Time to rethink retirement
Readers, this is a revised edition of retirement articles I wrote in September 2000. More than 21 years later, as a financial and retirement planning professional having worked with hundreds of clients, my thinking (and advice) on this life stage has changed, dramatically.
Don’t retire; rewire for your third (and fourth) journey
It is time to take the word retirement out of global language. At a financial planning conference 15 years ago, one seminar was focused on the then recent developments in the retirement planning process.
One impressive female presenter, voted one of the best 200 financial planning professionals in the United States for the year 2000 by Worth magazine, spoke of her worries relative to her own family situation.
She spoke of her two elderly great-aunts and an uncle, already over 99 years; one of them had already been institutionalised for 15 years. Her mother was still a fully functioning human being at 95, while her very own projected life expectancy was 110 years or longer!
At that time, governments were adjusting mortality tables upwards, but planners felt that those life expectancy projections were unrealistically low in early 80s, as we had been routinely using at least 90 or 95 years of age as a mortality benchmark to project retirement income needs.
The overwhelming theme throughout this conference was the very serious concern of our clients outliving their retirement income. In hindsight, we were too complacent with conventional thinking rather than actual reality.
Work 40 years, retire with the gold watch, live off your dividends, rents, a nice social security monthly cheque, and relax in the golden sunshine.
None of these assumptions exist in any tangible form today – for most people – yet the message from mass media advertising still portrays an idyllic unreality.
• Hardly anyone wears a regular watch any more
• People are working longer hours and longer years than ever before
• Decent dividends are harder to find; interest rates are still on the floor
• Social insurance/security is less than adequate for even a sub-minimal lifestyle, especially when health coverage is thrown in
• And relaxing, well, when you’re constantly worried about eking out your savings - nothing relaxing about it.
So, the question becomes – why are we still thinking the same way? This statement may generate some controversy, but I submit that we have to think differently about our collective financial future.
Let’s review our physical heritage.
Bermudians are very long-lived people – more than we realise. Again, 20 years ago, frequent visits to a local rest home, the ages of the lovely people residing there ranged (both men and women) from 82 to 100, with quite a few over 90.
So, I decided to have a look at my own family’s life expectancy and mortality ages.
Our granny passed in 1979 at age 94 after a bare scratch life that would have killed most people today.
We have vivid memories of her; bent over a sewing machine at age 87 (with a perpetual cigarette butt hanging out of her mouth). Visiting her one day, I waited to see if the ash would burn a hole in the wedding dress she was making. It never did.
Chasing her dog while jumping over a three-foot stone wall (same age). The dear lady survived on tea and toast, chain-smoking until her demise, even though she occasionally lit the ends of her hair on fire. My parent caregivers would have none of these antics, but granny had an indomitable will.
Widowed in her forties while pregnant with twins, one of whom died so sadly within a year, my granny struggled for a marginal existence for the next 54 years. She would have become a statistic without her dressmaking, which she practised well into her eighties. Later as her eyesight failed, although she fiercely resisted, she became dependent upon her children, among them my father, himself trying to keep the family finances above water.
I’ve compared notes numerous times over the years with clients and professional contemporaries - her story is many Bermudian families’ story, not unusual in those days of no safety nets and just as relevant today. Even then, their family longevity was a familiar refrain, almost as if such adversity bred “never give up” physical and mental attributes.
Using a life expectancy table, taking into consideration the genetic family factors and general health, it was still very shocking to see that we from families of great longevity will still be twirling and talking at 105 years of age!
How long do you think you will live?
How long you will live is based partly upon the genetic and mortality factors in your family and partly pure luck. Mortality is simply another way of saying, what is the statistically calculated average life expectancy for a particular age group? Gender also must be considered in the statistical curves. Sorry, gentlemen, but we ladies on average live much longer (eight years) than you do. Those of you gentlemen planning on taking charge of your physical health, here is a wake-up call.
Many people cannot wait for this golden age, have lots of things planned and trips to take.
But how many of you (whatever your age is right now) have actually thought about the projected life span in your family genes. Aside from all those rosy, retired things: golden golf, golden trips, golden grandchildren, golden healthy lifestyle and so on.
The reality, dear readers, we know may be much different. As long as we park our thinking about that “far-off time” as another of life’s pleasant experiences, everything today is cool! Right?
Readers, now, you are thinking, so, what is the point of this narrative?
It is this.
What are you going to do - after the trips, the pass-the-time activities, the grandchildren leave home, life and relationships change?
Do you have a purpose?
Stay tuned: in part two, professional observations – after more than 35 years in the financial planning industry: further thoughts on rewire finances, money worries, relationship adjustments, identity, purpose, intellectual expertise and lifetime learning, health/physical activities, leisure time, community, falling birth rates, boredom, government and political positions.
• Martha Harris Myron, CPA JSM, a native Bermudian, is the author of The Bermuda Islander Financial Planning Primers, international financial consultant to the Olderhood Group Bermuda, and financial columnist to The Royal Gazette. All proceeds from these articles are donated by the Royal Gazette to the Salvation Army, Bermuda. Contact: firstname.lastname@example.org