Retirement – A Labor of LoveAugust 29th, 2019 by Jim Allen
Labor Day is typically thought of as the informal end of summer – a last hurrah before school starts and the weather starts to change. Labor Day was created in 1882 as a celebration of the labor movement and the contributions it made to America’s economic success. Of course, in modern times it is really just a three day weekend and the original concept is considered outdated and not given much thought. It just doesn’t carry the same patriotic meaning as the other summer holidays, Memorial Day and the 4th of July.
Another outdated way of thinking about labor is that you want to stop when you retire. When America was primarily an agricultural or industrial economy, people’s bodies wouldn’t allow them to continue working so retirement was forced upon them. As we shifted to a technological and service economy, this is no longer the case. The majority of jobs today are not typically manual labor, which allows people to continue working much longer than previous generations. This shift in the labor force, when coupled with ever increasing longevity, requires us to re-think the concept of retirement.
When Social Security was created in 1935, life expectancy was 62 years old so most people weren’t even going to make it to retirement age. In 2019, average life expectancy is 82-85 years so people can expect to be in retirement 15 years or more. In fact for a married couple, life expectancy is 89 so retirement can last 25 years or more. Not only does someone’s money need to last much longer than prior generations, but making use of 20+ years of “idle time” can become a problem for many retirees.
Studies have shown that older adults who are not socially active can be subject to a condition called “The Dwindles” or a failure to thrive. This condition isn’t just normal aging but can cause a physical and emotional spiral that can lead to early death. The best way to prevent this is to stay both mentally and physically active, and continuing to work can be one of the best methods of staying active. Not only can continuing to work provide needed social interaction and mental stimulus, the extra income it can provide may help produce a more secure financial future.
So does this mean that someone shouldn’t retire? Of course not. Our modern economy provides the potential to work in a variety of ways – part time, full time, remotely, as a “soloist” / independent contractor, in an encore career, as a volunteer or doing one of the multitude of gig economy jobs like Uber, Up work etc. The opportunities to do some sort of labor that you are passionate about during your retirement years are endless. The trick is to find something you would love to do and “just do it.”
Our financial planning approach at Anchor Bay Capital is to look not only at your return on investments but at your Return On Life. Designing a plan that helps you live a fulfilled life is what we are all about.