Skip to main content

You are here

Advertisement

Is it Time to Retire Retirement?

Practice Management

Is the concept of “retirement” no longer relevant?

For starters, there are any number of consumer surveys that suggest that a growing number of American workers—of all ages—no longer expect to retire—or expect to do so at ages well beyond what is likely to be available to them. 

Moreover, there is a growing consensus that emphasizing “retirement” is not effective at encouraging individuals—particularly younger individuals—to save for… retirement. And thus, a suggestion has emerged (from a variety of sources) that that focus be reframed as a goal to achieve financial freedom. 
Now, younger workers have never been all that enthused about saving for “retirement.” Indeed the participation rate for those under 30 has long lagged that of their elders, a factoid that is often obscured by aggregate participation rates. More recently, that participation lag has been muted by the advent of automatic enrollment (assisted by an acceleration of the eligibility period, and doubtless also by more generous vesting schedules), and yet it remains.[1]

Let’s face it, even for those on the cusp of that event, retirement remains a somewhat esoteric concept. Long gone—if they ever existed—are the days where you would come to a point in your career, generally 30 years on, almost always at age 65, and be handed a gold watch, a pension, and then head home to hang out with the garden and the grandkids (pensions were always rare in the private sector, and full-benefit pensions even rarer[2]). Instead, we’re challenged to set aside what appears (to most) to be a ridiculously high percentage of our pre-tax pay so that we can have “enough” to live on for an undetermined number of years with expenses (particularly healthcare), of (what seems) an indeterminable amount. Little wonder that surveys routinely show many now predicting that they will “never” retire.

So if these days the talk is about (or is beginning to be about) emphasizing financial freedom, rather than “retirement”—I get that. Retirement is for old people, and nobody—not even those who (technically, anyway) are old think of themselves that way. But what is financial freedom—how are we to determine it, what life milestones and markers would apply? Aren’t we just swapping out one hard-t- articulate/define/quantify concept for another? Indeed, one could argue that it’s even more complicated, even more individualized than “retirement,” which at least has general age and longevity parameters to bound in key assumptions. 

Individualized goals are nothing new to effective financial planning, of course, and while the anchor of a targeted retirement date provides the illusion of a specific start (and an “end” to accumulation), we’re already in a time where such concepts are, of necessity, increasingly fluid. All of which suggests that a focus on financial freedom, though at first blush it seems less specific than retirement’s traditional age/tenure focus might actually be more meaningful. Certainly, if you’ve ever had that abusive boss—or that job that absolutely drains your soul (and sometimes they’re a “package”)—well, there’s something to be said for having the financial wherewithal to be able to say “take this job and shove it.” 

More than that, perhaps financial freedom is best seen as the ultimate retirement savings question—how much do you need to live from “today” (pick your point) through the rest of your life? 

There’s an old Janis Joplin hit (“Me & Bobby McGee”) that claims that freedom is “just another word for nothing left to lose.” 

But maybe these days, and certainly when it comes to attaining financial freedom—it’s really about having everything to gain. 

Footnotes

[1] Just 51% of those under age 25 participate in a workplace retirement plan, according to Vanguard’s “How America Saves 2020” report, up from 44% a decade ago. The participation rate of those aged 25-34 is 75%, versus 82% in the 55-64 cohort.

[2] And they always were.

All comments
Mark Quigley
2 years 11 months ago
The answer to the question: How much money do I need for retirement? has and, probably always will be, How much is there?