Not too long ago, retirement was a concept where you worked with one employer for 30 or 40 years and at the magical age of usually 65 years of old, you retired from the company with a gold watch or grandfather clock and road off into the sunset to enjoy your golden years. You received a pension and social security check and that was plenty to sustain a lifestyle throughout retirement. For all those born in 1980s or after, a pension is a monthly check earned from the company for years of service worked (usually based on a formula).
The notion of retirement at age 65 was primarily for two reasons. The majority of US labor force was manual labor during the industrial age and obtaining decent wages was possible directly from high school, without a college education. If a lad joined a manufacturing company at age 18-25, forty years of labor took its toll on the physical body, hence, it was almost necessary that he stopped working. He earned a pension to cover the remaining living years of his life. Call it corporate goodwill or loyalty. If you think back to someone you may have known that retired during this era, their lifespan was often short, passing only a few years after retiring.
Fast forward to today. It is said that the average worker will have more than 18 jobs and 5 careers in her lifetime. Pension is a thing of the past with less than 16% of companies currently offering defined benefit plans. Social security is considered a hope and prayer, as it is questioned if it will last through the next generation. You are expected to save and invest up 20%, if not more, of your income to take care of your older self. We are in the digital and knowledge age so hard strenuous body breaking labor is not as prevalent in most jobs. Even in the factories; workers today are computer or robot operators, with minimum heavy lifting. People are living longer due to medical breakthroughs and health awareness. Workers can work longer.
Today, YOU ARE YOUR RETIREMENT PLAN!
So tell me, why are we still following an old retirement model? It is time for a paradigm shift. Retirement as we knew it does not exist. The days of sitting on your duff and riding out the golden years is a fantasy. The new words are life re-engineering or lifestyle planning. I empathize with Boomers because the game changed in the middle of the game, but it’s not too late for to start planning for life after the last paycheck from their primary employer. Just because that paycheck ends does not mean that your earning power does as well. We are in the knowledge age; everyone knows something that is useful to someone.
Take my friend Debbie for instance. Debbie retired at age 55 from an executive government position. Debbie didn’t start saving seriously for retirement until age 40, but she was very diligent. She was not frugal and lived very comfortably. Debbie was a duel income upper middle class household. Debbie didn’t retire with millions of dollars, but a modest six figure account. She counseled with an advisor, including myself, to devise a strategy to make her money last.
Once she retired, she traveled around the world, took cruises, spoiled her grand-children, and hosted lavish holidays at her home. She was very active in social and community activities. Debbie also started a human resources consulting business and taught at a local university. Why was Debbie successful in retirement? She reinvented her life. She didn’t act as if retirement represented the end, but embraced it as a time to do the things that she enjoyed doing.
As part of FINCON14, we are challenged to share tips on how people can retire successfully. Here are 5 tips for Baby Boomers below:
1. Abolish the word retirement. The word retirement denotes an “I’m done” mentality. Instead, create a new vernacular around this next life phase.
2. Stop stressing over the money thing. Enough with the colorful charts with enormous dollar amounts and financial shortfalls. Millions of dollars are not necessary for a successful retirement.
3. Transfer skills to other income producing activities. Instead of thinking of retirement as the final resting place for your skills, continue to learn and hone your craft.
4. Identify your true purpose and passion. Most people have a calling deep down inside waiting to be unleashed.
5. Find true happiness. It’s not about the lavish vacations and cruises, but embracing what matters most in life: family, friends, love, health, wisdom, freedom, and peace of mind.
Samirian Hill (@moneywisdoms) is President and Founder of BudgetWise Financial Solutions, LLC. She is a financial educator, consultant, freelance writer, and blogger. http://budgetwisefinancial.com