We all know what retirement is supposed to look like: after a long career, you get a hearty thank you and a genuine gold-plated watch. Then you retire to a warmer climate where you spend your time golfing, traveling to see grandkids, and growling at teenagers to get off your lawn.
Unfortunately, this idyllic vision isn’t exactly the retirement that the majority of Baby Boomers will get to experience. Instead, they’ll have to reinvent the idea of retirement.
Here are some of the ways that retirement will be different for Boomers than it was for their parents:
Boomers Will Work Longer
There are both good and bad reasons for this new reality. On the good side, Boomers can expect to live longer, healthier, and more active lives than their parents did. Few people consider 65 to be old anymore, even though 50 years ago, life expectancy was only 69.7 years. Many 60-something Boomers will continue to work because they still feel vital, while others will need to continue to draw a paycheck so they can pay for a much longer retirement than their parents enjoyed.
In addition to longer lives, however, Boomers may have to work longer because they can’t expect a pension from their employers, like their parents did.
Since workers are now expected to fund their own retirements, longer careers are often necessary in order to make up for the loss of guaranteed pensions. This is especially true of the Boomers (and Generation X, for that matter), since they didn’t necessarily embrace the saving mentality of their parents and grandparents.
The Do-It-Yourself Retirement
The loss of pensions has added another wrinkle to Boomer retirement — having the responsibility of managing your own investments. This can be overwhelming for many retirees, particularly since the stakes are so high.
Partnering with a trusted financial adviser can truly help Boomers make sure they don’t outlive their money. The problem is that many still believe financial advisers are only for the truly wealthy. Boomers need to recognize that they need help in managing their investments, and they need to educate themselves thoroughly on their options.
Carrying Debt Into Retirement
Boomers’ parents may have held mortgage-burning parties, but those who are on the cusp of retirement are much more likely to still owe money on their house, on their credit cards, or to other creditors when they take the plunge into retirement.
This will certainly change the retirement picture, since retired Boomers who are still carrying a mortgage or consumer debt will have to cut back on discretionary spending in order to stay afloat. That will make for some uncomfortable choices for any retirees who are already in reduced circumstances because of their fixed income.
The Bottom Line
One of the most important aspects of planning your retirement is flexibility. Not being married to a single vision of what your retirement should look like means that you’re able to make the changes to your savings, your plans, and your retirement strategies in order to meet your changing needs.
Boomers, in particular, need to be ready for a different retirement than what their parents experienced. Their example will make it clear to future generations that there’s no one right way to retire.
If you’re a baby boomer, what kind of retirement are you expecting or experiencing?
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