Retirement ain’t what it used to be. The baby boomer generation has seen to that.
Americans born between 1946 and 1964 have been upending traditions since they were young, so why stop now? Their redefinition of retirement is not only supported by statistics, but I‘ve personally seen it in action time and again.
For nearly a decade, I coordinated a senior travel club and loyalty program for a community savings bank in suburban Boston. I became close with many of our members, who confided in me about their retirement concerns and experiences.
One woman spent her final year of work being so excited by her upcoming retirement, only to lament a mere three months into it that “All my friends want to do is go out for a big lunch every day. I’m gaining weight, I’m spending money, and I’m bored.”
Two women who became best friends driving school buses for years made a pact not to retire, declaring the job was the perfect amount of money and amount of time for what they wanted to continue to do — mainly summer travel.
One couple told me they were holding out on retirement until their daughter’s babies were school aged, because they didn’t want “to be expected to babysit full time.” As they put it, “We deserve to have our own lives.”
These are just a few of the many examples of people who’ve discovered they actually don’t enjoy full-time retirement.
Now let’s take a look at the reasons retirement is being redefined. Then we’ll share ways that you can customize yours — and how much it helps when you know your retirement benefits.
Why Retirement Is Different Now
Advances in health and medicine, the state of the economy, the changes in our culture, and the opportunities brought on by technology are several of the factors impacting the retirement revolution.
#1 – Seniors Are Living Longer
The most common retirement fear? Outliving your income. This is a valid concern, as a large percentage of the 76 million American baby boomers are expected to live 10 to 25 years longer than their parents.
Today’s boomers are also faced with expanding income insecurities. In addition to having less investment safety than the greatest generation, they’re taking on student debt to help their children or grandchildren while dealing with rising costs, including medical expenses.
Seniors have been turning to credit cards in order to pay for basics, racking up long-term, high-interest charges. The Federal Reserve reports senior consumer debt has risen by over five hundred percent in the past 20 years — a number expected to rise given the pandemic-fueled lockdowns leading to high unemployment and lower income for Americans 50 and older.
Also, many of today’s retirement-age adults are able to work longer. According to a National Health Interview survey in 2017, when asked to rate their overall health, 82 percent of adults 65 to 74 described it as excellent (18 percent), very good (32 percent) and good (32 percent). By contrast, 18 percent described their health at fair (14 percent) or poor (4 percent).
#2 – Jobs Are More than Work
Many who are retirement age want to work longer. And working is good for your mental and physical health. The mental stimulation and problem solving helps maintain thinking skills. The social engagement attached to a job helps stave off chronic disease.
And while today’s information economy has made jobs less physically demanding, any activity attached to a job can lead to both better health and sharper thinking skills.
In addition, more boomer women have been more likely to be in the labor force throughout their lives than their mothers and grandmothers, and they, like boomer men, can come to define themselves by their professional life.
#3 – Retirees Have More Job Opportunities
The internet and the independent contractor/gig economy is a boon for retirees. Whether you’re still passionate about your career, want to try a different career, desire to pursue your passion, or simply want to supplement your nest egg, there are many available options to do so.
If you’re a people person, there’s independent consulting, substitute teaching, part-time coaching, or renting out a room via outlets such as Airbnb.
If you love to drive, you can still keep your flexible schedule by becoming an independent contractor delivery driver. You decide how busy you want to be. You work when you want and how long you want.
Just be sure to check in with your car insurance company about delivery driver insurance. Some delivery companies, like Postmates, do have an insurance policy, but most don’t.
If you prefer to work from home, all you need is a computer and internet access. There are a variety of online income opportunities like being an online tutor, virtual assistant, or virtual call center representative. You could even monetize your hobby by selling on Etsy.
Many boomers have become internet entrepreneurs as a new way to “retire.”
How to Get the Most Out of Your Golden Years
Coming into your retirement years is an exciting but challenging time. Let’s heighten the fun and lower the stress with some essential retirement planning tips.
#1 – Discuss Your Retirement Goals
Do you want to stay in your home or downsize? Do you want to travel or spend your winters as a seasonal vacation home? Do you want to stay in your job, explore a new career, or dedicate yourself to volunteering?
Take the time to take a frank look at what you want to do. Then you can look into the practicalities of pursuing your desires.
#2 – Review Your Retirement Benefits
Setting your goals should include taking a look at what you have financially and seeing how much more you may need.
To retire comfortably, your retirement income should be about 80 percent of your pre-retirement salary. For example, if your salary is $50,000 annually, then your retirement income should be $40,000 annually.
So dig out that paperwork or go online and gather information on your 401(k)s, investments, and other savings. Do a little research regarding your Social Security benefits. See how much your retirement benefit will be. Your year of birth determines what’s called your full retirement age, when you’re able to receive your full retirement benefits.
You can start your Social Security benefits as early as age 62, but the benefit amount you receive will be less than your full retirement benefit. For example, if you were born in 1962 and take early retirement, your monthly check will be about 70 percent of the full benefit you would receive if you wait until your full retirement age of 67.
Many people don’t know they can continue to work and still get retirement benefits. Earnings in, or after, the month you reach age 70 won’t affect your Social Security benefits. But before age 70, your benefits will be reduced if your earnings exceed certain limits.
If you’re under 65, $1 in benefits will be deducted for each $2 in earnings above the limit. If you’re 65-69, $1 in benefits will be deducted for each $3 in earnings above the limit.
The limits increase each year as average wages increase. Contact Social Security to ask for the latest limits.
Subtracting your Social Security benefits from that 80 percent rule of thumb will show you how much you need from other sources. For example, continuing with the $40,000 annually, if you and your spouse will collect $2,000 a month from Social Security, or $24,000 a year, you would need about $16,000 from your savings.
#3 – Hire a Financial Advisor
Financial concerns are the most common source of conflict for couples. Add to that the big decisions you have to think about when you’re planning your retirement, and you may want some extra help.
The best way to assess your retirement benefits relative to your retirement goals is to get an outside perspective from a professional, preferably a financial advisor that specializes in working with seniors.
A financial advisor can help you strategize how to best use your retirement funds and tackle any challenges you face, such as how to adjust your budget to take care of remaining debt.
#4 – Connect With Your Family
Family support during your retirement decision-making process can also profoundly influence your wellbeing. Your family can be a great help in assisting you with what you want to do, or even present new and improved ideas that make your retirement even more enjoyable.
If you want to retire and simply play golf and sit by the beach, there’s absolutely nothing wrong with that. But for the boomers who still want to contribute to society and the economy, remember that you’re in good company.
About the Author:
Karen Condor is a finance expert who writes and researches for FreeAdvice.com, a legal and insurance information site.