When our Grandfathers were were working, a lot of companies offered some sort of defined benefit pension plan. Some of you may remember that “Big Blue”, also known as IBM, ATT and many other big companies offered defined benefit retirement plans as a way to retain employees. If you worked for one of those companies, then you knew what your monthly income would be after retirement.
Defined benefit retirement plans gave way to defined contribution plans that the employee (meaning you) paid for. The big difference between the two is who pays for it. You or your company. If you have a 401k or IRA, the only thing you know for sure is what your contribution is. The value changes every day and you have no idea what your retirement income will be until you actually retire. Up until that point, everything is just a guess.
Social Security was created in the mid 1930s to provide retirement income for people over age sixty-five based on taxes they paid into the system during their working years. It’s a public retirement plan if you will. Social Security was supposed to supplement personal retirement plans with payroll taxes paid over a lifetime of work. For a lot of Americans, Social Security is the primary source of retirement income. This might not be enough money for a spectacularly successful retirement.
What’s a Successful Retirement?
There are as many answers as people you ask. Everyone has a different idea of what retirement should be and almost everyone will agree that good plan is necessary to live whatever their vision of the future is. Personally, I think it’s a retirement like I have, good health, great relationships, work when I want to and time to do what I want.
More people are finding that the traditional retirement has been replaced by a working retirement, either part or full time. I know some who work because they have to and some because they want to. I know some with entrepreneurial pursuits as an independent contractor, consultant, volunteer or business owner. It’s easy to continue working if you enjoy what you’re doing. But, if you enjoy what you’re doing, it’s also easy to work more than you actually want.
What is a 21st Century Retirement?
Nowadays, employer defined pensions are a thing of the distant past and our congress has tinkered with social security making its future uncertain. That puts the onus of retirement planning squarely on each of us. If we don’t plan for and take care of our future retirement, it could be pretty bleak when it gets here.
Living longer and healthier lives has a significant effect on what the 21st century retirement looks like. Traditionally, retirement meant quitting work and adopting a lifestyle of relaxation. A retiree was not expected to continue working, except maybe in a garden. That’s not the case in the 21st century when a lot of people continue to work long after they could have retired.
From my personal experience, I can say this has all changed. I worked until I was seventy-four. It’s what I wanted to do and I didn’t expected to stop. Retirement has become more satisfying, but a lot more complicated. Especially for people who retire without a lot of savings or have to use their retirement savings for catastrophic events. The great recession of 2008 and Covid-19 restrictions have done a great job of forcing a lot of people into an uneasy retirement.
I’m not an expert, but I’ve there and I know what my own experience has been. The traditional retirement has become more like a change in careers. I used to tell people that retiring just meant you have to find something else to do. That’s never been more true than it is today.
What Boomers Are Concerned About
The number one concern for most baby-boomers and millennials is the same as it’s been for anyone who has ever retired. Money, with health and relationships following close behind. Personal finance and how to pay for retirement is a big question. It can be catastrophic to run out of money, especially for a surviving spouse.
Good health is most important. If you have serious health conditions and can’t enjoy your retirement, nothing else matters. A huge part is the cost of healthcare that we’ll need and possibly long term care. We have no idea what those might be, but we know the cost will continue to go up and only about a quarter of retirees have those expenses in their budget.
How do we know how much money we’ll need when we retire? We either trust to luck or we can figure out how much money we’ll need and make a plan to get it. We need good information to do that. Check out “Easy Retirement Planning” at the top of this page. There’s some great information in it and the price is right.
My Conclusion
More retirees will continue to work, some because they want to and some because they have to, but what to do and when is a personal decision. What to do and when are the questions. Everybody has an opinion and there’s a lot of advice, but the decisions have to be personal. A lot of decisions will be made based on how financially secure you are, what you do before retiring and what you want for the future.
In my opinion, the definition of retirement has changed and will continue evolve as our country’s political atmosphere changes and government becomes more involved in our lives. More people will have to keep working and some of us will have more uncertainty when we retire.
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Excerpts from EzineArticle: http://EzineArticles.com/10450072