Retirement Is Changing — Do Experts Think It Is for Better or Worse?

couple looking forward to the future and contemplating their retirement age and social security

Retirement is not the same as it was even a decade ago — it’s changing. Some people are choosing to retire later. Some people are choosing to retire earlier, partly due to the FIRE(financial independence, retire early) movement. And once retired, many people (even those from older generations) don’t stop working. Instead, they turn to side hustles. What do experts think about all these changes? Are they for better or for worse?

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Retirees Are Buying Real Estate as an Investment

“Many more people are buying local real estate in retirement that they then rent out,” said Doug Carey, owner and founder of WealthTrace. “From my experience, a lot of retirees are very concerned about an overvalued stock market. It used to be that most retirees placed most of their money into bonds and didn’t have to worry about severe market volatility. But with interest rates below inflation, many had to keep their more money in stocks than they really wanted to. By investing in local real estate and receiving consistent income, they have in some ways replicated what bonds used to do. Local real estate is also a good way to diversify one’s portfolio.”

Retire Comfortably

“Retirees with the majority of their assets in stocks is a negative in my opinion,” Carey said. “It leaves them very susceptible to a major market downturn. If this happens, a lot of these people would have to go back to work in their 70s or even 80s. This is one problem with ultra-low interest rates. On the flip side, being a landlord and renting for income is a positive, at least compared to being invested mostly in stocks when in retirement. Rental income provides consistent retirement income and is less volatile than the stock market in general.”

More: Jaw-Dropping Stats About the State of Retirement in America

More People Are Retiring Early

“There is an increasing desire to retire as early as possible and start living for oneself,” said Shawn Plummer, CEO of The Annuity Expert. “This means there is also increased discussion and awareness of how to retire early — including budgeting, saving money, maxing out retirement accounts, getting appropriate insurance coverage and making long-term investments to preserve wealth. This is a positive change as people are seeking more education about retirement and to avoid being in a position where they run out of money.”

Retire Comfortably

Carey said that he’s found that more and more people are retiring in their 50s rather than waiting an additional decade or more. 

“Many people in their 50s have maxed out their 401(k) plans for over 20 years and reaped the rewards of a fantastic stock market over this time,” Carey said. “By simply maxing out their 401(k) contributions, they have over $1 million saved and can retire earlier than they thought possible. I also find that a lot of these people work part-time for five to ten years, both for cash flow and so that they are not bored in retirement.”

Also See: All You Need To Know About Collecting Social Security While Still Working

Social Media Impacts Younger People’s Financial Decisions

Zachary A. Bachner, CFP(r) with Summit Financial, believes that social media has been a positive influence on people’s financial literacy. 

“Younger generations definitely seem more focused on F.I.R.E.,” he said. “The desire to retire early is popular among younger investors. Perhaps they do not want to work their entire lives like the generations before them. Social media has made lives appear more glorious and expensive, but also allows others to broadly share about their financial freedom. 

“I believe social media has had a strong impact on the financial literacy of the public and I hope this trend continues to strengthen. The more people focus on their financial situation, the better off they should be in the long run. Previous generations have not worried about retirement until later in life, but the power of compounding interest suggests you should start saving as soon as you can.”

Tips: 27 Best Strategies To Get the Most Out of Your 401(k)

The Pandemic Has Brought About Flexibility for Near-Retirees

Taylor Nissi, CFP(r), CTLC (r) and partner with Pleasant Street Wealth Advisors, pointed out that the pandemic has brought about many positives for those nearing retirement. 

“The work-from-home movement has allowed near-retirees much more flexibility,” Nissi said. “One common retirement event is relocation to be closer to family, better climate or other reasons. In the past two years, people have been able to relocate and continue working. For clients in some housing markets, this also allowed them to sell their family home into one of the strongest housing markets in recent years. Some clients who plan to retire and are ready to retire are still working reduced hours or consulting because their employers value their work and are willing to create compelling compensation structures and flexible hours.”

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About the Author

Cynthia Measom is a personal finance writer and editor with over 12 years of collective experience. Her articles have been featured in MSN, Aol, Yahoo Finance, INSIDER, Houston Chronicle, The Seattle Times and The Network Journal. She attended the University of Texas at Austin and earned a Bachelor of Arts degree in English.

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