If you’ve been an advisor for any length of time, you’ve heard Ken Dychtwald speak. The CEO of research and consulting firm Age Wave was ubiquitous on the trade show circuit prior to the market crash of 2008 (we heard him speak at three separate events in a little over one year).
For those who hadn’t seen Dychtwald in action, their attitude was usually dismissive. “Gee, a presentation from an author and gerontologist about aging and retirement; where do I sign up?”
But the zeal with which it was delivered and its multimedia format punctuated with insightful and often amusing video had audiences, by the end, cheering for the new retirement paradigm Dychtwald described—one of continual reinvention, new career paths, new advanced degrees, new adventures. It was the very opposite of the “short rest then death” stereotype that until then dominated the retirement discussion, and it was one that baby boomers rapidly approaching retirement age were eager to hear.
We haven’t heard much from Dychtwald since the economy went bad; like so many others, our retirement interest largely took a backseat to more immediate matters. But it wasn’t as though Dychtwald slowed down. He continued to add to the list of the 16 books he’s written. He produced his second PBS special, “With Purpose,” in 2009. He joined The Huffington Post as a frequent contributor. In short, he continued spreading his message, one that read “as life spans increase, so too do new opportunities.”
We wondered how his message had changed in light of all that had happened—if at all. Was it stale? Were his predictions right? More importantly, did those audiences still cheer?
A chance press release gave us an opportunity to find out. Over the summer, SunAmerica Financial Group released a 10th anniversary update to its widely cited “Retirement Re-Set Study” from 2001. The original study offered critical insight into retirement attitudes as the dynamic, rebellious, but by no means monolithic boomer generation prepared for a time few could grasp—old age.
Given the volatility in the decade since, Dychtwald rightly saw a follow-up as a “no-brainer.” He sent a late-night email to SunAmerica Financial Group President and CEO Jay Wintrob as well as Larry Roth, Advisor Group chief executive (owned by SunAmerica). He had an answer by 7:00 the next morning: “Yes.”
“What a crazy decade it had been,” Dychtwald says. “First 9/11 happened, and then the economy went crazy, the stock market went backward, we had all sorts of shifts and changes. But we had the advantage of doing a very thorough study [in 2001], and we could go back and ask the same questions layered in with all sorts of new queries and concerns.”
Dychtwald assembled the same players from the original study, which he describes as “a reunion akin to ‘Seven Samurai.’” They include Humphrey Taylor, chairman of The Harris Poll, to help with logistics and operations, and Dychtwald’s own head of research, an individual formerly employed with the CIA who’s been with Age Wave for 15 years. Together with the rest of the team, they gathered (and pored over) 800 pages of analytics.
Good luck getting a synopsis from Dychtwald. Superficial isn’t in his vocabulary. Everything is put into context, most likely a consequence of his Ph.D. and one reason he’s so popular within the industry.
“What’s a good analogy? In astronomy there’s what’s called a blue star,” he begins cryptically. “A blue star is when a star is born. And apparently every now and then, with the help of these massive telescopes, you can see the birth of a star. That’s what we felt like looking at the American public’s retirement. We were seeing the birth of a different paradigm for retirement right under our eyes: morphing, altering, transforming.”
But just when you think he’s headed for drive-time psychobabble, he snaps back.
“Prior to the 1930s, for all intents and purposes, retirement didn’t exist,” he says. “The word wasn’t used in modern language; you can’t find the word in books. The general idea was that people worked throughout their days. They earned a livelihood, had a feeling of self-worth (a non-trivial piece of the puzzle) and work acted as a social connector.”
Yet something happened in the mid-1930s, Dychtwald explains, that is often forgotten. People think Social Security was crafted in order to give older adults a comfortable passage. Not so, he says. “The larger part was that the unemployment levels reached 25%, which presented an interesting challenge. If young men and women can’t get jobs, the entire ‘American engine’ stalls. They don’t have kids, buy houses and cars and generally don’t consume.”
Social Security provided assurance, at least in part, for retirement and therefore allowed them to rev the engine. This generation worked and saved and had a bit of rest toward the end of their lives, resulting in a period between 1935 and 1975 that Dychtwald calls Retirement 1.0.
“In the 1970s, however, retirement morphed for a number of interesting reasons,” he says. “One of them was that people began to get wind of the idea that longevity was on the increase. The other thing that happened was that the financial circumstances of older adults completely reversed. It used to be the highest poverty levels in America were among the elderly. By the 1970s, the elderly had the lowest poverty levels in America.”
Why? Dychtwald says they were influenced by having grown up in the shadow of the Great Depression, and as a consequence they were very frugal. But suddenly older adults became a market segment. Insurance companies began to sell to them; cruise lines began to reach out to them.
“For that reason, from 1975 to 2010, people viewed retirement as better than work; it was an entitled period of leisure,” he says. “You could afford it, and what you couldn’t afford, the rest of the country would gladly pay because that was the deal.”
So what happened these last few years?