The landscape for retirement is not the same as it used to be. James is retiring today (born in 1953) and has a life expectancy of 78 years. Kevin is born today and can expect to live to age 91.
James has just 13 years of retirement for his money to last. Kevin has almost double the time – 25 years. He needs a full 12 years of extra income saved up than James, who is only 2-3 generations older. The landscape changes quickly. Note: these retirement numbers are averages. You may live longer or shorter. My plans anticipate me living to 100.
Our health is also better. So, not only are we having to save for more years of retirement, we are also having to save MORE for those years because we are more active and have more vitality thanks to improved health. This is what I mean by the new retirement.
No longer are we working for 40 years to then do nothing of substance for the remainder of our lives. This is becoming more difficult to pull off financially because of living extended lives after work.
30 years of retirement can be too long not only financially, but also on a personal level. For example, travelling may be exciting for a few years but it may lose its shine after a while. It is becoming increasingly important that we are finding something fulfilling to fill in our days. Something that we are passionate about. It is too long a timeframe now to do nothing of substance.
This is where second careers can come in. Almost 25% of over 65’s are working past retirement age now. This number will continue to increase as life expectancy’s increase. It would be interesting to survey how many are not because they want to, but because they have to. What if you could find something that produces income from a job you enjoy? It would feel much less like work.
Working a job you hate past the retirement age doesn’t sound much fun to me.
A new direction we can now find ourselves in is working in high-pressure main jobs for maybe 20 years, instead of 40 years. Just until we have enough to cover our basic expenses such as housing and food. Once we have saved enough money to have the basics covered then we can implement our mid-life career change. To something that we want to do. Something that brings us passion and gets us out of bed in the morning. This new job may be producing less income, it may not. But, because we have set ourselves up financially in the first 20 years, we can afford it. That is the purpose of having money. Not as an end in itself, but because it can buy us our freedom. Freedom to take risk. Freedom to do what we want.
What if you get to age 65 and then die shortly after? I know that is not a nice question to think about but it is important. It does happen. To have worked like a dog for 40 years at a job you don’t enjoy, to not get to enjoy the fruits of your labour. Why wait until age 65 to reap the rewards of your work? We can live much more fulfilling lives earlier in life should we choose to.
Hoping for the best and relying on NZ Super may have worked with 15-20 year retirements in days gone by. Hope is not going to work with the 25-40 year retirements we see now.
The new retirement requires more and more of us to earn income past the age of retirement. We are living longer and more active lifestyles. We need more money to last the remainder of our years. But how we earn that money is up to us. Not everyone is in a position to boost their income by renting a house or downsizing homes. Work may be the only answer. Even if only part-time. Meaningful work does not just fulfill a financial role, but it can also fill a social need. Of feeling important where you are contributing to society. Work also enhances our social interactions with other people.
Some people are extremely fortunate to have a job they are passionate about their whole lives. You have already found your passion. This is general advice for the majority that are just going through the motions in their jobs and are seeking more meaning from their lives. Otherwise, retirement will not change a thing.
If we are prudent in our early careers with a high savings rate, we buy ourselves flexibility in our mid-life stage or near retirement. Flexibility to change careers from something we have to do to something we want to do. Whether that involves work or not depends on how much you have saved and what you want to achieve in your life.
The second career is not for just the wealthy. Anyone can follow their passions if they simplify their lives. We don’t have to have TV’s. We don’t have to have I phones. We don’t have to eat out. These expensive material goods are what is often tying us to a job we don’t like so we can pay for them all. Without luxury expenses and only living on the basics, we need less to live on. With less to live on we are not bound to our employer. We are free to do work we want. I get much more fulfilment from the freedom, than I do from I phones and TV’s. Only you can decide this for yourself.
The astute reader may notice that the old-style retirement was about retiring FROM work. The new retirement is more about retiring TO something. 35 years is too long to be running from something. Living longer, we want our time to mean something. We want our time to matter. Our work to be meaningful. Our leisure to be meaningful. Our relationships to be meaningful.
We can have money and health, but we also need meaning. Meaning to get up in in the morning. Meaning to live.
Isn’t that what we all want? To be happy and fulfilled?
The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here
How do you plan to have your money last the new retirement? Do you enjoy your job or do you feel stuck to a job you don’t enjoy?