One of the most important reasons to save throughout our working life remains retirement. It’s shocking how few people afford themselves the ability to live with dignity and independence, without sacrificing a huge drop in standard of living.
And yet… the world we are living in is one of constant disruption. One of the things being disrupted as we speak is the concept of retirement. And so, in a few years’ time, what we’ve understood as ‘retirement’ will no longer exist.
Here are four things that will affect your retirement by the time you get there:
Longevity – When Time magazine came out with a cover stating that ‘this baby could live to 120 years old’, the world cheered. But few people stopped to think what this could mean for their retirement. What if the average lifespan were up to 120 years old once you retired?
The age-old standard figure of ‘65 years old’ for retirement was invented in a time when the average person lived to 80, the goal was to plan for 15 years.
But 120 means that 65 is just over only half of your life, and savings calculated today for retiring at 65 will not be able to keep you comfortably alive and financially independent for a whopping 55 more years.
Our ideas of what retirement might look like, what age is considered ‘retirement age’ or even ‘old’, needs to change.
This goes hand in hand with longevity. Longer lifespan without a healthier life is bad news: that could mean years of assisted living or frail care, and all the huge costs that go with it. But medicine is advancing to the point where what was once considered cutting edge is going mainstream, and we could well expect to see a cure for Parkinson’s or the smaller physical breakdowns of ageing in our (longer) lifetimes. This changes not only how much money you need to retire, but what physical state you’ll be in once you do. And, due to that, you may be able to retire even later, increasing your opportunities to plan for when you do.
Rising cost of living
If inflation is anything to go by, the prices of things are just going up. And by that we don’t only mean the price of eggs. Investments that were standard a generation ago, like buying at least one house in your lifetime, are now becoming less widespread as costs get more and more prohibitive. Even getting married is getting too expensive. And retirement, one of the largest financial undertakings in any one person’s life, costing at least hundreds of thousands of rands to do well, is definitely up there. This means that our urgency to have better conversations around our retirement is even greater.
The actual concept of retirement itself
People within the retirement industry already know this. CEOs at world leaders in financial planning are speaking about ‘cyclical retirement’ and ‘the rise of the silver surfers’. This means a far less linear approach to retirement in the future.
Up until now, we have viewed the stages of our life in a kind of linear circuit system: you attend school, then tertiary education, then you work and get married, have children, then you retire and make way for the new generation. However, longer lifespans and the need to work more means repetitive cycles or seasons instead of the traditional linear journey.
So you may work for a decade, not work for a few years, work again, then completely shift gears into a different career – but still work – well after you hit age 65.
You might be retiring a lot later, and in a very different way, to what conventional wisdom would have you believe today. Plan for that now, let’s have that conversation, and you’ll be growing grey gracefully every day.