Lemons and Lemonade

Now having vented my spleen, I must note that SunAmerica was kind enough to arrange for a conversation between myself and Mary Jane Fortin, CEO of American General Life Companies (whose parent, of course, is the SunAmerica Financial Group). And while Fortin was predictably upbeat about the study’s findings, she also admitted that the sharp change in expectations was very much a function of how things have changed since 2008-2009 more than anything else. According to the study, she noted, financial protection and peace of mind were six times more important to people than they were 10 years ago, and that need to protect from uncertainty is going to have a huge impact on how advisors approach their clients.

Fortin liked people’s transit through the Great Recession to people who lived through the Great Depression, and how that event left an indelible mark on how people viewed saving and spending. She suspected a similar phenomenon was afoot here, as borne out by the study results. On the upside, she said, if the Great Recession has done anything, it has helped to bring people’s expectations about financial performance back down to Earth.

And this, I think, is where we get to the critical notion of working in retirement. When I challenged Fortin about the study’s rosy conclusion that folks want to work in retirement because they would find it stimulating, she conceded that in reality, working in retirement is very much a function of people actually needing to work, at least to some degree. But she also noted that it is not as simple as people getting cleaned out in 2008/9 and not having the money they need to live a life of leisure until they turn 100. As society itself questions the future of things like Social Security as well as long-term economic performance, the thought of retiring later and working forever has gained a great deal of traction. Gone is the notion of living an extended vacation for 10 or 15 years once one quits working. But at the same time, Fortin says, this need to work, coupled with hitting one’s autumn years, is a chance for people to re-invent themselves. Folks might stuill have to work, but not full-time, and perhaps in an entirely different industry or trade. And this, I think, is most interesting. Part of the need to plan for the future means planning so that you can absorb whatever risk comes from switching careers late in life.

For years, retirement planning has hawked the notion of turning 65 and suddenly being happy building model trains or taking road trips all the time. This study is one of the first I’ve seen that, once you strip away the candy-coated marketing speak, does get to the heart of a new reality: We are all going to work longer than we thought we would, but that doesn’t necessarily have to be a bad thing, especially given our workaholic culture, and an overall health landscape that makes it perfectly feasible to remain active far later in life than our parents did. Having said that, I do think that the notion that “50 is the new 40″ or “60 is the new 50″ strikes me as somewhat ridiculous and misleading. 40 is still 40. 50 is still 50. But 60 is not what it used to be. Neither is 70, or 80 or even 90. And that is what we all need to plan for.