OK, Boomer, are you ready for retirement - and growing "yold" gracefully?
By Wouter Fourie (CFP®)
This year marks the start of a new decade and also the start of the expected retirement wave of Baby Boomers – the generation that was born after the Second World War and before the mid-60s.
This generation grew up in a period of economic growth and in many countries today they are considered wealthier and more prosperous than the generations preceding and following them. But does that mean that they will retire in peace and relative economic comfort?
The Economist, in a recent forward-looking article, believes that many Boomers – at least more than the subsequent generations – will be able to retire in relative comfort, but that we may not see that happening as expected. The reason? Choice, not obligation.
The article refers to these people as “yolds”, a term borrowed from Japan, who call people aged between 65 and 75 the “young old” and says that many of the people in this generation enjoy life as they currently live it. Work is not as much of an obligation as it is a calling, and many look forward to continuing their contribution to their family and society in general for many years to come.
Many of the people in this generation, and this is especially true in South Africa, still feel very much engaged in their jobs and many are entrepreneurs who do not feel ready to hand over the reins to the next generation. Others still would like to contribute for longer to their retirement savings, before having to draw from it.
“Yolds”, we are told, will strive for a more balanced semi-retirement, where they continue working and also spending more time on travel and leisure.
While South African Boomers share many of the traits of their international counterparts, there are some unique circumstances. For instance, while local Boomers are relatively well off, many saw their well-planned careers take a turn for the worse after the many waves of voluntary severance and layoff programmes that we saw in many large corporations.
Other SA Boomers may have started their own businesses but have seen their projections of future business growth flatten out as our economy stagnated in recent years. Others have found themselves part of the so-called Sandwich Generation; those who have been forced to care for both ageing parents and adult children.
If you find yourself in this generation and you grapple with the thought of retiring, keep the following insights from the “Yolds” in mind:
See retirement as a choice, not an obligation
While many companies still enforce a mandatory retirement age of 65, these companies often re-hire newly retired staff to consult, provide much needed expertise or often just offer a steady hand at the tiller.
You may argue that your company is very strict in its retirement policy and that they will never consider it, but changing your outlook and widening your scope to include other businesses in the same or similar industries may open your eyes to new opportunities.
In doing this, you may be able to earn money and save for your retirement for longer, thereby boosting your nest egg and making sure you retire in better financial shape.
Mix business and pleasure
If you are financially but not emotionally prepared for retirement, consider a slow transition. This may take the form of part time or consulting work, as described in the previous point, or it may involve a complete change in career to something you always wanted to do, or, like a good friend, it may involve taking a pro bono or low paying position at a non-profit organisation, that may be better for the soul than the wallet.
A mix of business and pleasure may also see you travel or relax more regularly, while you still work in-between.
Slow down, don’t brake hard
Following from the points above, consider the warning by well-known wealth guru Rabbi Daniel Lapin. He uses the analogy of a boxer who aims for a target that is a good 15 cm behind his opponent’s nose. By aiming to hit that target, and not his opponent’s nose, a boxer is still picking up momentum when he hits the opponent, ensuring greater impact.
If you see 65 as the final destination, you will start easing off the accelerator well before that time, which may affect your retirement savings, your wealth creation in general and the impact you have on your career and community.
Why not, as the “Yolds” seem to do, aim for a much later retirement. Then, if you do hit 65 and you are forced to make a change, you are still at speed and not slowing down!
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