Language of the Generations: “Retirement”

It’s time to retire the word “retirement.” It doesn’t describe the post-65 reality that a majority of Baby Boomers are likely to experience.

If you are like us, you’re already growing weary of all the talk in the media and in advertising about Baby Boomers and retirement. (We’re dreaming of the day Dennis Hopper stops telling us about our dreams in those Ameriprise commercials.)

But get used to it: The talk is just beginning. At some point in the coming twenty years, 76 million boomers will stop working to earn a living and start working to do what they want to do–which may or may not include earning an income.

That doesn’t sound like “retirement.” And it shouldn’t, because Boomers aren’t going to do “retirement” like their parents did. How do we know? Boomers say so in survey after survey.

A few years ago, a study done by AARP found that some 80 percent of Boomers planned to “work in retirement.” Lo and behold, the Bureau of Labor Statistics recently found that the number of employed people 65 and older had doubled from 1977 to 2007. Our own national study found that 50 percent of Boomers “have no idea” when they’ll retire. Presumably, they all know the date and year of their 65th birthday, but that chronological milepost is increasingly irrelevant.

Even if they haven’t figured out all the details, Boomers are redefining “retirement” at this next stage of life. The shift in behavior is driven by three factors: Boomers are pretty sure they’re going to live a long time, most haven’t saved enough money to quit yet, and much of their self-identity comes from their work.

Living Longer

Most Boomers think they will live to age 85 and beyond. Many of them will. Gerontologist Ken Dychtwald has said that Boomers are the first generation in history to reach age 50, and now 60, and know with confidence that they have a third (or more) of their lives left to live.

The bright side of living longer is… well, living longer. The downside is that Boomers have to stretch their inadequate savings over more years, or complement it with continued earnings.

Along with greater longevity and need for ongoing financial resources comes greater sense of vitality. No surprise, many 65-year-old Boomers aren’t ready to slow down. If they have another 25 years of life, why stop working at age 65 and take up gardening and mahjong? Why would Boomers sideline themselves from the mainstream of society by moving to Florida, where their big contribution to the world is joining Jerry Seinfeld’s TV parents at the Del Boca Vista condo committee?

Managing Money

What are Boomers doing, then, to ensure that the last third of life is lived to the fullest, as vital and contributing members of society? Apparently, not enough.

One in three Boomers aren’t saving for the future, reportedly having less than $1,000 put away into a retirement account. Another third have money, but not nearly enough to quit completely, especially given the relentlessly rising cost of health care. Boomers will work beyond age 65 just to hold onto healthcare benefits. That is, if companies are still offering healthcare benefits.

Living to Work

Boomers have a strong work ethic, finding their self-identify primarily in their job or work. No longer is one’s family lineage the key component in answering the “Who are you?” question. Instead, it’s “what do you do” – for a living, that is. “I’m a lawyer, surgeon, sales executive or a COO.” Leaving that occupational identity behind, seemingly arbitrarily at age 65, is something that many Boomers are not psychologically wired to handle.

Many Boomers see “retirement” at age 65 not as the occasion to quit working but to shift gears: to adopt a less stressful work-life balance or gain more flexibility for travel and hobbies. Or to pursue creative or philanthropic endeavors at a reduced income. Or to start that new business they always fantasized about.

As an example of how Boomers are thinking about retirement in a whole new way, take 59-year-old David Hughes of Michigan. He wrote us to present himself as a contradiction to an article that said Boomers weren’t ready for retirement:

I have spent the last 20 years preparing and planning my retirement. I will retire in 9 months from a factory job in Grand Rapids.

Last year I started a business, selling and servicing Travel trailers and this spring my brother and I are building an RV park on a small lake. Sixteen years ago I purchased 40 hectares of property in Costa Rica where I planted 18,000 teak trees. This will allow me to work in Michigan during the tourist season and work my teak plantation in the winter months.

We wrote back and congratulated David on his foresight and wondered why he referred to running two businesses as “retirement.” David is the quintessential Boomer heading towards retirement–he is going to do what he wants to do, and it happens to be working.