Modern Retirement: Redefining the Experience for the 21st Century

Our perspectives about retirement are all over the place. It's the new triggering word.

There’s a new loaded word out there: Retirement.

Some people hear the word, and think they cannot wait to retire. Some people want to retire, but they don’t think they would be able to. A growing number of people are saying they don’t ever want to retire, at least not in the conventional sense of the word.

We hear stories of people having done the full retirement transition, only to make a U-Turn, hence the birth of the word unretirement. Oh, and let’s not forget the contingent of folks out other who literally get annoyed when asked if they’re ready to retire or are thinking about retirement yet.

Retirement is the new triggering word.

The reality is how we retire in the 21st century is going to be different from how our parents experienced their retirement. It’s even going to be different from how we might have, once upon a time, imagined ourselves retiring.

And while the loudest messages out there about retirement are all about financial security, investment strategies, and growing the nest egg, the truth is there’s more to consider than just dollars and cents.

So the question is, what now? What is our new relationship with the word? How should we think about retirement? Or should we, as many have suggested, simply retire the word retirement altogether?

[NB: The entire month of July 2023, we’re covering Modern Retirement in the 21st century on Second Breaks. We’re going to be reframing the word while looking at why it’s crucial that we redefine retirement. I’m going to be sharing my messy retirement story because I think it’s a bit of a cautionary tale with lessons to be learned. We’re also going to talk about the skills we need to “retire” — whatever that word may mean for you — in the 21st century. And lastly, we’re going to talk about a framework so we can consider all the things that need to be considered.]

Let’s first do a quick level-setting of definitions and history lesson, so we can all be on the same page about what we mean by “conventional retirement”.

Exploring Conventional Retirement and Its Origins

Before we can redefine retirement, it’s best that we level set on what is typically meant by the word.

When people talk about conventional retirement, they usually refer to the traditional idea of leaving the workforce and transitioning into a period of leisure and relaxation. Generally, this transition occurs somewhere in our 60s after years of full-time work.

During conventional retirement, individuals rely on their retirement savings, pensions, or government-provided benefits, such as Social Security, to cover their living expenses.

It's seen as a time of personal freedom to pursue interests, spend quality time with loved ones, and engage in hobbies that may have been neglected during the working years.

Retirement became an integral part of the American Dream.

The concept of conventional retirement has been a social norm for many years. But how and when did it actually start?

It used to be that people simply worked until they couldn't work any longer. Then, the industrial revolution was born, right around the end of the 18th century. A few years later, pensions were introduced to provide financial support to disabled or elderly workers.

The introduction of pensions was a major step forward for social welfare. It provided a safety net and enabled a more dignified life for those who could no longer work. As time went on, governments introduced social security programs to support elderly citizens, and employers began offering pension plans and retirement benefits to their employees.

Retirement became associated with leisure and relaxation when financial institutions — looking to sell their new financial products and investment strategies — began to heavily market the image of retired folks on vacation, golfing, and living a life of leisure.

That imagery painted by financial institutions was a big hit. People embraced that ideal, and soon, many people looked forward to spending their golden years pursuing hobbies, traveling, and spending time with family.

It became an integral part of the American Dream.

Shifting Perspectives on Retirement

Most of us who are currently in midlife likely viewed our parents' retirement as closely synonymous with the traditional concept of retirement - a period primarily focused on rest and relaxation.

Here’s a not-so-bold prediction: Our retirement isn’t going to be like that, either by choice or by necessity.

Nor is there going to be one universal idea of what retirement is or isn’t.

We live in a time when retirement is not one-size-fits-all. It has many possibilities and many variations. As a result, there isn’t one single definition of retirement anymore. And people’s attitudes about it are all over the place.

For example, have you heard of Financial Independence, Retire Early, or FIRE for short?

FIRE is a buzzy movement, that gained have gained popularity, attracting followers in their 20s, 30s, and 40s who reject the idea that they must be focused on earning income for the bulk of their adult life and wait until their golden years for the reward of retirement. What if, they propose, a better plan is to live frugally, save intensely, and retire in the prime of life?

For followers of FIRE, retiring young is the goal.

Then we have the Boomers, who, after retiring with well-planned pensions and 401Ks, are choosing to un-retire after a few years — either because they are worried that their savings won’t last the entirety of their retirement, or they realize that traveling to exotic locations or golfing every weekend isn’t enough to live a fulfilling life after all.

Then there are Gen Xers like myself who say, "We will never retire." Many in this generation say that they can never retire for financial reasons. But many also say that they don’t want to.

It doesn't mean we won't ever leave our corporate jobs; we might want to. But sailing off into a sunset of rest and relaxation isn't our end goal. There’s so much more to life than that. There’s so much more we want to achieve personally and professionally.

So, for a growing number of people, slogans like Never Retire, resonate deeply.

We may not want to retire, but we may be forced to.

The Urgency to Redefine Retirement

A quick Google search will give you hundreds of articles about why the idea of retirement is going through a big reinvention. But at the root of it all, the imperative for redefining retirement stems from one thing: increased longevity.

We are living longer than ever before.

And traditional retirement systems designed for shorter lifespans are no longer sustainable.

To put things into perspective, let's consider the Social Security Act of 1935. Back then, the average life expectancy for Americans was just 58 years. The retirement age for federal employees was set at 65, implying that social security was intended to support retirees for an average of around 7 years.

Today, life expectancy in the US is 73 for males and 79 for females. And the US only ranks 43rd globally in terms of longevity, with other countries having even higher life expectancies. For instance, the UK has an average life expectancy of 83, Canada stands at 84, and Australia at 85. Source

So, the conventional definition of retirement — leaving the workforce and transitioning to a life of leisure and relaxation — is clearly no longer fit for purpose.

First, for financial reasons. It’s increasingly challenging to accumulate enough savings to support ourselves for such extended periods of time.

And second, for existential reasons. Leading a life solely focused on leisure and relaxation cannot fulfill our inherent human need for purpose and meaning.

The Harsh Reality We Need to Accept (if You’re Employed in Corporate America)

Unfortunately for those employed in the corporate world — and I’m specifically talking about corporate America here — there’s an ugly reality we must accept. And that ugly truth is called ageism.

Ageism refers to the discrimination against individuals based on their age, the belief that younger workers are more innovative and adaptable.

Combine that with the always-present corporate focus on cost-cutting, a desire for a younger workforce, and tremendous advancements in technology that can replace human workers, and we have the perfect storm.

We have an environment where older workers face increasing pressure to retire. This can happen through early retirement packages, downsizing initiatives, reorganizations, or simply creating an uncomfortable work environment.

So, even though we may not want to retire yet, we may be pushed to do so.

Forced retirement has serious consequences. It deprives older workers of the opportunity to utilize their valuable skills and disrupts their financial security, creating significant challenges for their future well-being.

I think it’s clear that the traditional notions of retirement no longer meet our current needs and circumstances.

Obviously, this is not our parents’ retirement.

But simply declaring “We will never retire” may not be a practical solution. The unfortunate reality of ageism in the workplace, corporate practices, and advancements in technology can force individuals into retirement, even if they aren't prepared or willing to leave their careers behind.

What we truly need is a fresh perspective on retirement.

We need to reframe the word and redefine it to accommodate the diverse needs, paths, and possibilities that exist today.

We need to define the skills required to transition smoothly into this next stage of life. And we need a framework that caters to the unique challenges and opportunities of retirement in the 21st century.

(NB: These are the topics that we will cover in the following episodes of this series.)

By embracing a new outlook, we can create a retirement experience that is tailored to our individual circumstances and aspirations. We must actively shape the narrative around retirement, highlighting the importance of continuous personal and professional growth, financial security, and overall well-being.