A Think Tank's Take on Retirement
A new report seeks to offer perspective on emerging trends.
Photo by Lee Luis on Upsplash
Every breath you take and every move you make, Ken Dychtwald has been watching you. In 1986, he and his wife founded Age Wave, a think tank and consulting firm advising corporations and institutions on how the supersized Baby Boom generation would impact every aspect of society and life as we know it.
And now that we Boomers are in or on the threshold of “retirement,” Dychtwald and Age Wave are right on point, marshaling data to demonstrate how our numbers, combined with rising longevity trends, are starting to change traditional patterns of work, leisure, and retirement.
Longevity and the New Journey of Retirement, a study issued by Age Wave and Edward Jones, a financial advisory firm, reports on data from 11,000 pre-retirees and retirees. The new journey of the title refers to the idea that Boomers see retirement differently than our parents and grandparents did, because of five major factors: the size of our age cohort, greater longevity, the breakdown of the “three-legged stool” (Social Security, employer pensions, and personal savings) for funding retirement, the gap between lifespan and health span, and the big spoiler, the Covid-19 pandemic.
Four Stages of Retirement
The study finds that 55% of pre-retirees and retirees see “retirement” as a new chapter in life, with only 27% viewing it as a time for rest and relaxation (and 7% calling it the beginning of the end). The report breaks the new retirement journey into four stages:
1. Anticipation – beginning up to 10 years before retirement, pre-retirees start the groundwork for major financial decisions such as downsizing their home, exploring new interests, or putting more money into savings.
2. Liberation/Disorientation – the first two years of retirement are a transition phase, when retirees savor their freedom from work but are often confused about how to fill their extra time.
3. Reinvention – years 3-14 of retirement is when retirees reach a balance between activity and leisure and become comfortable with a new identity that isn’t tied to what they do for a living.
4. Reflection/Resolution – from year 15 onward, retirees tend to look back on their lives and come to terms with what their life has meant to others and to themselves.
The report also divides pre-retirees and retirees into four groups, based on their attitudes, ambitions, circumstances, preparations, and level of enjoyment of life in retirement. (In marketing, we call this psychographics.) According to the report, our generation’s component groups are:
Purposeful Pathfinders (23%): essentially, everyone subscribing to this newsletter. These folks are happy, filled with purpose, productive and engaged with life. They are also the best prepared financially for this life stage.
Relaxed Traditionalists (26%): people who pursue a traditional retirement of relaxation, enjoyment of life, and freedom from past obligations. They are also well prepared financially.
Challenged yet Hopefuls(20%): people who lead active lives and focus on self-improvement but are constrained by their finances. The present has its issues, but they remain optimistic about the future.
Regretful Strugglers (31%): The largest of the four groups, these people are least positive about life, less active, less able to find purpose, and most likely to be socially isolated. Many experienced setbacks before retirement such as illness, divorce, or death of a spouse; others were forced to retire and were not financially prepared.
Finally, the report looks at what it calls the four pillars of success in retirement: health, family, purpose, and finances. (Are you seeing a pattern here? I wouldn’t have been shocked by this point to see The Four Tops, The Four Seasons, or the Four Riders of the Apocalypse.) Then it shows how current retirees rate where they stand on each pillar.
Not surprisingly, the Purposeful Pathfinders and Relaxed Traditionists are in the strongest positions across the board. The Challenged Yet Hopefuls rank themselves lower on health and finances, and the Regretful Strugglers rate the lowest on all four pillars.
The critical difference, the report suggests, is in advance preparation. At least 93% of retirees say the most important things they think about are having enough money to last through retirement, what to do to live a healthy life, activities that give a sense of meaning and fulfillment, and maintaining or improving family relationships. By contrast, only 37% of the pre-retirees in the study thought saving enough money was important, and the other three items rated far lower.
The bottom line: If you have already entered “retirement” unprepared, expect to encounter some rude shocks. There isn’t a lot you can do about it at this point except to stay healthy and keep looking for those activities that give your life meaning.