Baby Boomers are Rewriting Retirement History

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If I say the word “retirement,” what comes to mind? Sunsets? Golfing? Cruises?

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Most of the people I work with don’t want anything to do with a retirement that has them sailing toward a sunset of irrelevance. The people I speak with want a retirement packed with meaning, new careers and new experiences.

Hundreds of years ago, most people didn’t grow old, so there was no need to retire. People worked to survive, until physically or mentally they could no longer perform their tasks.

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As centuries passed, life expectancies began to increase, but caring for the elderly was still not a problem. That’s because as recently as the mid-18th century, people rarely died from old age; they often died from infections that are easily cured today. And if someone was fortunate enough to age and no longer work in one field, they’d opt for a less labor-intense job.

A medical advance changed everything

It was the discovery of penicillin in 1928, and markedly increased lifespans, which led to the concept of the modern retirement that we’re familiar with today. People began living longer and naturally working longer — resulting in a glut of workers that eventually led to unemployment and stagnation, a big problem for the first time.

At the height of the Great Depression, it became apparent that the way to increase efficiency and lower unemployment was to encourage older workers to retire. However, many older workers were not willing (or in many cases, able) to quit. It just wasn’t in their DNA. Life had always been about work, and now they were being asked to stop. In response, President Franklin D. Roosevelt proposed the Social Security Act of 1935.

Suddenly, you could retire and still have income.

But this gave rise to a new problem: Americans had “nothing” to do. What were retirees to do with all that extra time?

Fast forward to 2016, where the median retirement age is 62, yet the typical life span is almost double what it was only a century ago — now up to 79 for women.

When Social Security was introduced, the average life expectancy was only 61 years, so most people who made it to retirement were only retired for a very short time. Today, a healthy 65-year-old man has a 25% chance of living to be 89 (90, for a woman). If you retire at 65, you might have a 24-year (or more) retirement.

Baby Boomers lead the way

In spite of all those commercials depicting serene retired couples, most of us really don’t want to golf or watch TV for the next 24 years. Increasingly, people want meaningful connections and a reason to get out of bed each and every day.

It’s no wonder the Baby Boomer generation is rewriting the definition of retirement by continuing to work. According to Transamerica Center for Retirement Studies, roughly 3 out of 5 Baby Boomers plan on continuing employment past the traditional retirement age of 65.

That’s news to much of the financial services industry, which still runs on a marketing-driven message that retirement is all about the accumulation of assets followed by a stroll across a finish line into Pleasantville.

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I tried to retire, but changed my mind.

I came pretty close to retirement after a business transaction and quickly discovered it wasn’t for me. I decided to put my focus back into work and began advising clients that quitting work was just one option, and not a requirement.

Similar to the 1930s, there’s a lot of anxiety about retirement, and it’s not based solely on fiscal concerns. Even for those who have saved well and don’t financially need to work, there’s a lot of angst about what they are going to do with their lives if they stop working.

One of the most satisfying aspects of my career is seeing the passion that older Americans are bringing to the retirement-transition process. Money is just a part of the equation. Volunteerism, nonprofits, returning to school, starting a new business, these are the goals of many of the Baby Boomers I work with.

Though it appears we’re shifting back to a time of people working as long physically and mentally as possible, modern retirement is about reinvention, and for me, it’s an exciting change in the American cultural landscape.

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Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Scott Hanson, CFP, answers your questions on a variety of topics and also co-hosts a weekly call-in radio program. Visit HansonMcClain.com to ask a question or to hear his show. Follow him on Twitter at @scotthansoncfp.