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Got retirement? Maybe
not. After reshaping the social and political
landscape during the past 40 years, baby boomers
are now in the process of redefining retirement.
Whether voluntarily or involuntarily, 50-
and 60-somethings are repackaging themselves
in second, third or even fourth careers for
a variety of reasons, including financial
necessity, creative choice and boredom.
The boomers are caught in a confluence of factors driving the re-creation of retirement: the disappearance of lifetime employment, the weakening of the retirement social safety net, skyrocketing health costs and increasing life spans. What all this adds up to is the death of traditional retirement.
If you retire at age 65, the
traditional retirement age, you're likely
to live for 15 to 20 more years, depending
on your gender and health. Many will live
longer. By working longer -- either in your
career of choice or at some other job -- you
can make important strides toward financial
self-sufficiency in retirement because you're
delaying drawing on the funds you've saved
for retirement. Also, those funds have a chance
to compound over a longer time.
"With the boomers, we've
got 78 million people who have to think about
what they are going to do in the next phase
of their lives," says Brian Drum, chief executive officer
of Drum Associates, an executive search firm
in New York City. "They are going to
have to focus on what skills they have that
are transferable to another job -- many will
need to continue to work to fund their retirement.
At the same time, there is a coming shortage
of trained people in the work force, so employers
are going to have to think about what they
can offer older workers to keep their skills."
Employment and retirement
Formerly, retirement was seen as a three-legged stool: a company pension, your savings and Social Security. The analogy is still valid, but the legs are different: your savings, your employment income and Social Security. The good news is that coupled with a disciplined savings plan, working in retirement for five to seven years or longer can substantially increase the likelihood that your money will outlive you instead of the other way around.
The bad news is that if you haven't already saved much,
working part-time for even five to seven years
in retirement won't help that much. You'll
need to work full-time for as long you can
and probably lower your post-retirement standard
of living so you won't outlive your savings.
That said, your individual situation is likely to be quite different from your neighbors' or co-workers' situations, so it's important to get a handle now on the various scenarios you may meet as you continue to wend your way toward retirement, says Mark LaSpisa, a certified financial planner with Vermillion Financial in South Barrington, Ill. |
