For many people, retirement is one of those things that has always been on the horizon at just enough distance not to warrant any real concern related to what to do about it in practical day to day terms. That is, until the horizon is upon us and the more pragmatic aspects of the retirement phase of life need to be addressed. Here are some facts to consider when thinking about your retirement and what it may look like.
Demographics
- With as many as 10,000 baby boomers turning 65 everyday, the lack of retirement planning in this generation has become a broader societal issue
- The 2020 census numbers for the 65-74 age group show an increase from 21.7 million in 2010 to 33.1 million in 2020, and represented 1 in 10 Americans in 2020.
- By 2030, all boomers will be at least age 65.
Longer Life Expectancy
- A man reaching age 65 in 2020 has a life expectancy of 81, while a woman the same age can expect to live until 84
- From 1980 to 2010, the number of Americans 90 years of age or older has nearly tripled
- According to the Social Security Administration, the number of Americans 65 and older will increase from about 58 million in 2022 to about 75 million by 2035.
- According to the data collected in 2021 by the Social Security Department, about 1 out of every 3 65-year-olds today will live until at least age 90, and 1 out of 7 will live until at least age 95. Of interest, the 2020 census numbers show the population 95 years and over grew from about 425,000 in 2010 to 631,000 in 2020.
Personal Challenges
- Catastrophic illness or disability – chronic disease can lead to disability in old age
- Escalation of healthcare costs – health care costs are expected to increase an average of 5.1% over 2021-2030.
- Death of a spouse – managing the emotional and practical issues alone can be difficult
- Caregiving demands – The estimated prevalence of caring for an adult 50+ older is 16.8%, or 41.8 million Americans.
Having the Conversation
Most conversations about retirement planning fall into the “need to” column as people continue to put off the complex discussions about what retirement will look like for them. Where will I live? How will I spend my time? Have I planned adequately for the financial costs of retirement?
Chances are that if you ask a couple to make a list of their retirement plans and rate them in terms of importance, you are likely to find that the list is quite different for each member of the couple – an obvious sign of a lack of discussion about what those retirement years will look like.
Research from Voya Financial says that for 60% of retirees, the timing of retirement was somewhat or completely unexpected. Fidelity in its 2021 Couples and Money Study found that 38% of baby boomer couples argue occasionally about money, 34% say saving enough keeps them up at night; and interestingly, almost half of baby boomer couples work with a financial advisor.
Most couples like to think they communicate about retirement and finances, but the data show that’s just not the case. Many times, emotions and our thinking are the real roadblocks to getting where we want to be in planning our retirement years.
5 Questions to Kickstart Your Conversation
- Where will you live – will you relocate or stay put?
- Are there family considerations – is being close to relatives important?
- Is travel a part of the equation – will that require more income in retirement?
- Are there health care limitations – will health status limit retirement options?
- What are your leisure avocations – hobbies or volunteer interests to be considered?
Some Resources
AARP Retirement Calculator
Kaiser Family Foundation
Money/CNN Retirement Calculator
The Retirement Café
US News/Money/Retirement Planning Tools
This article has been updated since it was originally published in November, 2015.
