Jeff Kempker, CEBS, CRC
There are two paths to retirement, the traditional path and the non-traditional path. The traditional path is the one where you work your entire career and decide to retire to a life of leisure with no plans for a future job of any sort. The non-traditional path is a more of a gentle downward slope rather than a cliff into retirement. It is characterized by continuing some type of paid employment and gradually easing into the life of leisure when you sever ties with all employment for good. Which path will you take? If you’re like most Americans, you will take the non-traditional path.
A recent study by the RAND Corporation found that less than 40 percent of Americans follow the traditional path to retirement while the rest either reduce their hours and work part-time with the same employer, leave the workforce and then reenter, and some even remain in full time work past the age of 70. So, will you be traditional or non-traditional? It depends on many factors.
Health
This finding should be fairly obvious. Your health may play a role in when you decide to leave the workforce. We all desire to be able to choose our own retirement date rather than it being determined by other factors, but that will not be the case for everyone. Injuries and illness can force people to retire earlier than they would like while good health may encourage working longer.
Individual Economic Situation
In order to be able to retire when you want, you have to be able to afford it. Financial preparedness in retirement means that you are able to pay all of your bills while living the lifestyle you want. The study found that Americans with pension plans (that’s you, LAGERS members) are more likely to follow the traditional path to retirement because pension plans provide stable monthly income and have pre-determined retirement ages. But income from a pension is most likely not going to be enough to provide you with the retirement you want so additional savings and planning is required.
Cognitive Abilities
Your brain power may also determine the path you take to retirement. Those with strong cognitive abilities are more likely to continue to work past age 65 and even to age 70 and beyond than those with lower cognitive abilities. This study specifically looked at working memory in order to measure cognitive ability.
Personality
Are you outgoing and personable (extrovert) or shy and unsocial (introvert)? Which category you fall into could also be a factor in determining when you will retire. If you are the outgoing, personable, life of the party-type, you are more likely to work past age 65 according to the study. This makes sense as our jobs are a social network for us. Extroverts are more likely to want to maintain and expand social networks so being engaged with other adults on a regular basis is more attractive for them.
What You Should Do With This Information
This report provides some interesting insight into retirement planning as it goes beyond finances and examines health, brain function, and personality. In planning your retirement these should all be factors to consider. If you have a strong desire to take the traditional path to retirement, ask yourself these questions:
- Can I afford to pay all of my bills and live the lifestyle I want?
- What is my personal health and how long do I think I’ll live?
- Will I need to seek out social networks outside of work or am I OK with having more time alone?
If the non-traditional path sounds better to you, prepare by asking these questions:
- How is my brain power? Will my working memory allow me to be productive past age 65?
- Do I want to work part time, full time, or start my own business?
- Are my motivations for working longer financial, social, health-related, or something else?
It’s all about creating the retirement you want. In order to create it, you must start planning now, if you haven’t already, and continue planning throughout your working career. Visualize what you want your retirement to look like and set a plan in motion to make it happen.
