Have you adjusted your thinking and “75 is the new retirement?” A lot of people I’m hearing from these days think their retirement will be starting much later than they anticipated. Sure, freedom 55 is passé but more and more it seems that freedom 65 is unachievable too. We keep pushing out the socially acceptable retirement date. I suppose this approach takes some of the pressure off us to be prepared for our no-longer-imminent retirement. However, without an approaching deadline we humans tend to be less motivated to achieve our goals.
By adjusting our thinking about the timing of retirement to a later date, we remove the urgency to take action. Preparations for retirement such as working on decreasing expenses, reducing the use of credit and rethinking our investment style for the fixed income years will be delayed. This means that if retirement sneaks up on us even at the traditional age of 65, we may be caught unprepared. The risks of the ‘drifting’ retirement age include:
- Never really expecting to retire—it just happens to you one day whether you’re prepared or not;
- An unexpected family or personal crisis leads you to decide that your time is better spent not working even though you are unprepared;
- You don’t have “enough” money because you have not taken the time to understand what “enough” means to you, leaving you feeling financial insecure;
- Your sense of self-worth and personal-contribution takes a nose-dive because you have not built a life outside of work.
The baby boomer generation identifies strongly with its careers. Many are not interested in leaving behind exciting work lives for unscheduled time in retirement. There’s no urgency to change their behaviour if retirement is continuously delayed. Even the federal government wants Canadians to retire later. The changes to retirement entitlements include gradually raising the Old Age Security (OAS) age of eligibility and modifying the Canadian Pension Plan (CPP) to increase benefits for those who access this entitlement later than age 65.
I am not convinced that a lot of baby boomers will continue to work into their mid to late sixties, even if their financial house is not in order. Late retirement is a social change that is probably more complex than meets the eye. The baby boomers are currently witnesses to the aging process through the experiences of their aging parents. This will result in a readjustment of priorities and delaying retirement, at least from the primary career, will become less appealing and increasingly unlikely.
Lee Anne Davies has worked as a consultant for insurance, wealth management, banking and financial education companies. She has a PhD in Aging, Health and Well-being and a Masters of Arts (MA) in Gerontology and Health Studies from the University of Waterloo and an MBA from Athabasca University’s Information Technology Management program. She’s also successfully completed the Canadian Securities Course and the Professional Financial Planning Course. To read more from Davies, visit her blog Agenomics.