Retirement will likely look very different from what it has looked like in the past.
Several demographic and lifestyle trends are emerging that will change the way Americans plan and invest for the future, according to a new white paper from RBC Wealth Management – U.S.
“Twenty years ago, retirement was a fixed point in time — you fully retired and spent your remaining years relaxing. It’s different now,” the paper titled, “Rewriting Retirement,” states. “Today, retirement is a time of life that brings you the freedom to continue working and have time for leisure, family, volunteering, pursuing hobbies and travel.”
Already, there may be a transformational shift in the mindset of today’s retirees that the report authors think could be helpful for future retirees.
As part of the report, RBC polled more than 1,400 Americans (half pre-retirement, half retired) and found that while those still in the workforce fear running out of money in retirement, current retirees worry more about being able to maintain their quality of life.
Pre-retirees also have retirement goals that contrast sharply with the goals of people who have already retired. Those in retirement focused more on quality of life, health and relationships, whereas the top goal before retirement is travel.
Here are the five demographic and lifestyle trends that the report outlines as disruptive to future retirement.
1. The Modern American Family
According to the report, changing social norms and the rise of millennials are changing the structure and look of American families.
For example, in the 1960s, more than 73% of all children were living with two parents in their first marriage, according to Pew Research data from 2015. The data shows that today less than half are.
The increased prominence of divorce, remarriage, cohabitation, single-parent households and multigenerational households is driving this change, RBC says. In addition, millennials are more likely to delay or eschew marriage altogether. (They also divorce at a lower rate.)
“These trends present a range of new factors to consider, including legacy planning, expense funding, family dynamics and geographic considerations,” the report says.
2. Longer Lives, Better Health
Medical advances have extended life expectancy and increased vitality. For example, the report says, medical procedures like hip replacement or cataract surgery are seen as routine and increasingly common as people age.