Clearly, both our individual and our societal views of "retirement" have evolved over the last 20 years or so. Let's look at the changes, how they affect your future and how you can take advantage of the trends.
It could be said that this is the first generation where an equal number of men and women will be "retiring" from full-time work. While the challenge had only been to find activities to keep a husband busy and out of his wife's hair after retirement, it may now be a two-way street!
The traditional age 65 retirement is also out the window. Many companies used to have 65 as the mandatory retirement age, but this is no longer legal. As a result, people can choose to stay on the job longer.
However, a more significant movement is people retiring early and changing careers or starting a business, or pursuing other dreams that may or may not pay them income. Clearly, retirees are no longer just playing golf and painting (if, indeed, they ever did follow that stereotype).
Working for pay after official "retirement" is definitely growing, but by how much?
It depends on who you ask. Some say this could just be a subtext of this generation's retirements, or it could be the predominant trend over the next two decades. As baby boomers reshape retirement the way they have reshaped everything from elementary schools to apartment vacancy rates and housing prices, our traditional picture of an "older person" could change radically.
How will this affect you?
If you are a pension-plan administrator or sponsor, it could have a huge impact on job demands. Early retirement by a pension-plan member often means a cash transfer. These transfers are growing, right at the time when many pension plans are facing projected deficits due to low interest rates and longer-living pensioners.
Members of such plans who retire with a monthly pension could see a negative impact on future benefits.
We will devote a full article to this issue within the next month. I would love to hear comments about this from pension-plan administrators and the Canadian Pension Benefits Institute, in the meantime.
One thing that has not changed about retirement is that those people who have a fully formed picture of how they want their retirement to unfold tend to have a much happier and more successful personal renaissance.
I have always liked that description because, to me, "retiring" always suggests stepping back. That's not how most of my clients view the process. Many are busier and more excited than they have ever been.
A critical ingredient is being clear on what's most important to them and what specific accomplishments will make them feel complete.
We help with this process by sitting down with our clients each year to help them set specific, measurable goals and help them determine the things that are most meaningful to them. The money that's needed is easy (for us) to calculate and is simply the means to the end. It was never the end in itself.
With that in mind, I was pleased to see a recent press release sent on behalf of BMO Bank of Montreal, suggesting that developing a clear picture of your desired retirement, instead of focusing only on the amount of money you need, was key. As well, they had developed a tool to help with this process.
Kudos to the BMO Retirement Market Group for publicizing this movement. They have created a guide book called Define Your Path -- Retiring Your Way, which "guides pre-retirees to chart a retirement course that an investment adviser can then help make attainable."
It is a terrific tool that takes you from exploring your general values, through the things you most want to accomplish, to specific steps to get there. After all, that's what it's all about, isn't it?
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If you are reading this Friday, then with luck and mercy from the starter, I am just finishing 18 holes at the Old Course at St. Andrews. I lined up at 4 a.m. to try for a walk-on spot to fulfil a dream. That's what it's all about.
David Christianson is a fee-only financial planner and investment counsel with Wellington West Total Wealth Management Inc. His column appears Fridays. You can e-mail him at dchristianson@wellwest.ca.
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