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Rethinking retirement
By
Laura Bruce • Bankrate.com
Retire -- to give up one's
work, business, career, etc., especially because of advanced age.
Webster's New World College Dictionary
Advanced age? Have you thought about retiring at 55?
Have you had to reconsider and delay it to 60, or maybe 65?
The bear market dismantled a lot of retirement dreams.
Portfolios fattened in the bubble years crash dieted when the market
went bust. But could your portfolio have lasted until really "advanced
age?" What if you live to age 90 or 95? Could your portfolio
survive 35 or 40 years?
As affluence and retirement daydreams nudge us into
considering retiring at far earlier ages than our parents or grandparents
would have dreamed, advances in health care keep us alive far longer,
too. Realistically, not many of us can amass a portfolio that would
see us through 40 years of retirement.
Perhaps it's time to rethink what it means to retire.
The reality may not be your original dream, but maybe you'll find
that a slimmer portfolio doesn't necessarily mean you can't stop
working -- at least for a while.
"Retirement is not your dad's retirement anymore.
It's evolved due to increases in life expectancy," says Larry
Cohen, director of the Consumer Financial Decisions group at SRI
Consulting Business Intelligence.
"At the turn of the last century, retirement
was for the really, really wealthy. Everyone else worked until they
died. When Social Security was formed in 1933, less than 2 percent
of the population lived past 65. It didn't matter that they didn't
have a lot of money."
Cohen says his company's research shows some people
are changing the face of retirement. They're carving out a new life
strategy.
Revolving retired
"They're not saving every penny to retire and they're not saying,
'I've got this money and I have to live off of it forever.' We call
it 'revolving retired.'
"Some people work because they can't afford not
to. Others might or might not be able to retire, but they change
their vocational system. They retired a couple years ago, but they
start a new business -- a bed and breakfast, or maybe they consult
for a couple years."
Cohen's position is that these people are blazing
a trail for baby boomers who start to retire in 2011.
"Revolving retired supposes that someone could
be retired for a couple of years and come back into the workforce
-- not be a greeter at Kmart, but in the area of their endeavor."
Cohen identifies 42 million households in the U.S.
where an individual, or couple, is 55 years of age or older and
has no dependent children. He lists four categories within that
segment, including the newly booming revolving retired.
Here's how the categories break down.
- Pre-retired (not retired, but
preparing for retirement) -- 8.7 million households
- Revolving retired (went from
full-time to part-time employment or had retired, but is now working)
-- 5.3 million households
- Retired -- 23 million households
- Not retired/not preparing --
5.2 million households
Retirement redefined
Cohen's retirement scenario shows that flexibility may be one of
the keys to not just surviving retirement, but enjoying it. He says
he expects the baby boomers to pump up the revolving retired category
and to further redefine the meaning of retirement.
"Since many of them delayed having kids and many
still don't feel they've reached 30, I suspect they will not go
gently into that good night."
Even if the revolving-retired scenario appeals to
you, you may still feel the need to boost your portfolio by taking
on some questionable risk. If, as many pundits proclaim, we are
in the beginning of a new bull market, it can be tempting to chase
the latest skyrocketing stock. You might reap a windfall, and then
again, you might lose a lot.
We spoke with three experts who, in their own words,
offer advice for patching up your battered portfolio.
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