Once upon a time retirement was mostly defined by the nature of your employment. Most people spent their working years with one company, knowing that a company-provided pension awaited them after forty years of service. Those days are gone now. The stereotypical retirement at 65 followed by a season of leisure and relaxation has become something of a relic. Now, individuals are more likely to be saving for retirement independently, as pensions are rare, and expectations for retirement have changed. While this may be uncharted territory, new possibilities exist for you to become the architect of your future. 

The retirement you imagined when you began your own career and started saving— lavish international travel, time to pursue passion projects— may have changed.  In recent years so many have experienced economic challenges, employment changes, health issues, or simply had the realization that a “traditional” retirement does not hold the allure it once did. However, while the world continues to change and these changes impact our individual lives, opportunities are created for new ways of thinking about and planning for the right retirement for you. 

The right retirement for you will be unique to your needs, goals, and current life situation. There’s no better time than right now to take a fresh look at your vision of retirement. With the newest data, the availability of diverse perspectives, and guidance from trusted, experienced financial professionals, you can become the architect of the retirement vision that’s right for you.

Generational changes

Many of the changes in thinking about retirement planning are reflected in the demographic shifts and trends as Baby Boomers have aged. As the largest generation, 10,000 Baby Boomers are turning 65 each day. By 2024 that number will be 12,000 daily. The children of Baby Boomers– Gen X and Millennials– have grown up in a very different social and economic reality than their parents.

After the market crash of 2008, record numbers of young adults returned to live with family members. These (mostly) Millennials have struggled to catch up with their Baby Boomer parents in terms of home ownership, savings, and other markers of financial stability. Currently people under 45 make up only 25.5% of homeowners. Those same Baby Boomer parents likely found themselves caught between helping their adult children and caring for their own aging parents. In fact, a 2021 Pew Research Center Survey found 23% of U.S. adults are caring for an adult over 65 and either supporting an adult child or still raising a minor child. These economic and caretaking demands have seriously impacted whether and how many people have been able to plan and save for retirement. The Center for Retirement Research at Boston College found that as of 2021 51% of households were considered at-risk of not being able to maintain their current lifestyle through retirement. 

In the past, the expectation was once your children became adults, they would be on their own. Planning for your retirement and future included arrangements for your adult children to inherit your estate. Now, however, due to changes in life span and economic realities, many families find themselves in longer cycles of caretaking and interdependence. This may change how estate planning and inheritance are considered, or impact how you think about future care you may need.

Pensions vs. 401k and changing career trajectories

Alongside the effects of economic fluctuations and resulting shifting generational trends, the structure of retirement investing and benefits has been in a consistent state of change for decades. In 1980, 60% of workers in the private sector were the beneficiaries of employer provided “defined-benefit” pension plans. Today only 4% of private sector workers, and only 20% of civilian workers overall, participate in this type of plan. These defined-benefit plans are now largely replaced by defined-contribution plans, like a 401(k) or 403(b). These defined-contribution plans are vulnerable to market changes. Between the end of 2021 and the end of the Q2 2022, Alicia Munnell, Director of the Center for Retirement Research at Boston College estimated nearly $3 trillion was erased from U.S. retirement accounts. 

Economic and societal trends are major factors in our shifting relationship with retirement, but they’re not the only dynamics in play. Along with increased longevity, most workers have encountered the trend away from traditional single-employer careers. Today, working often involves numerous pivots and changes from one company to another, public to private sector or vice versa, or even complete re-inventions in entirely new fields. Current research shows the average U.S. worker will change jobs twelve times in their working life. While this is a big change from the past, many workers find that their varied work experiences lead to a more highly developed quality of resilience. This resilience can have a significant impact on how you are able to navigate the needs and demands of your current phase of life and those you face on the horizon. In looking forward to retirement you may consider continuing to work in some capacity, perhaps re-visiting a field or role from the past which you enjoyed, or pursuing a project or business that you may not have had time for in other phases of life. 

Retirement may have traditionally been thought of as an end to your earning years, but it doesn’t have to be. The possibility of ongoing work can be a source of additional financial support in retirement, as well as serving what may be an even more valuable role— contributing to a sense of purpose and meaning which can make all the difference in the uncharted territory of your later years. A sense of purpose is so important, in fact, that recent research shows it can contribute to increased longevity, reduced health risks, and improved overall quality of life.

Holistic retirement planning–finances, lifestyle and purpose

Retirement planning is often, by necessity, heavily focused on financial specifics. However, the new way of thinking about retirement must include the less tangible, but absolutely crucial resources of mental, physical, and emotional well-being. Thinking about what nourishes all the facets of who you are is just as much a part of your journey to retirement and beyond as saving, reducing debt, and investing. Retirement can be a time of renewed commitment to personal projects, community organizations, religious institutions, volunteer work, or helping to care for grandchildren or other family members. These types of service can also provide a strong sense of purpose through retirement, and the bonds of community and interpersonal relationships may offer additional support through the physical changes of later life. Whether you seek purpose in new kinds of work, passion projects, or time with family or community, thinking holistically will allow you to build a retirement that’s not just about ending a career, but rather one that is a full and meaningful phase of life.

Longevity and Long-Term Care 

Did you know that of people who reach age 65, half of women and over a third of men will then live to 85? That means a full two decades of life after the traditional retirement age. Two decades (or more!) to create memories and meaning. Increased longevity also means considering the impact of potential health issues and the need for specific types of care in later years. 

Those physical changes are another important consideration of retirement planning. According to the Administration on Aging, someone turning 65 today has a close to 70% chance of needing long-term care– either in home or in a residential facility. Prioritizing your health now through diet, exercise, and good preventative medical care can help ensure that you are able to maintain an active lifestyle and keep doing the things you love. Illness and injury will always be part of life, however, and making sure your retirement plan includes considerations for potential long-term care, or unexpected medical costs, will give you greater peace of mind and ensure you do not wind up unprepared.

Building the dream 

Of course, pragmatic planning and purpose are essential to a full and meaningful life at every stage. While your vision of retirement may be changing, you do not have to let go of your dreams of adventurous travel or free time for fun and leisure. Planning that long-imagined grand European tour, or finally buying that vintage project car, or investing your time and energy in a passion project or hobby can all be part of your retirement. Seeking professional guidance and support now can help make your goals and dreams a reality. 

A good financial professional can be invaluable in helping you think about and plan for retirement. If you have managed your retirement planning and investments on your own, you may wonder whether the expense of a professional is worth it. If you currently have a financial professional, you may wonder if you are getting the most benefits possible. If you are looking for one you may be completely overwhelmed by the array of possibilities. Some things to consider:

• No matter how smart you are, from inside your own life it can be hard to see the full scope of your financial picture and the future you are planning. A financial professional can help you take a bird’s eye view and perhaps offer products or strategies that you may not be aware of.
• A financial professional can provide perspective and rationale in planning for future events which may be emotionally intense- loss of a spouse, illness or disability, or the complexities of estate planning.
• The right financial professional can be a long-term source of ongoing financial education, support, and guidance that is agile and responsive to major life events as well as bigger picture market trends.
• The right financial professional for you will spend time getting to know you, may share many life experiences, and will be personally invested in your success. Remembering that this personal connection can lead to greater understanding and individualized guidance can help direct you as you consider candidates.

The changing reality of retirement means the traditional ways of thinking and planning might not achieve your vision of retirement. That does not mean you have to give up on your dreams. Figuring out your priorities and passions and recognizing that life will have different phases and cycles– alongside investing and saving, and including financial protection in your plan – is part of building the foundation for the life you envision for you and your dear ones.  Learning to embrace each cycle of life and the new opportunities at each stage will keep you active and engaged through every phase. Taking time now to evaluate your progress and preparedness for retirement, ideally with the guidance of a financial professional, will give you the knowledge to be able to look forward with confidence.