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?

Phased 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 may not 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.

Written by Jim Yih

Jim Yih is a Fee Only Advisor, Best Selling Author, and Financial Speaker on wealth, retirement and personal finance. Currently, Jim specializes in putting Financial Education programs into the workplace. For more information you can follow him on Twitter @JimYih or visit his other websites Group Benefits Online and Advisor Think Box.

6 Responses to The Top 5 new retirement trends and how they will affect your retirement

  1. I’d need to look at along with you the following. Which can be not one point I usually perform! When i get pleasure from studying some sort of publish which will create men and women consider. Additionally, thank you regarding letting me personally in order to thoughts!

  2. 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.

  3. Jim,

    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.

  4. 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.

    • Donne,

      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.

  5. 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!

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