With the Me Generation already trumpeting slogans like "sixty is the new forty," it is unlikely its members will quietly shuffle off into their twilight years.
Besides, why should they? Many of their predecessors have not.
According to a recent study of retirees sponsored by Putnam Investments, the Boston-based money management firm, one-third of the newly retired (with an average age of 61) returned to work after an eighteen-month retirement.
While collectively they do not earn or work as much as before ‘retiring,’ the working retired—which Putnam estimates at 7 million currently — said they were back in the workforce for the mental stimulation, physical activity, and because it kept them socially connected. More importantly, they saw it as the means to personal fulfillment. They now work because they want to rather than need to. They see their quickly ditched ‘retirements’ as the pause that refreshes—the golden retreat into the final phase of life still years ahead of them.
The results do not surprise sociologist Robert Weiss, author of the recently published, The Experience of Retirement. His book recounts extensive interviews with eighty-nine men and women immediately prior to and after retirement.
Says Weiss, “Energies in the first year of retirement tend to be directed toward answering the questions: What do I do with myself? How do I make sense of a life in which, if I choose, I have no obligations?” He found most people — in particular those happiest with their post-career lives — found ways to continue to matter, by continuing to have responsibilities. “The best way to make that happen,” says Weiss, “is through work. And if work is to matter, then someone needs to be willing to pay for it.” He, too, found many retirees returned to at least part-time employment, in addition to their volunteer activities shortly after retirement.
Though two-thirds of the working retired in the Putnam study insisted choice, not financial necessity, motivated their return, finances did play some part, according to Beth Segers, a managing director with Putnam in Boston.
“We asked respondents what they would have done differently if they could turn the clock back. The universal response? They wished they had pared back their consumption and saved more earlier, especially given fears for future health care costs,” she says. Yet overall, the group was still pretty satisfied with their retirement lifestyle, at least enough so that reining in their current spending was not under consideration.
“Gifts and travel remain key consumption priorities,” reports Segers. “But there’s no indication of when the working retired plan to slow down their working, saving — which they still do — or their spending.”
So, if, as the studies indicate, retirement is evolving with expanded life expectancies into a time for renewal, personal growth, self-fulfillment and a means of maintaining a forty-year-old’s lifestyle, maybe sixty really is the new forty, and retirement is just the ultimate midlife crisis. If so, then the process of financial planning, as many still practice it, needs revamping.
“If we view retirement as a sabbatical or series of sabbaticals, then financial planning should not (as it traditionally has done) treat retirement as a stopping point where accumulation ends and distribution begins,” says Segers. “It is more complicated than that.”
Complicated and a bit arbitrary, according to George Kinder, founder of the Kinder Institute of Life Planning in Littleton, Mass. “Retirement is an artificial deadline dating back to the 1930s and 1940s. Those were the times of Big Labor when retiring and getting a pension was the objective. It is also a political thing — all the tax laws and distributions requirements seek to set an artificial deadline on life,” he explains. But these dates are becoming less practical, and really should not be driving most people’s planning decisions.
For this reason, Kinder shifted the focus of his advisory practice from financial planning to life planning, recognizing that his clients’ lives did not neatly power down with the celebration of a seminal birthday.
But what exactly is life planning?
“It involves finding that greater dream, regardless of age, and deriving a plan to realize [and fund] it,” explains Kinder.
“We tend to think of retirement as playing golf in Florida. But when people talk about what they want to do with the rest of their lives, that rarely comes up,” says Kinder. His work led him away from emphasizing the monetary aspect of retirement planning — the formulaic "you must have this amount saved by such and such a date to have this amount of income for retirement" — to focusing on what people are actually living for.
“Shifting objectives away from financial targets enables them to more easily use their passion to guide them to the strategies that will help realize their real life goals,” he adds. “Clients want something more than artificial deadlines to plan for. Instead we urge them to find that thing that sets their souls on fire.” Once they find it, he explains, they are driven to find ways of attaining, funding and maintaining it; and their ultimate retirement plan falls into place around it.
Finding your "it"
Kinder starts the planning process by asking clients three questions:
- If you had all the money you needed for the rest of your life, how would you live your life?
- If you suddenly discovered you had five to ten years to live, how would you change your life?
- If you went to the doctor and learned you only had twenty-four hours left, what would you miss? What did you not get to do? Who did you not get to be?
“When people answer these questions, they discover their images of their own retirement are much simpler than the grandiose images corporate advertisers have of retirement,” he says.
This may be why the Putnam study found such a high level of satisfaction among their retirement age respondents despite their rather modest nest eggs. Plus, those eighteen-month sabbaticals likely helped reframe expectations for retirement.
All of this bodes well for undersaving, age-denying Baby Boomers. It also makes financial planning clearer for those Boomers who will be turning sixty this year. For them, tomorrow is not the first day of some golden retreat from their midlife. It is the first day of the rest of their lives. They need to plan accordingly — and then, most likely, get back to work.