The Baby Boomer generation refers to people born in the 1940’s to the early 1960’s. Many of these folk have reached the traditional retirement age of between 60 and 65, and yet are refusing to, or are very reluctant to retire. In the US it is estimated that 10,000 of these so called Boomers each day continue to reach this stage in their lives. The US Census Bureau calculates that by 2020, 55,9 million people in the US, will be 65 or older, and by 2030, that number will reach 72,7 million. They say; “Nearly half of Boomers still working say they don’t expect to retire until they are 66 or older, including one in ten who predict they will never retire.”
In South Africa, the predicament facing these Boomers is no different. A perfect storm of increasing longevity, higher medical, household and living expenses, together with added financial pressures of often having to look after ageing parents, means that many of the SA Boomers do not have full blown traditional retirement as an option.
This is not necessarily a bad thing as there is good news on the horizon! Research has shown that you stay healthy by working longer, which means you are better able to finance the financial requirements of your longevity. Age-related scientists now position that a life overly focused on leisure and passive entertainment could actually promote poor health. A 2014 study conducted by the Rush University Alzheimer’s Disease Center in Chicago points to living a life of purpose as highly conducive to reducing one’s susceptibility to stroke, dementia, movement problems, disability and premature death. The surprising conclusion is that full retirement is not a financially smart or healthy option.
In short, due to financial constraints, a continued will and drive to live, together with an increasing body of scientific research promoting a healthy balanced purpose driven lifestyle, the notion of traditional retirement is being retired as a default life option.
How do these factors affect your financial planning and so called retirement saving plans? Unfortunately, most of the financial planning industry remains stuck in the outdated time warp of advising clients that they have to plan for a full retirement at age 60 or 65. This has led to wide scale disillusionment in the industry and the in the advisors who continue to peddle this outdated concept.
Investors should rather approach savings and investing from a goal based objective that is best suited to their personal needs, circumstances and life endeavors. This goal based investment advice is far more relevant to today’s investors, regardless of their age, stage of life or quantum of funds available to invest. Goal based investment advice forces the financial planner to give true advice that is most relevant to the client and that will enable him or her to achieve their investment goals.
Acknowledgments to FastCompany.com for the article on this subject, and for further and more detailed analysis of why Baby Boomers refuse to retire read the link to their full article.