This article appears in the November 2022 issue of Advisor’s Edge magazine — our second last print issue. If you’re a print-only subscriber, learn more about our digital transition and how to continue to receive all the best news and features on Advisor.ca.
When Serena Williams announced this summer that her remarkable tennis career would end at the U.S. Open, she didn’t say she was retiring.
“I have never liked the word retirement,” Williams wrote in Vogue. “It doesn’t feel like a modern word to me.”
Instead, Williams said she was “evolving away from tennis, toward other things that are important to me,” including her venture capital firm and her family.
Roll your eyes if you must at another celebrity inventing terms for life stages or crises — this year’s “conscious uncoupling.”
But Williams isn’t the only one uncomfortable with the word “retirement” and all its baggage and outdated imagery. Many clients are seeking a more modern idea of post-work life, as well as for help in realizing that vision.
A survey for Edward Jones released in July found a majority of retirees (and those within 10 years of retirement) now view retiring as “a new chapter in life.” That contrasts with previous generations for whom retirement was most commonly described as “a time for rest and relaxation.” Even more now say they’re “reinventing themselves” when they retire.
Johanna Faigelman, a cultural anthropologist and CEO of market research firm Human Branding, said the idea of “financial freedom” is overtaking the traditional notion of retirement. People aspire to live without the pressure of work, but that doesn’t always mean not working, she said. And the path isn’t as linear as it once was.
Part of it, Faigelman said, is that delayed gratification no longer holds sway.
“The pandemic brought a certain amount of nihilism and a certain amount of experiential focus on the now that was already bubbling a little bit among [younger people],” she said. In other words, the YOLO (you only live once) ethos is messing with savings.
In just over a year, we’ve seen the Great Resignation as well as “quiet quitting,” or the idea of doing the bare minimum at work and focusing energy elsewhere. With so much ambivalence about work, no wonder retirement is in flux.
Rather than age being the primary marker, Edward Jones found a small plurality (21%) said retirement starts when they achieve financial independence.
For advisors, Faigelman said that means separating retirement from age. “Take the grey hair and the old man fishing in the boat out of the imagery,” she said, and instead focus on what that man is feeling: freedom to do what he wants. That feeling resonates with clients of all ages.
With younger clients, advisors should be ready to help plan for a sabbatical or for a period to focus on a passion project or learn a new skill, rather than just steadily accumulating assets until they’re 65, she said. Whether it’s the effect of being cooped up for two years or the uncertainty from climate change and other global problems, young people aren’t interested in postponing experiences for decades.
Shortening the horizon can also encourage investing and saving, Faigelman said: “I think younger people today can handle [planning for] a couple of years from now, but they can’t handle thinking about when they’re 60”.
But the idea of retirement isn’t only changing for impatient young people. The Edward Jones survey found three in five respondents want to continue working in retirement. Among those in their early years of retirement, one-third said it’s a challenge to organize time and find purpose.
“When you live in a productivity-obsessed culture, there’s the undertone that you’re no longer contributing to society [when you retire],” Faigelman said. “God forbid it suggests that you’re old, which no one is allowed to be any more.”
This issue, AE’s retirement special, is a call for advisors to rethink retirement planning at all stages of a client’s life. You’ll find stories on what that means for financial planning and how investment products can address the challenges of saving, longevity and decumulation.
We also profiled a proponent of the Financial Independence Retire Early, or FIRE, movement and asked recently retired advisors about their experiences since they stopped working.
Finally, since helping clients retire also means planning for incapacity, we have a renovation guide for more accessible homes.
We may not be as ready as Williams is to retire the word “retirement,” but we hope to inject some new life into it.
Mark Burgess is managing editor of Advisor’s Edge.