Whilst the notion of living longer is a blessing to most of us, it does mean that we need to find ways to fund our lifestyle. Retirement, for many, will last as long as our working lives. The key challenge is this: will we have sufficient money to enjoy our extended lives?
The "r" word
The concept of retirement has only existed for around 100 years and today’s 'baby boomers' are the first generation to face the real prospect of outliving their financial resources. The ‘baby boomer’ generation is rejecting the notion of retirement. In fact, according to researcher Hugh Mackay,* “retirement is a word they’d rather not use because it carries connotations for them of elderly folk sitting on the verandah with pipe and slippers, watching the sun sink symbolically into the west”.
So, far from contemplating retirement, the 'baby boomers' are looking forward to a healthy, active and engaged period where they can continue to exert influence and control over their lives. This is not a generation expecting to degenerate. As Mackay observes, “they will be looking for new ways to de-stress without appearing to have dropped out or given up”. And importantly, the boomers have found a new word to describe this period, replacing the downbeat “retiring” with the upbeat “refocusing.” Dreams versus realities. Getting out and seeing the world again.
How achievable will this dream period of active, engaged “refocusing” be for those contemplating life after work in the next few years? Unfortunately, numerous studies show that many people have under-saved, under-invested, over-borrowed and under-insured to guarantee the life they so desire. This trend has been exacerbated by the 2008/09 global financial crisis, that threatens to have long term effects on the valuations of accumulated assets that the'baby boomer' generation will be relying on into the next decade or so.
What can I do to offset these uncertainties?
Refocus my expectations and priorities. Re-design my lifestyle for life after work around my projected financial resources and realistic capabilities. Be clear about what income my investments will generate into the future and adapt my spending accordingly.
Work longer. Postpone my transition from full time work and continue to build my asset base and my investment strategy, to allow for any shortfalls. Be clear about what I need in terms of an investment strategy and income levels once I stop full-time work.
Be patient. Asset values tend to return to previous levels, after major downturns. This ultimately depends on having enough buyers seeing the value in lower prices, to return to the market with confidence.
Best of all – combine all three strategies and refocus your ambitions around what’s important and meaningful in your life.
This is a wonderful time to reflect on these issues and reconsider your plans. We recommend you get advice to help you make the right choices for you.
Together, good planning and professional advice are the keys to ensuring you are prepared for life after work.