Retired Americans and pre-retirees have a new outlook on the word retirement, and it pushes back against the conventional images in financial brochures and other media.
Both groups want the idea of retirement redefined, according to a report by Empower Institute. In fact, two-thirds of the respondents in a survey of over 1,300 retirees and more than 600 pre-retirees said they don’t care for the word, and 80% of both groups said retirement is more of a mindset than an age.
Images such as a silver-haired couple sitting in the sunset on an island, walking on the beach, sitting arm-in-arm on a park bench, engaging in activity such as golf and tennis and meeting up with friends at the coffee shop have become passé, said the survey's respondents.
Eighty-three percent of pre-retirees said they expect to live their best life in retirement, while 65% of retirees said they are living their best life.
Retirees, the report noted, live in big cities, volunteer for nonprofits, frequent trendy restaurants and read Vogue magazine, where grey-haired models are all the rage. As for pre-retirees, they envision engaging in part-time work to boost late-life income on their own terms, as well as pursue another passion.
So, it’s no wonder they view retirement as “Second Act,” “Next Act,” “Next Chapter” or, even “Going off the Clock.”
Seventy-five percent of retirees and 81% of pre-retirees said there are more opportunities now than 20 years ago to have a second career, start a business or work in the gig economy. More than 60 percent of pre-retirees said they plan to continue to work or join the gig economy, citing freelancing and consulting as their top choice for work.
As for retirees, more than half indicated that they are volunteering or have started their own business. Many in both groups already are engaged in work opportunities such as Uber driving, dog walking, writing and teaching/tutoring.
“People are no longer looking at retirement as the end of something, but rather the beginning of something new,” said Edmund F. Murphy III, president and CEO of Empower Retirement in released comments. “This important shift has changed the way people save for retirement, or what they now consider their second act.”
With roughly half of pre-retirees expecting their second act to be “active” and “freeing,” the report data suggests that financial advisors and plan sponsors have an opportunity to capitalize on that by positioning retirement savings as working toward a tangible goal. It further suggests that advisors could promote more excitement around saving money by helping clients map out their second acts.
Employers could add more flexible positions for employees nearing retirement, said the report. As an example, it said that could include a discussion about gig economy with realistic expectations about income.
Given their expectation for retired life, the pre-retirees started planning sooner than their retired counterparts (on average at age 42 versus age 47). More than half, 56%, of pre-retirees have a specific age in mind to retire 65, and that’s based on their overall emotional and financial readiness, not a calendar year. On the other hand, 81% of retirees indicated that their decision to retire was based on reaching age 59.