It used to be pretty simple: Graduate college, get a good job, work at the same company until age 65. Then came the retirement party: A gold-plated wristwatch – and banishing off to a condominium in the sun for a handful of years of shuffleboard and bingo. Like the movie On Golden Pond.
But as the boomer generation continues its migration to and through retirement, the whole “concept” of retirement seems to be changing – at least for some. Many of today’s retirees want to stay more engaged than those of previous generations: working full or part-time, volunteering, travelling, learning, et cetera. This is a good thing… I have noticed my own parents change for the worse… not long after they stopped working to enjoy full “retirement”. Staying engaged after retirement is a good thing… as long as we have enough financial resources to last our lifetime!
In fact recent research from AIG and Sun America revealed that today’s retirees are dividing into about 4 (four) categories:
19% of retirees: “Comfortably content”
These are the “Golden Years” folks. Many in age segregated communities in warm weather climates. Free from most responsibilities, looking to enjoy the fruits of their labor and they are financially secure.
22% of retirees: “Live for today”
More active than Comfortably content; interested in more travel, new hobbies and “adventure” in retirement BUT modest net worth hence very worried and anxious about finances.
33% of retirees: “Sick and tired”
Living a retirement “nightmare”. Low net worth, poor health and pessimistic about the future.
27% of retirees: “Ageless explorer”
Youthful, optimistic and adventurous. Say they will never “feel” old. High net worth as a result of making smart financial decisions. They are sort of like the “live for today” group but with greater financial security.
Most people probably want to be in the “Ageless explorer” category. And along with some good luck and a little health - sufficient financial resources will pave the way for this new kind of retirement.
And in the 25 years I’ve been rendering financial advice, I have yet to find anything more effective than dollar cost averaging – over a very long period of time – into a 401K or Retirement portfolio comprised mostly of equities and a little fixed income. It’s a boring and simple approach but it works better than anything I have seen. The “get rich slowly” approach.
Please share any other ideas you may have about how to financially prepare for a longer retirement!