For previous generations, retirement simply marked the end of their working days and usually lasted a relatively short time. Retirees wrote their memoirs, spoiled their grandchildren and got their affairs in order before they passed on. But retirement for the modern worker bears little resemblance to the past. Retirees today face a complex financial and emotional landscape that can stretch out for 30 years or more in some cases. Here are just a few of those challenges. (For background reading, check out our Retirement Planning Tutorial.)
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Emotional Adjustment and Assessment
Retirement marks the beginning of the final phase of life. The time for work and professional achievement is past, to be replaced by a time of reflection and evaluation of one's accomplishments. The transition from being needed at work to staying at home all day can be difficult for some to contend with, such as those who rose high on the corporate ladder or built successful private professional practices.
Many retirees struggle with the radical shift from working 40 or more hours a week to having little or nothing to do during the day. Retirement can also have a major impact on marriage and other relationships. Spouses who are used to having the house all to themselves during the week are suddenly no longer alone, and this transition can create relational friction in some cases. (For more, check out Money Can't Buy Retirement Bliss.)
Managing Finances and Retirement Portfolios
Relying on a corporate pension and a snug nest egg allowed many retirees to get by in the post-World War II era. Today retirees must decide how and where to roll over their retirement assets, when to begin taking Social Security benefits and how to allocate their investments so that their financial needs are met. There is a dizzying array of investment alternatives to choose from, as well as a plethora of investment firms, websites, advisors and sources of research. Upper-class retirees often have complex tax issues to consider, and elaborate estate plans may be necessary to avoid taxation. (You can't beat death or taxes, but you can minimize the impact of them on your estate. Find out more in our Estate Planning Tutorial.)
Modern medical care has caused the elderly population to increase exponentially over the past few decades, and this trend shows no sign of slowing anytime soon. A large percentage of retirees now live into their eighties and nineties, which has created a corresponding need for some sort of long-term care. Assisted living facilities, in-home care and nursing homes have sprung up to meet this need.
However, the cost of these services can be very high, and Medicare and Medicaid cannot bear the cost of this service by themselves. Those who are not able to secure insurance coverage for this type of care can quickly go through at least a large portion of their savings in a relatively short time. (Check out Long-Term Care Insurance: Who Needs It?)
Not all retirees view retirement as the end of the line. Some take this time to start new businesses or embark on other ventures that they did not have time to pursue during their working years. Those who do not have sufficient assets to support themselves for life can turn this dilemma into the opportunity to begin a second mini-career serving a cause that they believe in, or engaging in a hobby or other interest. Even a part-time job in one of these endeavors can go a long way toward shoring up deficient retirement savings and paying living expenses. (For more, check out Working Longer: Will It Hurt Your Retirement?)
Furthermore, not all retirees nowadays are "elderly" in the traditional sense of the word; those who retire early can be seen running marathons, climbing mountains, surfing, sailing and traveling the globe.
The Bottom Line
The issues facing retirees today are fundamentally unlike those of past generations, and both the government and the private sector have struggled to meet the needs of this demographic category. Only time will tell what role retirees will ultimately play in our society in the years to come.
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