- The traditional retirement model at 65 is no longer the norm.
- Many workers today retire in stages, sometimes referred to as phased or micro-retirements.
- Working in retirement is increasingly common, whether through part-time jobs, consulting, or passion projects.
- There is no one “right” way to retire.
- Use tools like lifestyle audits, vision planning, financial modeling, and test driving to create the retirement of your dreams.
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Retirement is transitioning away from a one-size-fits-all milestone. As life expectancy increases, pensions dwindle, and an increasing number of people worry about outliving their savings, the concept of retirement is evolving away from traditional models into something far more flexible and individualized.
So, what does it mean to truly retire? For some, it’s walking away from work entirely. For others, it’s about creating passion projects, taking career breaks, transitioning to more fulfilling careers, or gradually reducing working hours to lessen the retirement shock. Ultimately, workers are discovering there is no “right” way to retire, and they’re designing retirements that more accurately reflect their goals, values, and lifestyles, regardless of antiquated retirement timelines.
The Traditional View of Retirement
The Social Security Act of 1935 established 65 as the full retirement age, providing workers, employers, and government planners with a benchmark for pension planning purposes. Sixty-five marked when workers left the workforce entirely and began collecting their pensions, using savings to supplement their income streams until they passed away. Further cementing 65 as the “traditional retirement age,” President Lyndon Johnson signed Medicare into law in 1965 with, you guessed it, an eligibility age of 65.
For many, the traditional retirement model of 65 is still a goal. However, fewer Americans are leaving the workforce altogether at 65.
While Gen Xers, millennials, and Gen Zers do have concerns about their savings, Social Security, and employer-sponsored retirement savings, working in retirement is not always about the money.
More than half of baby boomers (54%) cite working in retirement as a way to keep their minds active, and nearly half (47%) want to continue working after 65 because they enjoy their work. And 25% of workers across all generations report their desire to keep working in some capacity to maintain relationships and connections.
The Many New Forms of Retirement
Retirement is no longer a final chapter, but rather a choose-your-own-adventure story. The evolving workforce, dwindling pension availability, and rising Social Security full retirement age drive many workers to newer, more flexible retirement models, proving that there is no one “right” way to retire.
Early Retirement (FIRE)
Financial Independence, Retire Early (FIRE), inspired by the book “Your Money or Your Life: 9 Steps to Transforming Your Relationship With Money and Achieving Financial Independence,” emphasizes extreme savings and investing as a method for retiring much earlier than the traditional retirement age. FIRE gained popularity among young millennials and Gen Z, who have time and working years on their side, enabling early retirement. The opposite side of the coin is Gen Z, who prioritize present enjoyment over aggressive retirement saving.
Phased Retirement
Almost half of American workers (48%) anticipate a phased retirement, where they gradually reduce their hours and responsibilities without completely leaving their income and benefits behind. Phased retirement also includes workers moving into part-time, seasonal, or temporary positions. This retirement model is particularly popular among baby boomers and older Gen Xers who want to increase their leisure time without leaving their primary career altogether.
Pre-Retirement
Pre-retirement, also known as semi-retirement, is when workers leave their primary careers but continue working in a different capacity. Some pre-retirees seek related jobs to their primary career, such as consulting or teaching. Others look for unrelated jobs that can supplement their income and provide a sense of societal connection until they’re ready to retire fully.
Micro-Retirements
Micro-retirements involve taking planned breaks from work, serving as a self-funded sabbatical to rest, travel, focus on family, or pursue personal goals. At the end of the scheduled break, workers may return to their same career field or explore a new one, using the time away to reevaluate their work-life balance. Micro-retirements, a growing trend among millennials and Gen Z workers, signify a broader shift in the concept of retirement, indicating that workers seek more flexible circumstances to prevent burnout and that provide autonomy and purpose.
How Do You Know if You’re REALLY Retired?
As new models of retirement involve working in some capacity or stepping away briefly and returning, how do you know if you’re “really” retired or just in another phase of your working life? Answering a few questions about your status can help you self-assess whether you’re truly retired.
Are you financially independent?
If you can cover all of your expenses using pension payments or savings and without depending on a paycheck, you’re probably retired.
Are you working by choice or necessity?
As pensions become less common, more people worry about their retirement savings, and the minimum age for Social Security benefits continues to rise, fewer individuals may be able to retire fully. In instances where you must continue working out of necessity, it’s crucial to find a job that enriches your life and does not introduce undue stress.
Conversely, just because you continue to work does not mean you are not retired. More and more workers are continuing to work past the traditional retirement age to stay connected and keep their skills. The distinction between working for fulfillment and working to pay the bills matters when defining your retirement status.
In today’s world, retirement is increasingly about living the life you want, whether that includes working full-time, part-time, or not at all. If you’re already spending your time, finances, and energy in a way that reflects your long-term goals, you may already be living your version of retirement.
Redefining Retirement on Your Own Terms
Traditional retirement models may work for some, but an increasing number of workers are deviating from this outdated societal definition to create their own version of retirement. You don’t have to clock out for the final time to signify a happy and fulfilling retirement.
The Bottom Line
Whether you aspire to clock out for the final time at 65, retire at 35, and travel the world, or plan to work well into your 70s, retirement is not a fixed destination, and 65 is not the magic number for everyone. Personal preference supersedes traditional retirement norms, and truly retiring means having the freedom to live the life you want and choose how you spend your time, money, and energy.
Advisory Services are offered through MRA Advisory Group, a Registered Investment Adviser. This information was developed by Broadridge, an independent third party. It is general in nature, is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. The investments and strategies mentioned may not be suitable for all investors. Past performance is no guarantee of future results. Nothing herein, nor any attachment, shall be considered to constitute (i) an offer to sell, nor a solicitation of an offer to purchase, any security, or (ii) tax or legal advice.