“The Baby Boomers’ biggest impact will be on eliminating the term ‘retirement’ and inventing a new stage of life … the new career arc.”
– Rosabeth Moss Kanter, Ph.D., Harvard professor and author

The older seniors in the Silent and Baby Boomer generations were conditioned to view retirement as a career-ending expectation. Today there is a strong possibility—and perhaps more of a certainty—that traditional retirement with a “gold watch at 65” will cease to exist for many younger generation retirees.

Winds of change

A number of factors coming together may forever change our view of retirement and possibly eliminate retirement as we know it. Following are some of the factors that affect retirement in the modern day.

Financial necessity to work—One in three younger adults has no retirement savings. Forty-three percent of younger adults have less than $10,000 in savings.

Pension plans—Employers have systematically shifted the responsibility for retirement savings to their employees, especially in the private sector, forcing a great many eventual retirees to rely solely on personal investment and Social Security for their retirement nest egg.

Generational attitude change—Those in Generation X and Y have accumulated major educational and lifestyle debt and are more concerned about funding current experiences than future financial needs.

Financial reality—Some 80 percent of the financial wealth in the U.S. is controlled by older seniors in the Silent and Baby Boomer generations. And most of these seniors are fiscally conservative. Many in the younger generations do not share this conservative instinct.

Social Security—I see strong potential for Social Security to continue raising the eligibility age or possibly become insolvent, forcing more seniors to stay on the job.

Concept of retirement

The Social Security Act became law in 1935. Back then few organizations had pension and retirement savings plans. The impetus came from the creation of factories, mass production and the rapid expansion of labor unions. Eventually the unions found strength in numbers and were able to negotiate a host of employee benefits, including pension plans, thus setting up the opportunity for white and blue collar employees to retire with a company pension and Social Security. The concept of retirement did not become a cultural expectation until after World War II.

Impact of non-skilled jobs

The boom in mass production also resulted in an unexpected consequence—namely, many workers had a difficult time developing a sense of accomplishment and satisfaction from doing only a small part of a big job. Many ended up counting the days until they could retire with their company pension and Social Security benefits. Eventually, retirement became the norm and people worked their 30 or 40 years and retired.

Baby Boomer influence

The parents of the Boomers, the Greatest and Silent generations, experienced the Great Depression and were happy to have a job, any job, even if the job did not maximize their skills or provide a high level of personal satisfaction. As a result Boomers became highly motivated to pursue a career path that provided the opportunity to achieve higher levels of personal satisfaction, fulfillment and income. Boomers embarked en masse into white collar and professional careers.

Many Baby Boomers were the first in their family to attend college. The Boomers became the most educated generation up to that time, and they translated their education into the creation of an economic post-World War II boom, the greatest in the history of the world.

New retirement paradigm

The age of the retiring Baby Boomer is now at hand. For the most part, I suggest that Boomers view work, career and retirement differently than their parents. A new retirement paradigm is emerging that suggests several possible retirement options.

Some Boomers, including those who are financially secure, will opt not to retire simply because they enjoy their work and have integrated their work into a new comfortable lifestyle.

Since seniors are living longer, some will outlive their financial resources and return to the workforce. Those with inadequate financial resources will, by necessity, continue working, full or part time.

Some will have to delay retirement plans until they have the required level of financial security. Some will opt to retire from one job and pursue an entirely new job or career.

Finally, some will retire with adequate financial resources and find great joy in a traditional retirement.

The reality will be that a traditional retirement will cease to be a career-ending expectation or reality for a great many potential retirees.

Ideal retirement?

It’s one thing to have enough money to retire; it is another thing to achieve true happiness in retirement. A recent article by Wes Moss, host of the radio show, “Money Matters,” highlights the results of a national survey that asked retirees to identify the top three conditions necessary to achieve true happiness in retirement. It’s not surprising that two of the three conditions deal with financial security.

The third condition involves the need to develop core pursuits or activities, hobbies and interests that can provide a retiree with a strong sense of purpose, satisfaction and fulfillment. While you are working, your job became a major source of your identity and personal gratification. When you retire, you no longer have the feeling of pride and self-worth that your job provided. It is vital that you replace this void with an activity or involvement that causes you to feel good and fulfilled about what you do in retirement.

Bottom line

In the future, traditional retirement may well become an option reserved for the financially secure, some of whom will opt to continue working or pursue a totally new career or activity. A great many others will not have enough of a financial nest egg to retire. Unfortunately, those with little or no retirement savings will learn the hard lesson that retirement financial planning needs to start early in one’s career.