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How Baby Boomers Will Change Retirement

Part 1: Many Baby Boomers Plan to Mix Work and Play


Man and woman riding bicycles
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Many baby boomers plan to keep working and earning money during their retirement years, but will alternate between periods of work and leisure, according to a survey by Merrill Lynch.

Reinventing Retirement
The New Retirement Survey builds on the conventional wisdom that many baby boomers are not interested in pursuing a traditional retirement of leisure.

"Baby boomers fundamentally will reinvent retirement,” said James P. Gorman, president of the Merrill Lynch Global Private Client Group, in a news release about the survey. “With (baby) boomers living longer and remaining engaged and employed beyond age 65, many of the traditional financial assumptions regarding retirement need to be reexamined.”

Highlights of the Baby Boomer Survey
Created with guidance from gerontologist and author Ken Dychtwald, Ph.D., The New Retirement Survey offers a preview of the different lifestyles, workstyles and recreation activities that baby boomers envision for their future.

Here are highlights of the survey, from a news release by Merrill Lynch:

  • The new retirement "turning point." While 76% of baby boomers intend to keep working and earning in retirement, on average they expect to "retire" from their current job/career at around age 64, and then launch into an entirely new job or career.
  • Taking advantage of their "longevity bonus," baby boomers will create a whole new life stage. Since the time that Social Security established the "normal" retirement age at 65, life expectancy for a 65-year-old has increased by over seven years and continues to lengthen.

    As a result of living longer, baby boomers plan to be "younger" longer and to work longer.

    Most baby boomers who responded to the survey (65%) will stop working for pay and retire in the traditional sense at some point. However, that phase is more likely to begin in the late 60's than at age 60 or 65.

  • Baby boomers reject a life of either full-time leisure or full-time work. When asked about their ideal work arrangement in retirement, the most common choices among baby boomers in the survey would be to:
    • Repeatedly "cycle" between periods of work and leisure (42%)
    • Have part-time work (16%)
    • Start their own business (13%)
    • Work full time (6%)

    Only 17% of the baby boomers in the survey reported that they hope to never work for pay again.

  • It's not about the money. While 37% of the baby boomers in the survey indicate that continued earnings is a very important part of the reason they intend to keep working, 67% assert that continued mental stimulation and challenge is what will motivate them to stay in the game.
  • The transformation of the "me" generation into the "we" generation.The "me" generation has grown up — now with deep concerns for the well-being of their children, their parents and their communities.

    Baby boomers are now 10 times more likely to "put others first" (43%) than "put themselves first" (4%).

  • The unpredictable cost of illness and healthcare is by far baby boomers' biggest fear. They are three times more worried about a major illness (48%), their ability to pay for healthcare (53%) or winding up in a nursing home (48%), than about dying (17%).
  • Baby boomer women are better educated, more independent, are simultaneously juggling more work and family responsibilities and are more financially engaged than any generation in history. According to the survey, married baby boomer women are more than six times more likely to share responsibility for savings and investments compared to their mothers' generation (33% now vs. 5% then).
  • Baby boomer women are dreaming of retiring to Mars while baby boomer men hope to retire to Venus. Baby boomer men are looking forward to working less, relaxing more, and spending more time with their spouse. Baby boomer women view the dual liberations of empty nesting and retirement as providing new opportunities for career development, community involvement and continued personal growth.
  • Financial preparedness is the gateway to retirement freedom and the antidote to retirement phobia. Accumulating the resources baby boomers believe they need for retirement freedom (81%), rather than age (56%) or any other variable, was cited as the most decisive factor for when they choose to retire.

    And recognizing the growing uncertainty of government entitlements like Social Security, baby boomers who have a plan and feel prepared are twice as optimistic and far less fearful compared with those who do not.

  • One size does not fit all. When it comes to retirement dreams and preparedness, the survey found that there are five distinct and different baby boomer groups: Empowered Trailblazers, Wealth-Builders, Leisure Lifers, Anxious Idealists, and the Stretched and Stressed. The survey followed each group to determine how they are faring and what their plans are to meet their retirement goals.

In Part II, learn how you may be in a better financial position than you think to meet your retirement goals.

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