More than 8 in 10 boomers plan to continue working during the first 5 years of retirement, and almost three-quarters of boomers expect their post-retirement income requirements to fluctuate.
These are among the findings of a new survey, “Perspectives: Retirement Lifestyles,” released by Sun Life Financial, Wellesley, Mass. The survey authors polled 2,000 respondents age 50 and older (1,000 pre-retirees and 1,000 retirees) who have $250,000-plus in investable assets and work with a financial advisor.
According to the report, only 3 in 10 pre-retirees and retirees expect their income needs to remain static through their retirement years. Among retirees, 67% of those polled expect their income needs to vary from year to year; this compares with 72% among pre-retirees.
“The old rule of thumb was that retirees would live on roughly 70% or 80% of their pre-retirement income and draw down accumulated savings at a constant rate, such as 5% annually,” says Mary Fay, a senior vice president and general manager at SunLife Financial, Wellesley, Mass. “Our survey suggests this rule is no longer true. During their early retirement years, people are a more active and so they spend more.”
What Your Peers Are Reading
Boomers who responded to the survey anticipate engaging in a variety of activities early in retirement. Among those who cite domestic travel and international travel–2 of the most significant post-retirement expenses–85% and 82%, respectively, indicate they intend to pursue these leisure interests within the first 5 years of retirement. By comparison, just 13% of boomers expect to engage in domestic travel during mid-retirement (5 to 10 years into retirement), though 16% anticipate traveling internationally.
Other activities planned for early retirement are similarly high: hobbies (83%); beginning a new career (81%); spending more time with children and grandchildren (78%); starting a business (76%); volunteering (73%); taking classes or getting a degree (72%); buying a second home (61%); relocating to a new place (56%); and assisting charitable organizations (54%).
As the results highlight, not all of the activities have a leisure focus. Pamela Lee, a financial planner at Pursestrings, San Francisco, Calif., observes that retirees’ desire to remain engaged in a working capacity will depend in some measure on their expertise, prior profession and how much fulfillment they derive from work.
“Many of my [retirement age] clients are consultants and professionals who don’t want to leave the workforce because they love what they do so much,” says Lee. “They believe they can continue to provide a useful service to the world, even if in a part-time capacity. For them, money is not the primary issue.”