"People are now looking at 20 to 30 years of retirement," says Troy Daum, founder of Wealth Analytics, a San Diego-based financial planning firm. "Nobody has ever done that before."
Daum feels that given the education demands of today's economy before people even enter the workforce, many workers aren't productive until they're in their 30s. "You take somebody like that, and the idea they'll work for 20 to 30 years and then stop, and then live off of their nest egg for 30 years, that isn't realistic," he says.
There are many studies showing how much better off most people would be if they: a) didn't take early Social Security at 62, b) kept working until 65 and then began collecting Social Security, or c) kept working past 65 if they enjoyed working and had the ability to do so.
Given the financial savings predicament faced by many people, it's not surprising that the EBRI's recent annual retirement survey found 36% of respondents expect to retire after age 65, a number that has gradually increased from the 11% registered in the initial survey in 1991. In that vein, 74% said they plan to work in retirement, which is far more than the 23% of retirees surveyed who actually worked for pay in retirement.
If working is the new retirement, then try telling that to the French, who last autumn took to the streets to protest plans to raise the retirement age from 60 to 62. And in the U.S., efforts to raise the Social Security age and keep people working longer is seen as a very tough--though perhaps, inevitable--sell.
Working through one's 60s and 70s isn't appealing or feasible for everyone, and in many ways it's easier to do for individuals in the creative and knowledge-based industries. But for the most part, human beings need to be engaged with something to stimulate them or keep them out of trouble. A retirement built around sitting on one's keister is neither physically nor financially healthy.
"What I refer to as good retirement planning is helping people recrafting those expectations from sitting on a cruise ship to realizing that even if you're not required to generate an income, you'll probably want to be engaged with something that's meaningful and enjoyable," Daum says. "With some creativity and perhaps some retraining, there are a lot of things you can do during your retirement years."
Daum believes the retirement crisis is real. He also thinks it's solvable. "It'll have to be solved on a case-by-case basis, and you have to challenge the notion of what the financial services companies have laid out as being the ideal retirement," he says. "If you can do that in a creative and positive manner, and be engaged and involved with something you have a passion for, that's a solvable solution to the problem."
It helps to have some money in the bank, too.