Can a 40-year career pay for a 30-year retirement?
It appears that many of us are worried about what living a longer life means for us financially. In a recent study titled “The Gift of Time” conducted by Allianz Life Insurance Company, it wasn’t just Baby Boomers concerned about retirement savings. Seventy-four percent of millennials in the study said they felt financially unprepared for longer lives, while 79 percent of Gen-Xers felt that way. Over half of Baby Boomers, 57 percent, felt financially unprepared.
Americans are living as much as 30 extra years than prior generations. However, 70 percent of us feel we are not financially prepared to live to age 100 or beyond. This is where having a longevity plan becomes extremely valuable. This plan should incorporate both financial resources and your human resources. Indeed, the younger generations expect to work longer. More than a third – 36 percent of millennials – might consider starting their own business. Others commented about the ability to drop in and out of the work force or shift careers throughout one’s life and not be bound by the “Retire at 65” traditional (perhaps outdated) standard.
A comprehensive financial planning process is an ongoing activity that helps people plan for specific goals, or at least begin to think about phases of their lives and what they may need to save. In the study, nearly half – 49 percent of respondents – are open to living life in a different order. I have friends who focused on their careers for 20 years, adopted children later in life, then down-shifted their careers or retired in order to raise the children. I believe that “encore careers” will become more prevalent, as the youngest Baby Boomers and Generation Y reach their 40s and 50s.
If you are excited, yet concerned about living longer and how to fund it, consider these tips:
- Work with a professional wealth manager to build a longevity plan. You can start this in your early 30s and focus on the next 5-10 years, with an eye toward some form of retirement later in life.
- Proactively manage your career. Don’t just let it happen. Within the longevity plan, outline opportunities for making higher income and the trade-offs from a personal or family life perspective. What are you willing to do in each phase of your life? When you make decisions, try to understand the implications of the trade-offs.
- Develop a different mindset about “retirement.” The early Baby Boomers are already proving that the old fashioned retirement of the World War II generation is not for them. If you are going to live longer, how are you going to use your talents, skills, and experience to make income and fund your lifestyle? Be willing to consider working longer, but perhaps in careers that provide more meaning – like non-profit or health care work. Think about multiple careers.
In the Allianz survey, 93 percent said that living longer was a good thing, yet they have concerns. Take action to address your concerns and be proactive about the career(s) you choose and how you earn, spend and save money. An ongoing longevity planning process can help you as life and your goals change. For more information, visit our website at makinglifecount.com or contact Joni Lindquist –email@example.com, (913) 345-1881.