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The baby boom has had a profound effect in changing societal norms and dominating economic developments and business activity, and nowhere more so than in Canada. While it occurred in other countries as well—most notably in the United States, Australia, and New Zealand—the baby boom in Canada was the largest in the world. Similarly, the decline in birth rates following the boom has been the most dramatic in Canada; these two phenomena—boom followed by bust—have meant that the boomers represent a larger proportion of the population in Canada than in any other country. During every stage of the boomers’ lives they have precipitated change, and the arrival of this generation at late middle age and the traditional retirement years portends new and significant economic, political, and social developments.
Boomers can be usefully divided into two age groups: leading edge boomers born between 1946 and 1954, and the many more late boomers, born between 1955 and 1966 (or 1965 in the United States). As a group, boomers will redefine retirement just as they have redefined middle age. While much is made in the media about the oldest boomers moving into their 60s, this group is a relatively small proportion of the Canadian and U.S. populations. Most boomers are in their 40s, with another 20 years or so until traditional retirement. They still have kids to raise, tuition to pay, and debt at a level well above that carried by their parents at the same age, even adjusted for inflation. These 40-somethings have yet to reach their peak earning and wealth-accumulatingyears. A small percentage of boomers will retire in the next five years, but a far larger number will hit retirement in the 2020s. The crest of boomer retirement is not until 2025.
In this book, I examine the Canadian and global economic implications of this aging population and its impact on government policy, business, financial markets, and society. As well, I zero in on the personal impact of aging and the coming reality for boomers and their families. I cover these issues for the United States as well, because of the close links between the U.S. and Canadian economies, the wealth of American demographic and survey data regarding retirement-related issues, and the fact that Canadians get much of their retirement advice and information from the U.S. media. In addition, most Canadian boomers who decide to spend a meaningful portion of their retirement living outside of Canada will likely do so in the United States.
But this is not your typical retirement book; this is not a mpersonal finance book. There are plenty of those already. This book looks at the transition to late life and what it takes to achieve a successful final third of your life. A successful retirement for most people—be it at age 55, 65, or 75—is to be physically and fiscally independent and active with love and purpose in their lives. Boomers are “retiring” retirement as people in our parents’ generation knew it. We will not settle for personal diminishment, social isolation, dependency, and inertia. In the new retirement, boomers will remain active in mind and body, and most of us will continue to be productive well into our eighth decade. Our later years will be more youthful and exhilarating than they were for any previous generation, as we are the healthiest and wealthiest generation ever to retire.
In The New Retirement I will examine how we can prepare for the last third of our lives to give ourselves the best chance of physical and mental well-being and financial security. We can age successfully—actually regenerate rather than degenerate. I will describe the key mid-life predictors of a happy, healthy late life. Most of these predictors are under our control—some are behavioural and some are attitudinal. No longer is our genetic make-up or parental social class a sole determinant of our destiny. There are things we can do today that will increase the likelihood of our aging well, adding “life to our years,” as well as years to our life. There is a rapidly growing body of scientific research that explains the key processes of healthy maturation and a satisfying late life. Success in life varies from person to person, and it is much broader than simply success in work.
The research suggests there are benefits to aging, as stress diminishes and most people re-evaluate what is important in life. The impulse to be ostentatious and competitive typically wanes; the wise ones are more comfortable in their skin than ever before, and there is time to experience the beauty in the world and to nurture younger people and each other. Older brains are better at dealing with complex situations, having the benefit of so much experience. Emotions can be more easily controlled, and the opportunity to feel joy and have peace of mind is greater than at any other time in our lives. Many studies show that people who have aged well wouldn’t want to go back to their childhood, teens, young adulthood, or the rat race years of career achievement in their 40s and 50s. Many are quite content to be right where they are in the life cycle. With advances in our knowledge about the aging process, many experts now believe there is no reason to suffer enormous and prolonged pain, degeneration, and inactivity before death.
Of course, financial planning remains a key component to successful retirement. I will show how to determine how much money you will need in retirement and what your options are to achieve that level of wealth. It is no longer considered necessary to shift from stocks to bonds as you near retirement, or that you should ever divest yourself of all of your equity holdings.
Boomers have, for the most part, been notoriously bad savers; I will show you some ways to fast-track your retirement savings and stretch the value of your retirement nest egg.
Boomers were the “new generation” that transformed societal and cultural norms as well as politics. Boomers are far less traditional and conservative than their parents were. We broke away from what our elders expected of us and challenged their assumptions from across the generation gap. Even as the radicals and free thinkers of the 1960s became the yuppies of the 1980s, boomers continued to set new standards for themselves and their children. Unlike the previous generation, most boomers won’t have worked for a single employer for 40 years. Many will have had multiple careers, and most do not have gold-plated, “old-fashioned,” defined benefit pension plans that guarantee a level of income for the rest of their lives.
What Will Boomer Retirement Look Like?
The subject of retirement conjures up a variety of thoughts and feelings. Of course it sometimes triggers fears of old age and infirmity, but most people see it as a happy time, a less-stressful time to do things they’ve always wanted to do—a time for themselves and for family and friends. Nevertheless, for many healthy boomers it will be difficult to adjust to a life without a pre-determined schedule or a defined sense of purpose. Many will miss the trappings of their former jobs—the general buzz of the office, the sense of accomplishment when a project has been done well and in good time, the computer support, and the financial security of a regular paycheque. If you have never fixed your own computer problems or lived without a dental plan, it could be quite an adjustment.
An increasing number of people, therefore, will choose a phased-in retirement, working on a more flexible basis and maintaining a healthy, active lifestyle for well into their seventh and eighth decade. People will view this time as a period of regeneration, and that trend is likely to become more pervasive as the bulk of the boomers move into their 60s.
The aging populations of developed countries will have a significant impact on the economy, markets, and health care. A labour shortage has already begun to emerge as boomers leave the senior ranks of the workforce. This shortage will be especially troublesome in Canada, and government is already responding, introducing policies and pension reforms to encourage boomers to postpone their full retirement from work.
Employers will increasingly entice seasoned boomers to stay on the job to preserve continuity, experience, and customer relationships built over many years. Scores of boomers whose jobs don’t require excessive physical exertion will remain on company payrolls full time well beyond traditional retirement age. Many boomers will need to work longer and to save and invest more aggressively to top up their nest eggs. It is serendipitous that businesses and public organizations will offer flex-time, part-time positions, job-sharing, telecommuting, consulting positions, and more to extend the productivity of their older workers. In both Canada and the United States, investments in labour-saving technology, stepped up immigration, and outsourcing will also help to fill the labour gap.
Many boomers will take on new challenges or pursue longheld dreams, remaining engaged and purposeful well beyond age 65. Philanthropy and volunteerism will also blossom as boomers give back to the community and the world. An active, happy Act III will be a hallmark of the new retirement.