April 1, 2015 — We were surprised recently by a group of commenters who took umbrage at the notion that you can work and also be retired. Their more traditional view was that if you are retired, you don’t work, period. A few even quoted dictionary definitions to support their case. But an increasing body of evidence points to an overwhelming trend in the opposite direction – that retirement is often going to be anything but traditional or predictable. It is more likely to be a transition than it is stopping work. Instead of just cashing pension and Social Security checks and having morning coffee or golf with the guys, it might mean a change of career or a part time or volunteer job. The trend is toward more of a highly personal, very customizable retirement experience, one that will be a little bit different for just about everyone.
Here is a summary of some of what we are seeing in 3 recent studies and/or articles:
A Rheostat, not and on-off switch
The Pew Institute asked about Americans about their retirement plans and work. They found that 1 in 5 (21 percent) said they are not planning to retire, while more than half (53 percent) anticipate doing something else, including working at a different job. Just 26 percent have a traditional notion of retirement in which they stop working altogether. Source: Pew Study Shows Americans’ Financial Worries Clouds Optimism. Note that this was a study among Americans of all ages. Its bottom line was that many of those polled are barely breaking even or spending more than they make each month, and more than half said they feel unprepared for a financial emergency.
Housing trends are changing
Meanwhile a Merrill Lynch/New Wave retirement study reported on new housing trends among Americans of retirement age. This study’s title basically reports the happy news – “Home in Retirement: More Freedom, More Choices“. Here are some of their findings that support that freedom in housing choices also helps bring about more flexible and interesting retirements:
– Two-thirds (65%) of the retired Americans in the study say they are living in the best home of their lives.
– Compared to people who have not yet retired, retirees are more likely to say their homes are comfortable, in a safe community, and a great place to connect with family. They also are more likely to say that they are now living in a part of the country with pleasant climate and weather
– Many don’t have to work, family obligations are lower than ever, many of their homes are paid for, and they can live where ever they would like.
– Retirees are generally thrilled about their new found freedom. In fact the study authors even have a name for this, the “Freedom Threshold”. It generally seems to happen at age 61, and signifies that retiree age folks are free to live wherever they would like
– 4 out of 5 Americans 65+ own their own home, and 7 out of 10 have no mortgage
– An estimated 4.2 million retirees moved into a new home last year alone. 83% of those folks did not move out of state.
– Sixty-four percent of retirees say they are likely to move at least once during retirement, with 37% having already done so and 27% anticipating doing so. Reasons for doing so are widowhood, empty nesting, health changes – as well as desire for a new environment or climate.
– Seniors do face serious challenges, and one of the biggest is that they have to be prepared to live for 20 to 40 years of retirement on what they have saved.
– The downsize surprise. Most people expect that retirees will downsize at some point in retirement. But this study found that almost half of them did not downsize, in fact 3 out of 10 moved to a larger house.
– According to this study, just 7% of retirees have moved into age-restricted retirement communities. Although this seems quite surprising and low, Topretirements would like to note that perhaps an even large percentage of retirees move to communities that although are not officially 55+, are in fact very highly defacto 55+.
Easing into retirement
The third leg of the ‘new retirement’ concerns what people will do in retirement. A New York Times article, “Easing Into Leisure, One Step at a Time“, has the examples of many baby boomers as they struggle to redefine what retirement means to them. The first example in the article is of Jack Guttentag, a Wharton professor who as an empty nester at age 54 decided to downsize to a place in the country, even though he was still working. That was 37 years ago, but now he and his wife have just downsized again, this time back to the City of Philadelphia.
The article goes on to describe other individuals who have retired, then decided to get a new job, quit that to volunteer, and then retired again. The article points out a few factors that are leading to this gradual, step by step kind of retirement. One is the rise of 2 earner households, where one person might be ready to retire but the other is not. Another is money, where couples who realize that they might live beyond what they ever thought was reasonable, or trying to put more away to assure a comfortable retirement.
We think these studies confirm our belief that retirement is evolving in ever new directions. It can be whatever you want it to be, and does not have to follow any one else’s model. Go for it!
Comments? Are you going to have a traditional retirement, or something much more different than that of your parents? Are you planning on moving in retirement, and will that change your lifestyle. Please share your thoughts in the Commments section below.