Monday, February 26, 2024
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Retirement is not for everyone

As a financial advisor who has worked with retirees for more than 20 years, I've come to learn one thing: Retirement is not for everyone. In fact, it's not for a whole lot of us.

During the 1990s, with the stock market charging and everyday folks making millions from dot-coms, the conventional wisdom of the day was to retire as young as possible. There was a certain pride that went along with being young and retired, and people were cashing out as early as possible.

Not anymore.

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Today many retirement-aged folks are continuing to work, for a variety of reasons. Many simply can't afford to retire, because they don't have enough saved.Their corporate pension plans—in the unlikely event they still have one—don't pay nearly enough. Their savings haven't grown at the rate they had planned, and interest rates are so low they can't generate enough income to replace their salaries. Plus, many would-be retirees still have a ton of debt on their homes.

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Yet others are continuing to work because they've come to believe that retirement isn't all it's cracked up to be.

They've seen friends retire young and "enjoy life" by traveling in their motor homes, wintering in the Sunbelt, golfing every day and so on. But they continue to work because they think they'll find more satisfaction by staying in the game and contributing to society rather than living a life of leisure.

Granted, many retirees do contribute to society through volunteerism and philanthropy, but studies have shown that if people aren't engaged in volunteerism by midlife, they won't be engaged in it during retirement.

A friend of mine recently joked that "retirement was such a '90s thing."

The concept of retirement is a relatively new phenomenon. In the not-so-distant past, people worked at physically demanding jobs until the day they died. The concept of having enough money saved so you didn't have to labor applied only to the gentry. But the 20th century changed much of that—at least, in the Western world.

(Read more: Seniors warned, beware of selling pension)

With the creation of Social Security, pension plans, unions and a rapidly increasing lifespan, retirement became a dream for many in the growing middle class. You worked for a company for 30 years, got a gold watch and received a monthly check until your dying day.

Now that people are living longer and retirement is out of reach for many, retirement should not be a goal for most. Rather than planning and saving for retirement, how about planning and saving for financial independence instead?

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