28 November 2011
When I was a kid, Saturday night was the special night. First, we got to have a Coke with our meal―outside of Saturday nights, we did not drink soda. Second, we were allowed to stay up and watch "Bonanza," which started at 10:30 p.m. I remember thinking how cool it was that Ben Cartwright could have all his sons live with him on the Ponderosa―he was an older guy, he must be retired. Today I realize that if he was retired, he sure was working hard. But then again, what is wrong with that?
It is easy to assume the lost wealth of the last couple years is what will make most people retire later than they wanted. But I would like to challenge the assumption that a bad stock market and weak home prices are the only reason people delay retirement. Consider these reasons as well:
- Social Security―Several decades ago President Ronald Reagan signed into law an age increase in order to get full benefits, changing the full retirement age from 65 to 67. Since then, more people have postponed retirement in order to get their full benefits.
- 401(k)s―The advent of the 401(k) in the 1980s changed people's thinking as well. Prior to the 401(k), corporate pensions were the norm and workers were assured a lifetime income when they retired and took their pension. But 401(k)s changed this thinking because those accounts are not guaranteed.
- Work Brings Contentment―I can share anecdotal stories, but I think baby boomers already understand this. Retiring "from" a past life and sitting around aging is not a lifestyle. Retiring "to" the next phase of life, which can even include part-time work, keeps your mind active, engaged, and healthy. And as my grandma always told me, a healthy mind is a healthy body (she lived well into her 90s).
These three reasons, call them policy evolutions if you want, have caused the re-thinking of what a healthy retirement age might be. And as I have pointed out, this line of thinking has formed over decades, not just since 2008. With that in mind, I believe there is one more topic to be addressed: saving for retirement. Implicit in working longer in life is the ability to save differently―maybe less, but maybe even just taking lower investment risk. That is for you and your planner to debate.
There is one thing 2008 and "Bonanza" do have in common though; after 2008, more children have moved back into their parents' homes in order to get back on their feet. This will affect the parents' ultimate retirement goal as well, but that's a topic for another day.
About Jon T. Meyer, CFP®
