Photo: Flickr via ataelw
If anything has been a casualty of the Great Recession, it’s America’s traditional vision of retirement–– clocking out at age 65, cruises every other month and a condo in Florida.Instead, workers today are coming to grips with the very realistic notion that they may work well into their 70s.
But is that really such a bad thing?
“Yes, for some people continuing to work is an economic necessity due to shrinking nest eggs and rising medical costs,” Ken Budd, executive editor of AARP The Magazine, told Business Insider.
“But as people not only live longer, but continue to feel healthy, why slow down? The rocking chair is out, entrepreneurship is in: older Americans are driving much of the growth in new businesses. People want to feel productive, regardless of age.”
Researchers have found a link between approaching retirement age and expanding waistlines.
'People who are close to retirement age show the highest rates of weight gain and obesity,' write the authors of 'The Effect of Retirement On Weight,' published in the Journal of Psychological Science.
More than 37,000 individuals aged 50 to 71 were analysed over a 10 year period. Retirees averaged a 0.24 increase in their Body Mass Index.
'Given the increasing number of people approaching retirement age, the population level impact of the weight gain ascribed to retirement on health outcomes and health care system might be significant,' they conclude.
In fact, for every year of early retirement, they shaved about two months off their lives.
Zweimuller and his fellow researchers attributed the trend to decreased mobility, which, including aforementioned weight gain, can lead to depleted cardiovascular and mental health.
'I have spoken with many retirees who retired because that was the logical thing to do, or because all their friends had crossed over to retirement, leaving them to be the unbearable odd man out,' says Jim Heafner of Heafner Financial Solutions, Inc.
But 'some never find the satisfaction that their work provided. Others retire only to discover that they weren't financially prepared. They learn firsthand how small the job market is for 60-year-olds. Typically, they cannot find a job that pays nearly as well as the one they just retired from.'
Do you know exactly how much liquid assets you'll need to carry yourself through retirement? If you can't answer 'yes', chances are you're not ready for the golden years.
Nickel, the anonymous blogger behind Five Cent Nickel, takes a slightly different approach than basing future needs on your current income:
'Start by estimating your post-retirement expenses. Average it out across a year. From there, estimate what sort of investment returns you'll be able to generate -- yes, you'll need a crystal ball for this.
'From there, divide that rate (as a decimal) into one to find your multiplier. So, for example, if you think you can generate 4% real returns (i.e., 4% returns after accounts for inflation, so more like 7% nominal returns) then you'll need 25x your annual expenses (1 / 0.04 = 25). If you think you'll only be able to generate 3% real returns, then you'll need 33x your expenses. And so on.'
'People spend most of their time planning their finances for retirement, but not their fulfillment in retirement,' Budd says.
'We once profiled a man who decided that for the first year of retirement he would do whatever he wanted. So he went for long walks, he skimmed the newspaper online, he sat in Starbucks and read Grisham novels. But after that, he wanted to become a chaplain...
The rocking chair is out, entrepreneurship is in: older Americans are driving much of the growth in new businesses.'
The takeaway? Try a phased retirement plan, Budd says. You might start by paring down your work schedule to part-time work and then possible moving on to volunteer work afterward.
In a 2011 study by RocketLaywer.com, more than half of Americans admitted they hadn't written a will yet ---- including 44 per cent of those aged 45-64.
Without a plan in place, you could leave your estate's future in the hands of squabbling family members or your state, which would appoint an administrator to handle everything.
'(A will) enables you to start thinking about issues like whether you have the right insurance coverage, life insurance, and ways of replacing your lost income,' RocketLawyer founder Charley Moore said.
This is doubly important for gay spouses, as states that don't recognise gay marriages would pass over spouses in favour of next of kin.