The definition and expectations of a working life and retirement have shifted through the years. They continue to shift, both out of our changing desires and out of necessity.
When the safety net of the Social Security system was introduced in the United States, unreduced benefits were available at age 65, but life expectancy was only a few years beyond that. The changes in that system, at least partially, reflect the broader shift in retirement. People are living longer, which is good. But that means that we need resources to support us for a longer period of time. That means we either need to work longer, save more, or a combination of both.
An important issue that's related to the financial issues is what to do in retirement. If you've got a stressful job or work in an unpleasant environment, you're probably saying to yourself that you'll have no problem deciding what to do with all the time you'll have in retirement. But, like many aspects of life, sometimes we tend to romanticize things.
Barry LaValley, founder of Retirement Lifestyle Center, has noticed some trends in the emotional reaction people have to retirement. The two or three years prior to retirement are full of excitement, but often the first year of retirement is stressful. Work gives structure to our lives, a sense of identity and purpose, and often a social network. After the first year, people find things to do and develop new structure, resulting in a honeymoon phase with retirement that lasts a few years. They're still healthy and have found things they enjoy doing.
The retirement activities become routine after a while and after a few years of the new schedule, people tend to be disenchanted. After a few more years, people reorient over several years, then become content.
One wild card that impacts many people is poor health. For this reason, doing many of the desired retirement activities in the early years makes sense. Travel, golfing and being with young grandchildren might not be possible if there are health concerns. The spending patterns in retirement tend to follow these stages. The first few years tend to be big spending years. Then spending declines for several years, but increases again when the cost of declining health become an issue.
Consider a new retirement approach. Phasing out of the workforce rather than an abrupt end to working - what financial professionals sometimes call a "cliff retirement" - can be a less stressful transition and ease the financial burden. It can enhance the sense of fulfillment, keep ties with professional people, and allow a flexible schedule for travel, golf and other retirement activities.
If you're interested in reading more about a phased retirement, look at "The New Retirementality" by Mitch Anthony. Open your thought to the possibilities of changing the way people retire.
Linda Leitz is a certified financial planner. Questions for this column can be sent to firstname.lastname@example.org.