Not long ago, when the topic of retirement came up, we all had the same vision of what it would be like. We would work until we were 65, we would retire and live comfortably on our company or union pension, social security and the savings we had in the bank. It was similar for everyone. Retirees would relax on the couch, visit their grandchildren, travel, and do this for the rest of their lives, which were typically only 7-10 more years or so. Retirees still didn’t have to worry about something called Long Term Care, and medical costs were still somewhat manageable with their old Blue Cross Blue Shield severance plan that pretty much took care of everything. In short, retirement was more streamlined, easier to prepare in some ways, but generally much shorter than it is today.

That traditional and very typical retirement structure is not dead, but it certainly has life support for a variety of reasons, and not all of them are bad. Most of those I call the “New Retirement” play by different rules. Our parents’ goals and dreams are no longer our vision of how we want to spend our “golden years.” If you are not yet retired, you will need to define what your vision is and not necessarily think of it as a destination, but perhaps more as a turnaround of how you will live in the next phase of your journey.

I am noticing with our own clients that there are now three very specific templates that they are implementing or targeting. I think our group is probably a good litmus test for what will continue to evolve over the next 20 years. The three structures are as follows:

1. Traditional retirement: Yes, it did not disappear completely. Some have saved enough assets to spend to properly budget for living expenses and plan for contingencies. They no longer have the desire to work anymore and mostly spend their time … well … doing whatever floats their boat! However, this group is very small and is no longer typical. With a longer life expectancy, our parents’ retirement could soon become a lifestyle of the past.

2. The Semi-Retirement Retirement – This group represents what is becoming the largest segment of successful retirees today. They have enough assets and they don’t have to work, but they continue to want to do something productive with their lives, very often in a different capacity. This group realizes that if retirement today can last up to 30 years, it is more desirable on their terms to spend it on starting a small business, advising on their past careers part-time, or choosing to earn money on something they love to do. Semi-retirement retirement will be available primarily to those who still value proper financial planning and have saved enough to offer flexible work options in exchange for fun.

3. Retirement from work: yes, an oxymoron, but in my opinion, this will become the predominant structure of tomorrow based on the current planning and saving habits of young baby boomers. The above two scenarios will not be an option, as one or both spouses will have to stay in the workforce doing what they may not like in order to provide the necessary income for basic living expenses. I think this group will do the best it can to take some extra time to find some fun, but the habits of living for now from the last 30 years will have caught up with them. My biggest fear is if they will have a job available to stay in the workforce. If this does indeed become the prevailing structure of the near future, where one or both spouses work full time forever, will the demographics of an increasingly aging population coupled with college graduates just joining the workforce provide enough job opportunities? A very risky proposition, but really, isn’t that how this group has played it all along?

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