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Rogan most plan to continue to work well into their traditional retirement years.

by Michael Rogan

Special to Tropical Breeze

After making a prescient and meaningless prediction on the future direction of oil prices in last month’s column, I will now return to a topic that could actually help you secure a successful financial future. The rules of retirement are changing rapidly and significantly in this country and the implications could make an enormous difference in how you spend the final third of your life.

Recently, new pension reform laws took effect that just about put the final nails in the coffin of pension plans. The days of reaching age 65 and starting “the long vacation” are over. Since the 1970s, companies and laws have slowly switched the burden of funding a retirement away from the company and toward the worker. Even though many think retirement has always been a time when you could count on a pension and Social Security for income, Americans only enjoyed that type of retirement for about 40 years.  

From the economic ashes of the Great Depression, unions grew in power and influence and helped demand pension benefits. Likewise, Congress created Social Security in 1935 in order to provide an income to those aged 65 and older – at a time when life expectancy was only 63! No one could foresee the tremendous advances in medicine and nutrition that led to our life expectancies growing dramatically. The amount of money required to fund a corporate pension or a Social Security benefit for a worker who retires at 65 with a life expectancy of 75 is exponentially less than the cost of that benefit when that retiree lives to 85 or longer. Math and demographics have combined to make those goals obsolete.

So, perhaps more than at any other time in American history, future generations will be on their own to provide for their income as they live out their days. Given this new reality, we should examine what retirement will look like for you. In our financial planning practice, we often use an exercise to walk people through creating their own retirement reality with a series of questions. Assuming you are not yet retired, take this quiz to help form a vision of your retirement years.

1)    At what age do you see yourself retiring?

2)    How much income do you think you’ll need?

3)    Where will that income come from?

4)    When you wake up in the morning, what will your day look like?

5)    Where will you live?

6)    If you were to retire today, what things would you be able to stop doing?

7)    If you were to retire today, what things would you be able to start doing?

What we have been noticing from the answers we are receiving is that the old concept of “the long vacation” is being replaced — through necessity and through choice – by a plan for most people to continue to work well into their traditional retirement years. For most Americans, this is not a choice. They simply have not invested and saved a sufficient amount of money to augment their Social Security income and not risk running out of money. Interestingly, we are also seeing the people who have accumulated substantial wealth choosing to continue working.

Perhaps it is a series of unintended consequences that have brought us to this new reality. It is unlikely that anyone could have imagined a downside to eliminating the illnesses that used to kill us early. It is doubtful that we could have predicted that by curing diseases that killed us when we were young, we would be able to live long enough to experience new illnesses, like Alzheimer’s and Parkinson’s, that were previously not prevalent because we simply didn’t live long enough to get them.

Maybe most importantly though is that today’s retirees are seeking life with a purpose. More and more, retirement is becoming a time of transition. With preparation, people are using retirement as a time to switch from doing what you have to do, to doing what you want to do. Few people are choosing to leave their job and just play golf or hang out at the beach everyday. This will surely change our society dramatically. In the coming years, opportunities will be created for “senior citizens” that will go far beyond being a greeter at a discount retailer or asking if “you want fries with that.”

All of this means that America is once again changing, evolving, and rewriting the rules. For Baby Boomers, instead of apprehension, this is a time of opportunity. How you take advantage of that opportunity will be determined by how you plan for it. Start today by answering those questions above and forming your vision of your “retirement years.” Like most everything in life, the advantage will go to those who have planned for it.

Michael Rogan is president of Rogan & Associates Financial Planners, a locally-owned financial planning brokerage firm based in Safety Harbor. He brings nearly two decades of financial expertise to the local airwaves on the radio show, Financial Planning for Life, heard at 11 a.m. weekdays on AM 1250 WHNZ. For more information, call 727-712-3400 or visit www.RoganFinancial.com.