Your clients may have their parents'—or even their grandparents'—ideas about work and retirement in their heads. That probably needs to change.
For starters, we're living a lot longer, but the Stanford Center on Longevity at Stanford University reports that despite dramatic increases in American life spans, the average retirement age continues to hover around 63.
"Today's reality looks really, really different," said Martha Deevy, senior research scholar and director of the Financial Security Division at the Stanford Center on Longevity. "You may go to college or you may work for a while. You may have a baby first and then get married. You may buy the house and then you get divorced. You may get married again and have more kids. In the end, we know that the path to retirement today looks very different than in previous generations."
Retiring at 63 might have been fine in 1950 when the average man was expected to live another eight years following. But by 2000, the time an average man was expected to live beyond retirement had risen to 19 years.
The Center's wide-ranging 2016 Sightlines Project study reports, "The developed world is bearing witness to a 21st Century miracle—the possibility of living well to the age of 100 and beyond."
Add in that today's retirees bear more responsibility for retirement savings. They job hop, work without pensions, and follow unconventional life paths.
We may need to reimagine old notions about aging.
"We are living longer in middle age—productive years that we can contribute," Deevy said. "As we are living longer lives, I think the impression is that the extra years are all tacked on at the end, that we're living in, truly, infirmity and old age, longer than we ever did before. In reality, we are living with longer middle ages. We are living healthfully, able to contribute, and the cultural break that I think needs to change is the idea that 65 is a magical age where everything goes south."
As Americans live longer healthy years, they may need to work longer, said Steve Vernon, consulting research scholar at the Center's Financial Security Division.
"Traditional ways of preparing for retirement are outdated," he said. "If you're going to be living in your 90s, it just takes a lot of money to retire in your 60s. A lot of people just won't be able to save the massive amounts of money that it will take to have a 30-year retirement. That's one good argument for working longer, because with working longer not only do you have more money coming in but also there's a shorter period of your retirement that you have to save for."
Vernon said delaying retirement, holding off on drawing against retirement resources such as Social Security and savings, can enhance retirement security.
For those who can't imagine working in the same job for an extra 10 or 15 years, the problem isn't just the work, it may be the job. Vernon suggested some may just want a change from the work they've been doing for so many years.
"Is it the commute? Is it the number of hours you're working? Is it the fact you're doing work you really don't like?" Vernon asked. "These are all possibilities, and so I think facing the realities of longer lives and the implications for your finances actually might lead you to better decisions for your life. If you find new kinds of work, and new job situations. Maybe work a little less, not quite as intensely as you've been working."
With a new line of work or a new job, Vernon said some may feel invigorated and happier.
The good news
Working a little longer may not be a bad thing, for both employees and employers.
The Sightlines Project found healthful advantages to working longer—social engagement and enhanced senses of meaning and purpose—and Deevy said employers are finding older workers attractive.
"Older workers are notoriously loyal, and their employers know that, and that loyalty sort of is felt across the organization," she said. "Older workers bring a level of emotional stability to a workforce that really, really is valuable. They're not chasing the same goals as their coworkers, and they're much more likely to collaborate and help their coworkers achieve their own goals. Interestingly enough, they're likely to have fewer sick days, mostly because, many of them, their kids are out of the house and they have fewer demands on their time that might take them out of the workplace."
Transamerica Resources, Inc. is an Aegon company and is affiliated with various companies which include, but are not limited to, insurance companies and broker dealers. Transamerica Resources, Inc. does not offer insurance products or securities. The information provided is for educational purposes only and should not be construed as, medical, insurance, securities, tax, legal or financial advice or guidance. Please consult your personal independent advisors for answers to your specific questions.