Re-Defining Retirement: The Social Dynamics of Life Planning
Gerald L. House MSM
“The Contrarian Investor”
Abstract
Too often we think of retirement primarily as a financial issue. Of course, nothing could be further from the truth. Retirement, as defined by the new retirement generation called the baby boomers, is much more dynamic and requires considering several aspects of life planning. This new life phase necessitates preparing our aging adults for the final stage of their lives socially as well as financially. Furthermore, the next generation of planners need to either set-up referral networks of individual specialist or combine into one business organization called life planners to carry out the needs of seniors.
We tend to accept something as the truth after hearing the claims of it repeated over and over to us. Case in point: How many times do you hear the statement trust, but verify as originating from former President Ronald Reagan? Actually, this statement is an old Russian saying doveryai, no proveryai (Yahoo Answers, 2016). There is a marketing technique which states: if you repeat something enough times, people will begin to believe it. We fall prey to this philosophy often.
Yes, Virginia, there is a Santa Clause--It must be so, it was in the
New York Sun (New York Sun, 2012)
Overview of Topic & Rationale
There is a proliferation of information on the subject of retirement. However, how much of this information is just marketing; getting you to buy-in to their philosophy or marketing scheme and how much is factual? Is the term retirement exploited by the financial service industry for monetary gain? By the same token, do we have a social responsibility to prepare for retirement or for that matter, to ensure a livable retirement for those who failed to set aside enough money for a basic subsistence? In essence, is our culture placing too much emphasis on the word retirement without considering the individual goals and needs of older adults?
In a sense, how does one define retirement? Is the traditional and currently accepted definition of retirement based on false premises and demagoguery? Kojola and Moen (2016), conducted a survey of 27 retired and working white collar baby boomers in Minnesota and discovered the one-way traditional path to retirement is no longer the norm. As a matter of fact, this age group prefers continuing work in more flexible and less demanding roles offering more meaning. We term this type of employment as encore careers defined by Investopedia (2013) as:
A second vocation in the second half of one's life. An encore career seeks to combine a sense of purpose with public-service passion and a paycheck for people in their 50s and 60s, according to Encore.org, a nonprofit organization founded by social entrepreneur Marc Freedman. While encore careers can be found in any sector, they tend to be clustered in five areas – healthcare, the environment, education, government and the nonprofit sector. The term "encore career" is believed to have been popularized by Freedman.
If this definition is now the accepted norm in our society, why is the financial service industry still marketing the traditional mode of retirement? Obviously, the option to continue working throughout one’s lifetime, defined as bridge employment, is not as economically beneficial to the financial industry. Consequently, what about the so-called socially consciousness encouraged by many people in our society for the creation of a basic subsistence program such as Social Security to provide for those individuals less financially prepared for the traditional retirement? Should this mindset also be revised?
Brief History
Retirement as a stage of life is a recent phenomenon. Just think, up to the end of the 19th century, people still worked for themselves. It was the industrial revolution and urbanization which brought about the idea of retirement (Ellis, Munnell, and Eschtruth, 2016). Older people in the factories struggled to keep up the workflow and pace as the younger generation. Therefore, the idea of pension plans came about in an effort to force older workers out of the workforce. In addition, the Social Security system further defined the need for retiring by setting an initial date for receiving your benefits at age 62 ( Anthony, 2014).
The Social Security Act of 1935 ensured a subsistence for older people in an effort to stem the large poverty and unemployment of the elderly after the Great Depression (Ellis et al). In addition, the government later established programs to promote saving for retirement by creating salary deferral through 401K programs. Naturally, corporations took advantage of this government perk by eliminating defined pension plans and instead opted for contributing small amounts to the now government approved tax deferral 401K plans on behalf of the employee (Anthony).
The profession of personal financial advising got started in the early 1940’s with the passing of the Investment Advisor Act of 1940 in an effort to clean-up the corruptions in investment companies. Then the primary investments were real estate, mutual funds, and insurance. The International Association of Financial Planning did not organize until 1969 along with the College of Financial Planning to establish standards and certification for financial professionals (Stomierowski and Lorette, 2012).
The financial planning profession is once again going through many changes as the industry confronts competing with robo-advisors and the need for a holistic approach to planning to encompass the complete life needs of individuals. These revised requirements will necessitate the combining of finances and other life needs such as health, Social Security, Medicare, family and other relationships, housing, legal and estate planning, and time management-leisure and activities (Migliaccio, 2016).
Financial Planning has long stressed the need for social goals as well as financial goals. However, until recently, the need to incorporate the two goals was just rhetoric designed to demonstrate a level of concern not necessarily present with financial advisors. Today, the environment is changing and people are not only looking to plan their financial life but also other life goals into a complete plan called life planning. This will necessitate the bringing together life planning firms with several different types of planners who specialize in one aspect of the planning process or creating shared networks of different specialties (Migliaccio).
References
Anthony, M. (2014). The new retirementality: Planning your life and living your dreams ... at any age you want. Hoboken, NJ: John Wiley and Sons.
Editorial of The New York Sun | December 21, 2012. (n.d.). Yes, Virginia ... Retrieved from http://www.nysun.com/editorials/yes-virginia/68502/
Ellis, C., Munnell, A., & Eschtruth, A. (2016). Falling Short: The Roots of the Coming U.S. Retirement Crisis. Challenge, 59(2), 126-147. doi:10.1080/05775132.2015.1138061
Kojola, E., & Moen, P. (2016). No more lock-step retirement: Boomers' shifting meanings of work and retirement. Journal of Aging Studies, 36, 59-70. doi:10.1016/j.jaging.2015.12.003
Laureate Education (producer), (2012b). Choosing your doctoral topic [Video file]. Baltimore, MD: Author.
Migliaccio, J. N. (2016, January). Retirement’s hidden agenda: from “money changes everything” to “money isn’t everything”. Journal of Financial Service Professionals, 70(1), 74-80.
Staff, I. (2013). Encore Career. Retrieved from http://www.investopedia.com/terms/e/encore-career.asp
Stomierowski, P., & Lorette, K. (2012). How to open & operate a financially successful personal financial planning business: With companion CD-ROM. Ocala, FL: Atlantic Pub. Group.
Who made this famous quotation, "Trust but verify"? (n.d.). from https://answers.yahoo.com/question/index?qid=20061230230553AAjxN4c
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