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The Coming Retirement Revolution

A Q & A with Coming of Age Financial Planning Guide Sol Levy

Q. We hear so much about new medical technologies and advancements in healthcare.  Does this mean we’ll all have a healthy retirement? 

 
A. Many of us will most definitely live longer, but maybe not healthier.  With current medical technology and assumptions, today’s life expectancy for men is age 81 and women age 84.  If a married couple reaches age 65, statistically at least one will live to age 93. 
 
We can expect a significant increase in medical technology to treat and keep people alive, but not necessarily to prevent illness.  It’s an unfortunate fact that many people will live in chronic poor health for a longer period of time, draining resources from the family.
 
Chronic illness will increase, aggravated by the increasing obesity rate, which increases the rate of cancer, diabetes, and heart disease.  We will also see an increase in Alzheimer’s disease as a product of living longer.  These illnesses are costly and greatly decrease our quality of life. 
 

Q. Do most people manage to save enough to truly retire and not work? 

 
A. Many professionals want to continue to work past age 65, and if they plan right, they’ll be able to choose the way they work or what they do. Many others will have to work to bet by. 
 
Currently there are 4.2 million people 65+ who are working, and that number is expected quadruple in the next decade. Today most 65-year-olds average a TOTAL of $65,000 in retirement savings to supplement their social security income.  Fewer people have pensions that will pay a good income, and pensions will be even less common in the future. 
 
Most people will have to support themselves with self-saving plans such as 401K’s.  Home equity is another source of capital and some 15% of people 65+ will have a nice inheritance to live on.  But most of us will need to take care of our number one asset:  our human capital, the ability to work full- or part-time to supplement social security and other income.
 

Q. Should I be concerned about housing options as I age? 

 
A. Huge numbers of boomers expect to relocate when they retire, creating up to six times more 65+ relocations.  Housing will evolve as they seek communities that are affordable and can provide services and amenities close to home.
 
More senior and life care communities will be built with assisted living support services and nursing homes attached.  This will allow people to build friendships and support systems within their living community.  This may be harder to do in a multi-generational community, although for many people the thought of living in a one generational community is not as appealing.
 
The questions that need to be asked are “Why is it necessary to move?” “Where will I go?”  “How will I afford to live?”
 

Q. It seems that “retirement” isn’t what it used to be. What’s changed? 

 
A. With the increase in expected lifespan and a potential 30-year period of time after age 65, there will be several stages of retirement not just one.
 
Initially there may be continued full- or part-time work in a current job, with a good income. Depending on financial means and good health, the next stage may be an active one where travel and activities dominate. 
 
The next stage may include any type of work to supplement income. 
 
The final stages will be determined by physical fragility and health status, with declining health and loss of independence that eventually leads to death.
 
The biggest shift is in people’s attitudes and thoughts about retirement.  Many people who were lucky enough to work in a place with a pension are now free to control their retirement years.  Many continue working or consulting part-time and are enjoying the free time they didn’t have as a full-time worker. 
 
But I’ve also encountered many people who don’t know what to do in retirement.  Their view of themselves was completely tied to work and career, they had few outside interests, and now they’re finding that golf alone isn’t satisfying.  I’d send them to the Explore Your Future  section of this website!
 
The best thing all of us can do is understand these trends and plan for them not only financially, but also socially and psychologically, and determine how and where we want to spend our retirement years.