My parents are right on track for the retirement they were promised. If all goes well, they’ll both have around 15 or more years to enjoy a comfortable life without working.
My father retired a few years ago at 67. He was planning to work longer, but his company offered him a good package to end his 26-year tenure.
My mother is planning to retire next year at 63, a little earlier than originally planned. Her job as a nurse is starting to wear on her. And seeing my dad live the good life has made her eager to share that with him.
Who can blame her? Retirement in the mid-60s is what she was promised and has been working toward for most of her life. It’s hard to change an expectation that you’ve had for most of your life, even if it’s only by a few years.
I’m happy and grateful that they planned so well. But, I’m not expecting the same for myself, and I don’t think anyone else in my generation can, either.
History Will Not Repeat
Baby Boomers – the generation that’s retiring now – are the first generation expected to be retired for such a large chunk of their life – around 10 to 15 years.
When Social Security was first created in 1935, the minimum retirement age to receive full benefits was set at 65. At the time, the average person was living until around 70, meaning the social net only had to provide for them for about five years.
That worked out. The population spent most of their working life paying into Social Security, and then only took out money for a handful of years.
Today, the average life span has increased by 10 years. Men in the United States are expected to live to approximately 76 years, on average, while women are expected to live to around 81 years.
In 1983, an amendment was passed that gradually increased the maximum benefit retirement age to 67. But that still equates to more than 10 years of collecting retirement benefits.
Social Security was never meant to support people for such a long period of time – at least not at the standard of living most of us have come to expect. That’s why there’s so much emphasis put on personal retirement savings. But even that seems unreasonable with current expectations of retirement in our late 60s.
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You see, each subsequent generation is expected to live longer – with predictions for millennials hovering around 100 years. The amount of money I would need to save to be retired for 30 to 40 years is simply unattainable, at this point.
“There is no plausible way that Social Security, as it is now, will be sustainable without a reversal of demographic and life expectancy trends,” said Sol Halpern, President of Highlander – a mindful finance company. “The age to start receiving benefits will probably go up to 69 or 70. But, realistically, [the federal government] should extend that out even further.”
“But then, you have the social promise among voters,” continues Halpern. “They say, ‘You can’t move the bar now, right before we retire.’”
Expectations Create Suffering
My generation needs to drop its expectations that they’ll have a long retirement starting in their 60s or early 70s.
“We’re forcing this idea on the next generation and it’s just not going to work,” says Halpern. “Millennials will definitely need to work longer and save a lot more money.”
But, it’s societal expectations that are causing the negative feelings around this likelihood – not the reality of working longer.
We’ve had a picture of retirement painted for us – including time to pursue hobbies, no mortgage payments, and extended vacations.
But if we lower our expectations, then we won’t be disappointed if things don’t work out the way we think they should. Instead, we might be more flexible and open to other opportunities.
One such embrace of this idea is the invest-in-yourself movement.
At the extreme, this is committing to work for your whole life by continuously updating your skills to be useful. A more moderate interpretation, though, might be a willingness to have a second, third, or fourth career as you age and the needs of society evolve.
I don’t think my generation needs to drop the idea of retirement altogether, we just need to be prepared for it to look different.