of assets would stay the same in dollar terms.
In this article, the one thing I don’t know if I necessarily agree with is that people are retiring healthier and fitter. Perhaps if they are retiring sooner than 65, but I know a lot of seniors who are in effect kept alive today because of pills and medical devices – drugs and technology that we didn’t have a few decades ago. So yes we are living longer, but are we actually living healthier? Obesity rates are certainly going in the wrong direction.
Anyway, I plan to keep working into retirement, even if it’s just enough to supplement my retirement income.
Just my 2 cents 🙂
Learn to use TMXMONEY and/or Google Finance; maybe consider this activity as a part-time job. Each has a screener that allows you to select on Yield.
The ball is in your park. This new activity will likely allay some fears/doubts about the future of you portfolio’s income.
I know that we are living longer but not nearly as long as you would think. 100yrs ago there was a problem with infant mortality and we went through 2 world wars also. These events would make it look like we are living MUCH longer today.
I’m a firm believer that our generation won’t benefit from retirement money, unless we start saving. This wasn’t an issue 20-30 years ago though! So much has changed indeed.
Saving for retirement is a completely new mindset that young adults need to adopt. My parents and grandparents did things differently, and are now enjoying a nice state pension. But I’m afraid the same cannot be said about our generation.
What you call a state pension should be considered a retirement safety net.
The Personal Pension Plan should exclude all government safety net pension funds.
A Personal Pension Plan should have a primary focus of Return On Investment.
A Plan that generates a 3% return is unacceptable and should be avoided at all costs. The Plan will fluctuate in value, but what is critical is that the income not change; the values will fluctuate again in your favour.
Learn to use TMXMONEY and/or Google finance. Both have screeners that let you find the better returns. Then it’s a matter of learning what the better yielding stock and funds can do for your Personal Pension Plan.
One of the most important retirement trends in the UK is the necessity for life-term insurance or a funeral plan. With the cost of dying spiraling out of control burdening relatives with funeral costs needs to be avoided.
I come across a lot of clients who ask for retirement advice when planning their business. It is never too early to plan for your retirement
For those of us who have not developed good social networks, working in retirement may be more about mental health than about financial well being. I have seen published thoughts on loneliness being a major factor in mens mortality, and I believe it. To my mind loneliness lead to depression and eventually to death for both of my grandfathers.
The issue is coming to grips with the thought of having to work when all your life the ideal retirement has been about never having to be anywhere when someone tells you to.
The prevalence of advice that only deals with the financial pieces of the retirement puzzle tend to drown out the psychological aspects, which are often at least as important to living long and happy golden years.
I completely agree. I started working at 17, was last fired at 56; couldn’t find work other than part-time and minimum wage. I’m the classic loner whose hobbies are photography, playing guitar alone (had bands when I was a teenager) and travelling by car; no interest in sports, bars, etc.
I decided to retire, but I needed an income because I didn’t have much of a Personal Pension Plan.
As it turns out, my search for income made me choose retirement from conventional jobs and manage my meagre retirement capital.
I now had something to do during my retirement, but with computers, spreadsheets, library, etc. That kept me busy for a decade or so and then I started volunteering and that’s enough social interaction for me.
Teaching my kids about investing for income and building a Personal Pension plan is my current project.
I strongly believe that success at investing provides personal gratification; the research, the discovery provide purpose as well as extra money to be used for better everything including freedom of choice. Lack of money is a sentence of sorts.
I look forward to reading your comments. I find there is too much information on the internet and I am not sure where the best place to start without getting confused. What subjects would you recommend as a starting point.
I’ve been barred from this site for an unknown reason.
Let me try again to post something – 18-03-14. It seems that my previous post was not rejected.
I started with a single goal: monthly cash. Then a return of at least 8%. Then efficient income tax management. Then OPM (Other People’s Money).
Then finding and becoming familiar with the free web tools that would help me achieve this.
My discount broker’s tools. TMXMONEY. Yahoo|Finance – later some Google|Finance. BNN.ca.
I’m sure there are others websites that can help.
Eliminate distractions such as cannabis or blockchain – they don’t pay me monthly cash, the only primary consideration.
Thanks Claude, your insight is very much appreciated. I wish there was a some other way to communicate, I think it would be an interesting experience to talk with you in person.