Key Takeaways <\/p>\n
The traditional retirement model at 65 is no longer the norm. Retirement is transitioning away from a one-size-fits-all milestone. As life expectancy increases<\/a>, pensions dwindle, and an increasing number of Americans worry about outliving their savings<\/a>, the concept of retirement is evolving away from traditional models into something far more flexible and individualized.\n<\/p>\n So, what does it mean to truly retire? For some, it’s walking away from work entirely. For others, it’s about creating passion projects<\/a>, taking career breaks, transitioning to more fulfilling careers, or gradually reducing working hours<\/a> to lessen the retirement shock<\/a>. Ultimately, workers are discovering there is no “right” way to retire, and they’re designing retirements<\/a> that more accurately reflect their goals, values, and lifestyles, regardless of antiquated retirement timelines.\u00a0\n<\/p>\n The Traditional View of Retirement <\/p>\n The Social Security Act of 1935 established 65 as the full retirement age, providing workers, employers, and government planners with a benchmark for pension planning purposes. Sixty-five marked when workers left the workforce entirely and began collecting their pensions, using savings to supplement their income streams until they passed away. Further cementing 65 as the “traditional retirement age<\/a>,” President Lyndon Johnson signed Medicare into law in 1965 with, you guessed it, an eligibility age of 65.<\/p>\n For many, the traditional retirement model of 65 is still a goal. However, fewer Americans are leaving the workforce altogether at 65.\n<\/p>\n Note<\/p>\n The Bureau of Labor Statistics reports that employment in some capacity, part-time or full-time, of workers aged 65 and older grew by 117% over the last 20 years.<\/p>\n While Gen Xers, millennials, and Gen Zers do have concerns about their savings, Social Security, and employer-sponsored retirement savings, working in retirement is not always about the money.\u00a0\n<\/p>\n More than half of baby boomers (54%) cite working in retirement as a way to keep their minds active, and nearly half (47%) want to continue working after 65<\/a> because they enjoy their work. And 25% of workers across all generations report their desire to keep working in some capacity to maintain relationships and connections.\u00a0\u00a0\n<\/p>\n The Many New Forms of Retirement <\/p>\n Retirement is no longer a final chapter, but rather a choose-your-own-adventure story. The evolving workforce, dwindling pension availability, and rising Social Security full retirement age drive many workers to newer, more flexible retirement models<\/a>, proving that there is no one \u201cright\u201d way to retire.\u00a0\n<\/p>\n Early Retirement (FIRE) <\/p>\n Financial Independence, Retire Early (FIRE)<\/a>, inspired by the book “Your Money or Your Life: 9 Steps to Transforming Your Relationship With Money and Achieving Financial Independence,” emphasizes extreme savings<\/a> and investing as a method for retiring much earlier than the traditional retirement age. FIRE gained popularity with young millennials and Gen Z, who have time and working years on their side to enable early retirement<\/a>. The opposite side of the coin is the Gen Z soft savers<\/a> who prioritize present enjoyment over aggressive retirement saving.\n<\/p>\n Phased Retirement <\/p>\n Almost half of American workers (48%) anticipate a phased retirement<\/a>, where they gradually reduce their hours and responsibilities without completely leaving their income and benefits behind. Phased retirement also includes workers moving into part-time, seasonal, or temporary positions. This retirement model is particularly popular among baby boomers and older Gen Xers who want to increase their leisure time without leaving their primary career altogether.\n<\/p>\n Pre-Retirement <\/p>\n Pre-retirement, also known as semi-retirement, is when workers leave their primary careers but continue working in a different capacity. Some pre-retirees seek related jobs to their primary career, such as consulting or teaching. Others look for unrelated jobs that can supplement their income and provide a sense of societal connection until they’re ready to retire fully. \n<\/p>\n Note<\/p>\n Semi-retirement can last anywhere from a few years to a few decades.<\/p>\n Micro-Retirements <\/p>\n Micro-retirements<\/a> involve taking planned breaks from work, serving as a self-funded sabbatical<\/a> to rest, travel, focus on family, or pursue personal goals. At the end of the scheduled break, workers may return to their same career field or explore a new one, using the time away to reevaluate their work-life balance. Micro-retirements, a growing trend among millennials and Gen Z workers<\/a>, signify a broader shift in the concept of retirement, indicating that workers seek more flexible circumstances<\/a> to prevent burnout and that provide autonomy and purpose.\n<\/p>\n How Do You Know if You\u2019re \u201cReally\u201d Retired? <\/p>\n As new models of retirement involve working in some capacity or stepping away briefly and returning, how do you know if you’re “really” retired or just in another phase of your working life? Answering a few questions about your status can help you self-assess whether you’re truly retired.\u00a0\n<\/p>\n Are you financially independent<\/a>?\n<\/p>\n If you can cover all of your expenses using pension payments or savings and without depending on a paycheck, you’re probably retired.\u00a0\n<\/p>\n Are you working by choice or necessity?<\/p>\n As pensions become less common, more people worry about their retirement savings, and the minimum age for Social Security benefits continues to rise, fewer individuals may be able to retire fully. In instances where you must continue working out of necessity, it’s crucial to find a job that enriches your life and does not introduce undue stress.\u00a0\n<\/p>\n Conversely, just because you continue to work does not mean you are not retired. More and more workers are continuing to work past the traditional retirement age to stay connected and keep their skills. The distinction between working for fulfillment and working to pay the bills matters when defining your retirement status<\/a>.\n<\/p>\n
\nMany workers today retire in stages, sometimes referred to as phased or micro-retirements<\/a>.
\nWorking in retirement is increasingly common, whether through part-time jobs, consulting, or passion projects.
\nThere is no one “right” way to retire.
\nUse tools like lifestyle audits, vision planning, financial modeling, and test driving to create the retirement of your dreams.<\/p>\n