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Retirement Planning > Retirement Investing

The death of retirement as we know it

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From the September 2009 Issue of Senior Market Advisor Magazine

All right, we get it already! Battered by the recession and decline in their savings, many boomers have concluded that they may need to work longer and retire later than they once thought. That used to be news but it isn’t anymore. So, it’s tempting just to ignore the latest finding of the Pew Research Center’s Social and Demographic Trends Project that boomers are saying they may delay their retirement.

In surveys we’ve conducted, boomers tell us they want to work longer for one of three reasons. First, they expect to live to age 85 or 90 and quitting at 65 will result in boredom. Second, they enjoy work and it provides them a strong self-identity. Or third, they haven’t saved and cannot afford to stop earning a regular income.

On the verge of retirement

Pew hones in on what it calls the “threshold generation” of Americans 50 to 64 that is closest to retirement (comprising most of the boomer generation, which spans the ages from 45 to 63 this year). Fifty-two percent of full-time workers in this group say they “have thought in the past year about postponing their eventual retirement,” compared to 37 percent of adults of all ages.

Some 16 percent say they plan to never retire, twice the percentage of younger workers. We’ve seen other studies reporting that 25 percent of all boomers said they planned to work until they die.

How much did you lose?
Here’s where it gets interesting: Pew identifies which groups are more likely to say they will work longer. It isn’t based on income or how much people have saved. The real differentiator is how much money they lost in the economic meltdown. “Regardless of income or age, those who have lost 40 percent or more of their nest eggs are roughly twice as likely as those who haven’t lost money to say they have thought about delaying their eventual exit from the workforce.”

We suspect you are hearing this from your boomer clients. Most boomers we talk with these days shrug their shoulders and say they’ll just keep working until they can afford to quit.

Given that, our advice is to work with your boomer clients on “life” goals and “financial” plans, not “retirement” plans. Such terms take into account the possibility that clients will continue working full time, part time or in a lifestyle business–and that transient economic and financial events may influence how long they expect to work.
Unless a client explicitly states a goal of working toward retirement, I suggest you stop using the “R” word.


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