Wednesday, July 1, 2020

Is 60 the new 40?!

Pathways Advisory Group, Inc.
Dustin J. Smith, CFP®

Is 60 the new 40?!

That’s a literal claim, one of many made within in an interesting Wall Street Journal article that crossed my desk in early January.  A lot has transpired since, of course, but the premise that people are living longer and thinking differently about work remains important. 

We’ve been seeking context, with our clients, regarding financial independence – the point at which work becomes optional – for years.  This is different than the linear approach of the past. However, this particular article takes things a step or two further.

Dr. Mitchell, an academic at the University of Pennsylvania, was quoted that “some demographers say the baby who will live to 200 years old is already born”.  Although our David took this the wrong way, believing that he is the baby already born that they are referring to, it’s definitely thought provoking. How will financial independence discussions differ ten, twenty or thirty years from now? 

With the younger generation especially, we’ve already seen a shift away from destination planning to more lifelong habit discussions - the destination is murky, but the upside to healthy lifelong financial habits is not!

Another claim, that hits home for many of us, is that people who can and want to remain in the workforce live longer lives and have lower risks of dementia, depression and obesity. The article cites research from a Boston College economics professor Matthew Rutledge. Although each situation is unique, we do see people who “can and want to” continue working benefit from doing so. Financial independence does not necessarily fuel retirement. Staying active and engaged is clearly beneficial.

Finally, a law student commented that he “feels zero pressure to retire on time”, which makes me wonder about the financial implications of this evolving mindset. Will the next generation be more or less financially prepared for life? I hope the urgency to save remains – for me, it’s always been more about flexibility than the pressure to retire “on time” anyway.

It’s hard to say how today’s COVID-altered workplace will impact the future of this conversation, but it almost certainly will.  Workplace norms have been flipped completely upside down in just three months. Necessity, as you know, is the mother of all invention - here’s to thinking outside the box, with some urgency, as we return to a modified normal in 2020!

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