The Changing Face of Retirement
Americans are retiring younger and enjoying it more than ever before. The Boomers are heading for retirement at a record pace. Behind them are the Generation Xers. Both will profoundly change what it means to be retired.
A Wall Street Journal/NBC News poll last week provides the latest evidence of the changing face of retirement in the U.S. Among the poll's findings, fewer than 10% of future retirees intend to live in a nursing home. This varies significantly from previous generations who helped fill 20,000 nursing facilities with over 1 million retirees in the last decade. No, this new breed of retirees isn't planning to let life pass them by.
Nearly 70% of future retirees plan to work after they retire, a figure up sharply from current estimates of working retirees. American Express Retirement Services reports that about 24% of today's retiree income comes from part time employment. As tomorrow's retirees retire younger and healthier, employment income after retirement is likely to rise.
It's not just greed driving the desire to continue to work. More than 2/3 of the respondents in the WSJ poll indicated they plan to volunteer for public service or community organizations. Almost 30% of non-retired adults fear either boredom or alienation after retirement, and they plan to get involved in their communities combat these fears.
So what about Social Security? It turns out today's retirees rely on it, and tomorrow's retirees will need it, although perhaps less than today. Only 10% of current retirees cited financial worries as a significant disappointment in retirement.This compares to a full 30% of non-retired Americans scared about the financial implications of retirement. About 60% of those polled for the WSJ study indicated that Social Security was highly important (ranked 7 or higher on a scale of 1 to 10).31% indicated that Social Security will make up all or most of their retirement income. Still, the enormous popularity of 401(k) and other retirement programs over the past several years will enable a growing number of future retirees to rely less on Social Security than their predecessors.
Contrast this reliance on Social Security with the view held by a majority of Generation Xers who would rather opt out of Social Security and take retirement into their own hands. A full 36% of Gen Xers in the WSJ poll don't expect Social Security to be around when they retire anyway. And 46% of them will retire before age 60, compared to less than 20% of Americans who retire pre-60 today. As life expectancy grows, and retirement ages drop, retirement becomes more appealing all the time.
Yes, the face of retirement is changing. At the heart of each generation's plans is financial security. Maybe all this talk about retirement planning isn't such a bad idea. The sooner you shore up your retirement savings, the sooner you can join the boomers and the Xers working a little, volunteering a little, and living the good life after retirement.