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Is “Retirement” Obsolete?

Our vision of retirement is changing. What does it truly mean to "retire" today?

By Rob Morrison, CFP

What does it mean to retire in the 21st century? Increasingly, the answer is different from the definition you’ll find in the dictionary. In 2021, financial advisory firm Savant Wealth Management partnered with Absolute Engagement, a research and consulting firm, to explore how Americans are redefining retirement. The study showed that a significant difference exists between the path many people are on and the one they would take if they believed they had another option.

Rob Morrison

Rob Morrison

To learn how retirement is evolving, Savant’s researchers gathered insights from 750 high-net-worth individuals across the U.S. via an online survey. (The survey participants were not clients of Savant.) Respondents were 52 percent male and 48 percent female, ranging in age from 18 to 75 plus. All indicated they worked with a financial advisor, and either made or contributed to the financial decision-making in their household. Their answers led to six major insights:

Our vision of retirement is changing. Only half of respondents said they plan to work full time and then stop working completely. Nearly 70 percent say they would transition to a different kind of work or work on their own terms if they thought it was an option.

The pandemic contributed to shifting plans and ideas for retirement. For about a third of the study’s respondents (32 percent), the COVID-19 pandemic changed their plans for retirement, with a much higher proportion of people under age 45 saying their plans were impacted. While 68 percent of those surveyed said they would need to work longer as a result of the pandemic, nearly a third said they would stop working earlier, and a quarter indicated they would spend their time in retirement differently.

Planning for a transition that provides meaning and purpose is critical. Twenty percent of working respondents said they had retired, only to start working again. They pointed to personal, rather than financial, reasons for rejoining the workforce. Their reasons included not feeling “personally ready” to retire, an inability to move on from full-time work, and a lack of fulfillment.

Many do not think of the end of full-time work as retirement. Just 60 percent of respondents defined the time when they planned to stop working full time as “retirement.” Fewer than half (48 percent) of respondents under the age of 45 use the word “retirement” to describe this phase of life.

We are planning to retire earlier. Nearly two thirds (59 percent) of respondents said they want to retire before the age of 65, and a third want to retire before the age of 60.

Even if we aren’t planning on retiring early, we would like to do just that. Approximately two-thirds (62 percent) of respondents who planned on working past the age of 60 said they would retire earlier if they were financially able to do so. Only 35 percent of respondents cited a lack of financial resources as the reason they would not retire earlier. The largest proportion (55 percent) of respondents who said they would choose to retire earlier said they would need a clear vision for life in retirement before deciding to retire.

The results validate what financial advisors often hear from their clients: that the traditional path toward retirement doesn’t fit their vision of the “ideal future.”

Finding What Works

A senior corporate executive for a publicly traded company started preparing for the end of his career a full decade before his desired retirement date. He had seen fellow executives who had been mentors to him step down from their roles as successful leaders, only to fail as retirees because they lacked enough meaningful projects to keep them interested.

“My client did not want to ‘fail’ at retirement,” says Phil Corcoran, CFP®, a financial advisor and managing director of Savant’s office in McLean, Virginia, “so he did something different. He looked for examples of corporate executives who had transitioned successfully to serving on boards. He started with one, but that has now grown to several. One board is very mission-oriented, and my client and his spouse decided to redirect some of their charitable giving to support the charity’s efforts.”

Corcoran’s advice to clients is Noscete ipsum, Latin for “Know thyself.” “In my experience working with clients, no one is the same,” he says. “Every retirement is different, so embrace it. Don’t worry what others are doing or what others think is the right way to retire. Their retirement is irrelevant. You be you!”

Avoiding a “False Start”

The research suggested that clients often need help envisioning their lives in retirement in addition to financial planning. For Corcoran, it comes down to two ideas: the quantification of retirement, such as determining the financial resources needed, and the quality of the retirement experience. “Over the years, I’ve been able to observe how clients’ retirement plans have played out,” Corcoran says. “I realized that the key to retirement success is often less about quantity and more about quality. My recommendation is to spend much more time – maybe ten times as much – on the ‘quality of retirement’ question, rather than the ‘quantity of retirement’ question.”

Savant Advisor and managing director Wayne Titus, CPA/PFS, AIFA®, has also worked with clients who have experienced a false-start retirement. “If your career has been your focus for most of your adult life,” says Titus, “retirement may seem like an abstract concept – something that will happen eventually, but not something you need to think about right now. In the meantime, we work toward financial freedom knowing that once we retire, we’ll want to do something and have the money to do it.”

Titus says it’s important to understand not just your financial picture, but the entire picture of what life would be like in retirement. He offers three tips to help you get started:

Envision your future. While you are still working, take the opportunity to really envision what you would like your future to be. If you’re married or have a significant other, ask that person to do the same. Think about where you want to be in 10, 15 or 20 years – where are you and what are you experiencing? Try to be as vivid as possible. Once you’ve completed this exercise, share your thoughts and discuss them with each other. You can refine your vision based on your discussion.

Create a one-page personal plan. To achieve the vision you imagined, what things do you need to develop along the way? If you want to write a book, for example, what skills or research do you need to accomplish that task? Keep track of your goals – including personal and professional milestones – by creating a one-page personal plan. Your plan may highlight your goals to improve your physical well-being, your finances, or even your level of charitable giving. Start with your goals and work backwards – what will you need to do in 10 years, five years, one year, or each quarter to accomplish them? Encourage your spouse or partner to create a plan too, and review them together.

Remember that money isn’t everything. Money may help us achieve all that is important in our lives, but it can also be an important accelerant in improving other people’s lives and making an impact on the world. While it’s necessary to have a vision and develop plans to accomplish that vision, it can also be satisfying to use your resources, vision, plan, and financial well-being to impact the lives of others. After all, it isn’t about the money – it’s about what the money can do.

Whatever your vision for the “next chapter” of your life, it’s worth it to talk through your plans with a trusted financial advisor. First, you’ll want to discuss any gaps or potential changes in your investment strategy, but second, you can use your advisor as a sounding board to discuss what you would like your life to be like. Whether you’re considering a new or different type of job, volunteering, or staying in your field – perhaps as a consultant – your advisor can help you narrow the options, determine the income you’ll need, and hold you accountable in making your vision a reality.

About the author: Rob Morrison, CFP®

A CERTIFIED FINANCIAL PLANNERTM professional, Rob Morrison is the chief strategy and innovation officer at Rockford, Illinois-based Savant Wealth Management. He is also a co-author of Victory Lap Retirement, second edition, which explores the evolution of retirement and how to create a post-employment lifestyle that’s right for you.