“The institution of retirement is going through a radical
morphing; it’s being reshaped by the successes and failures of those currently
retired,” says Ken Dychtwald, co-founder and CEO of Age Wave. This radical
morphing is being influenced by trends and events that surround us. Dychtwald and Ken Cella Principal, Branch
Development, Edward Jones and their teams are co-authors of the recent report
“Longevity and the New Journey of Retirement.”
Living longer: Most of us are aware of this
phenomenon. What is new is that people are becoming increasingly aware that the
new longevity is affecting their expectations, attitudes and preparation for
this extended life stage. The 11,000 retirees surveyed in the 2022 study say
they intend to live until age 89 and are hoping for 29 years of retirement.
The baby boomer wave: Just by their sheer number,
this generation has changed environments of the workplace, education and the
home front during each of their life stages. And they are doing it again with
retirement. They want a retirement that is more engaged and active as well as
one that is filled with more new experiences than their parents’ retirements
and less conservative and frugal than previous retirees.
Health spans don’t match lifespans: This is the good
news-bad news story. Life expectancy has increased about 30 years from 1900 to
the present – from 47 years to 77 years. That’s the good news. The bad news is
we also increased the number of years older adults are living with illness,
disease and disability. According to 2019 data, average life expectancy was
78.5 years; 12.4 of those years were lived in poor health leaving just 66 years
of healthy living.
Retirement income: Funding for retirement typically
has come from three sources, often referred to as the three-legged stool of
retirement: They are Social Security, savings and pensions. According to the
report, the stool has “become wobbly if not completely broken.” The future of
Social Security benefits are uncertain as fewer workers are contributing to the
fund in relationship to the increasing number collecting benefits. Most people
are not saving enough for retirement and not at the recommended level of 15
percent of one’s income. Then there are pensions for those lucky enough to have
one. Only 16 percent of Fortune 500 companies are offering guaranteed benefit
pensions compared to 25 percent that offered them decades ago according to the
report. Note a fourth leg of the stool is emerging: income from work because
retirees either need the income or they find other rewards from working.
COVID: The final influencer is the pandemic that has
disrupted retirees’ health, family, their purpose in life and financial
position. Older adults with chronic health conditions continue to be
particularly vulnerable. The pandemic did place a heavy emphasis on technology
which left many older adults at a disadvantage; they were on the other side of
the digital divide. Finally, the pandemic caused nearly 70 percent of Americans
to rethink the timing of their retirement, either accelerating it or postponing
it. According to a New York Times
article from April 20, 2022, economists are surprised at the number of
adults who are returning to work for “unretirements.”
These influences suggest a few messages for both older and
younger people:
We need to think about the implications and opportunities
the long sought-after gift of increased longevity is providing for us and plan
for them.
We need to know that, on average, a little over 12 years of
poor health is accompanying this longer life. That means more effort is needed
to adapt both our science and our lifestyles to maintain and enhance our
health, fitness and functioning. We need to match our health span with our life
span. (World Health Organization, Global Health Observatory data repository,
Life expectancy and healthy life expectancy data for 2019)
Finally, we need to save for longevity beginning in our
early earning years not only to survive but to optimize that longevity bonus.
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