A new study by Edward Jones and Age Wave, “Longevity and the
New Journey of Retirement,” examines what it means to experience well-being and
thrive in retirement—a journey that is not one-size-fits-all, and instead has
many possible paths and variations.
The study of more than 11,000 U.S. adults found that despite
Americans’ worries about health care and long-term care costs in retirement,
they still desire to live longer, and nearly seven in 10 Americans (69%) want
to live to age 100.
More than the fact of longevity is changing retirement, the
study says. People’s growing awareness of their potential longer life is
changing their expectations, attitudes and preparations for this extended life.
In the 20th century, life expectancy in the U.S. rose from 47 years to 79, and
despite a setback to 77 years caused by the COVID-19 pandemic, longevity may
continue to grow for decades to come.
According to the study, Americans who want to live to 100
said they hope to live longer because they want to spend more years with family
and friends (35%), they are enjoying life and want to continue doing so (23%),
they are curious about the future (19%) and there is so much more they want to
do (18%). Only 6% said they wanted to live longer because they are afraid of
dying. Additionally, retirees now see the ideal length of retirement as 29
years.
On the other hand, there are some who said they would not
want the extra longevity if they were suffering with terrible health (32%),
became a burden on their families (29%), had serious cognitive loss like that
of Alzheimer’s disease (20%) or no longer had purpose in life (14%), the study
says. Only 5% said they wouldn’t want the longevity if they were impoverished.
The definition of retirement has vastly changed from that of
previous generations. Pre-retirees and retirees view their parents’ version of
retirement as a time for “rest and relaxation,” the study says. However, when
asked about their own retirement today, only 27% see today’s retirement as “a
time for rest and relaxation,” while 55% define it as “a new chapter in life.”
The study also found there are blurred lines around what
people think marks the beginning of retirement. The top milestones that
pre-retirees and retirees view as the “start” of this chapter include stopping
full-time work (34%), receiving Social Security and/or a pension (22%), leaving
one’s job/career (17%) and achieving financial independence (17%). Only 10%
said the start of retirement meant reaching a certain age.
This changing definition is reflected in pre-retirees’ and
retirees’ retirement plans, as a majority (59%) want to work in some way during
their retirement, with 22% looking to work part time, 19% hoping to cycle
between work and leisure and 18% wishing to work full time, the study says.
When asked what they’d like more of in life moving forward,
more than two-thirds of retirees said time with family, in particular with
their grandchildren; among women retirees, the number was even higher.
Forty-three percent of retirees said they look forward to more rest and
relaxation, and a third said they definitely want more fun.
The study identifies four distinct stages to describe the
overall journey as people enter retirement: anticipation (0 to 10 years before
retirement), liberation/disorientation (0 to 2 years after retirement),
reinvention (3 to 14 after retirement) and reflection/resolution (15+ years
after retirement). Each stage presents unique expectations, priorities,
challenges, hopes and planning needs.
In the heart of retirement, seen during the reinvention
stage, the study further identifies four distinct journey paths characterized
by people’s attitudes and ambitions, retirement preparations and level of
enjoyment of life in retirement. Researchers uncovered how decisions and strategies
for living throughout the early and middle years of life can impact the
retirement years—both negatively and positively.
“Purposeful Pathfinders” enjoy the greatest well-being in
retirement and are happy, engaged, productive and contributory, the study says.
They are best prepared for life in retirement and 78% said they are in great
shape financially. They began saving for retirement earlier than all the other
groups, on average at age 34.
“Relaxed Traditionalists” pursue a more traditional retirement
of rest and relaxation. This group had a smooth transition and are
well-prepared, the study says. Most (81%) retired when they chose to, and while
they are the most open to relocating, including to adult-living communities,
they have fewer aspirations for personal growth or giving back than Purposeful
Pathfinders.
“Challenged yet Hopefuls” lead active lives and have focused
on self-improvement, but their lives in retirement are constrained and
uncertain due to insufficient financial preparation, the study says. Half said
they often worry about outliving their money and this taints nearly all their
future hopes. They began saving for retirement later than all the other groups,
at age 45, and over half of those in the group with retirement accounts (54%) have
made early withdrawals along the way.
“Regretful Strugglers” represent the largest of the four
groups (31%). These are the least prepared for retirement. They are the most
unhappy and, overall, feel the least positive about life. The study found that 43%
said they are financially worse off in retirement than during their working
years. The majority (59%) said they have many regrets in life, and 42% feel
that life has dealt them a bad hand.
“We are witnessing the birth of a new retirement with unique
stages and journey paths for everyone,” says Ken Dychtwald, founder and CEO of
Age Wave. “Successful retirees have enjoyed a mostly positive, satisfying life
and are looking forward to the years ahead. Their emotional intelligence and
hard-earned resilience can provide invaluable guidance as tomorrow’s retirees
contemplate how to best plan to fulfill their hopes and dreams for retirement.”
While everyone’s experience of retirement is different, the
study says one thing is clear from the research: Retirees who report better
quality of life took more steps decades in advance to prepare and plan across
all the four pillars of finances, purpose, family and health. From saving early
and consistently and developing healthy habits to communicating with close
family and discovering passions and interests, there are many steps re-retirees
and those early in retirement can take to make the most of their retirement.
The value of financial foresight cannot be underestimated,
as the traditional “three-legged stool” for funding retirement—pensions, Social
Security and personal savings—has become even more wobbly, and unexpected
expenses can arise in retirement, the study says. Age Wave suggests working
Americans double down on the third leg of the stool, saving.
According to the study, retirees said they started saving
for retirement at age 38 on average, but in retrospect, they wished they had
started saving nearly a decade earlier, at age 29. In addition to saving, other
key pre-retirement actions include tending to ongoing health and preventive
care, discussing retirement plans and goals with family and friends and
beginning or expanding volunteering activity.
The study also says working with a financial adviser can be
instrumental in interpreting current market conditions and developing a
holistic financial plan to better prepare for a 100-year lifespan—and the
expenses that come with it.
“Understanding the way people today view retirement, and
what changes retirees wish they could have made, improves our ability to serve
them in a human-centered way and help them each achieve what’s most important
to them and their families,” says Ken Cella, Edward Jones’ branch development
principal.
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