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Retirement Planning

Retirement Trends: Predictability, Retirement Age, and Longevity

Zoe Team and Brandon Kraus, CFP®, AWMA® (Zoe Network Advisor)

Sep 12, 2022

5 min read

A financial advisor reviewing a plan with two clients at a table

Key Takeaways

Expectation of longer lifespans is reshaping standard retirement timelines.
Predictability in retirement income is becoming a primary focus for many.
Flexibility in retirement age allows for more personalized planning.

Frequently Asked Questions

Why is predictability important in retirement?

Predictability helps ensure that retirees can maintain their standard of living regardless of market volatility or unexpected expenses.

How does longevity affect retirement planning?

Longer life expectancy means your savings need to last significantly longer, requiring more robust investment and withdrawal strategies.

Is there a ‘standard’ retirement age anymore?

No, retirement age is becoming increasingly fluid as individuals tailor their exit from the workforce to their specific financial and life goals.

Here are three aspects of retirement that differentiate old retirement trends of previous generations from new retirement trends. These are income predictability, retirement age, and longevity.

Worrying is an evolutionary survival trait that is hardwired into our brains; most of us seek control and prefer order over chaos. There is no way around it; our instinct is to equate uncertainty with potential danger. Ironically enough, life is continuously changing, especially in the investment world. The Federal Reserve (the Fed) meets eight times a year to discuss changes to interest rates (if needed). As a result, markets are volatile, and thanks to multiple round-the-clock financial news networks, we are reminded of this fact daily.

The economy swings between expansion and contraction. With all this uncertainty, various concerns arise:

How do we worry less about retirement savings?

What are the retirement trends that we should pay attention to?

What steps can we take to empower retirement?

Are you craving control yet? Here are three aspects of retirement that differentiate old retirement trends of previous generations from new retirement trends. These are income predictability, retirement age, and longevity.

Income Predictability

Let’s take a trip down memory lane. Previous generations of retirees counted on pensions to enable their retirement. In the United States, government employees started receiving pensions in the mid-1800s, and many corporations began offering pensions to their retiring employees by the early 1900s. When pensions weren’t the primary source of income for retirees, Social Security would replace their earnings. Between pensions and Social Security income, many retirees of previous generations had predictable retirement income streams that they could never outlive.

Access to a time machine would likely show us that future retirees will not have the same predictable income. First, there is a dramatic decline in corporate pensions. In 1979, 87% of employees at medium and large companies participated in pension plans. As of 2017, only 16% of Fortune 500 companies offered “defined benefit pension plans”. Second, responsibility for retirement income has shifted from the employer (who provided pension plans) to employees who are now responsible for funding and investing in their own 401(k) or 403(b) plans. Third, even Social Security cannot be counted on fully; The Old-Age and Survivors Insurance (OASI) Trust Fund is on track to be depleted by 2034, meaning retirees will receive only 77% of their benefits. In summary, the old retirement trend included income predictability, while the new retirement trend does not. Hence, our human instinct to worry may be triggered.

Retirement Age

Sixty-five used to be the magic number for retirement. To begin with, half of the state pension systems used 65 as the retirement age. Additionally, the federal Railroad Retirement System and most corporate pensions followed suit.

Today there is no definitive retirement age to target. Anyone born after 1938 must wait anywhere from a few months to a few years after turning 65 before becoming eligible for full Social Security benefits. Why? Few pensions are left, meaning most retirees have no guaranteed retirement income stream at age 65. While the old retirement trend was to work until age 65, the new trend leaves those not yet retired feeling uncertain about when they should retire.

Longevity

70 is the new 60. We are living longer and healthier lives than our grandparents. With age comes wisdom, and with wisdom come possibilities. This reality leads to several questions: Do I want to work longer or part-time? Will I outlive my money? How can I optimize my retirement experience?

A Plan to Empower Retirement

These three retirement trends all create even more uncertainty. Coupled with the unpredictability of markets, Fed rates, and the economy, how can you worry less and have a happy retirement?

As if uncertainty wasn’t enough, there is also pressure. Unfortunately, there are no do-overs in retirement, and you only get one chance to get it right. That is why financial planning is so critical for reducing uncertainty and living your retirement to its fullest.

Here are a few benefits of financial planning for retirement:

Defining what is important to you (your objectives, needs, wants, & wishes).

Setting goals.

Evaluating your current financial situation.

Developing a retirement savings strategy.

Determining the best investments to meet your needs.

Anticipating inflation and economic volatility.

Monitoring your progress and making adjustments along the way.

Working With a Professional

Here is another modern trend: we live in a DIY (do-it-yourself) age where many people consult websites for education. While gathering information from reliable sources may help you acquire knowledge and expand your financial literacy, if you want to live a happy retirement, working with a wealth advisor is best.

Today there is a real danger of employees making planning and investment mistakes that can derail their retirement dreams. Financial planning and investing are multifaceted and complex, with many factors to consider, such as taxes, insurance, benefits, and tens of thousands of investment options. By working with a professional Wealth Advisor, you can reduce the uncertainty of retirement and enjoy the happy retirement you have always dreamed of.

Here are three aspects of retirement that differentiate old retirement trends of previous generations from new retirement trends. These are income predictability, retirement age, and longevity.

The economy swings between expansion and contraction. With all this uncertainty, various concerns arise:

How do we worry less about retirement savings?

What are the retirement trends that we should pay attention to?

What steps can we take to empower retirement?

Income Predictability

Retirement Age

Longevity

A Plan to Empower Retirement

These three retirement trends all create even more uncertainty. Coupled with the unpredictability of markets, Fed rates, and the economy, how can you worry less and have a happy retirement?

Here are a few benefits of financial planning for retirement:

Defining what is important to you (your objectives, needs, wants, & wishes).

Setting goals.

Evaluating your current financial situation.

Developing a retirement savings strategy.

Determining the best investments to meet your needs.

Anticipating inflation and economic volatility.

Monitoring your progress and making adjustments along the way.

Working With a Professional

Disclosures: Zoe Financial, Inc. ("Zoe Financial") is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Zoe Financial provides investment advisory services and access to independent registered investment advisers through its platform. The information provided by Zoe Financial is for educational and informational purposes only and should not be construed as personalized investment advice or as an offer to buy or sell any security. All investments involve risk, including possible loss of principal. Past performance is not indicative of future results. Clients should consult with their own financial, tax, or legal professionals before making any investment decisions. The material presented by Zoe Financial is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Material presented has been gathered from sources believed to be reliable, however Adviser cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Past performance is no guarantee of future results. Zoe Financial does not provide legal or tax advice, and nothing contained in these materials should be taken as legal or tax advice. SEC Registration does not constitute an endorsement of Zoe Financial by the SEC nor does it indicate that Zoe Financial has attained a particular level of skill or ability. The sole purpose of this material is to inform, and it in no way is intended to be an offer or solicitation to purchase or sell any security, other investment or service, or to attract any funds or deposits. Investments mentioned may not be appropriate for all clients. Before making any investment, each investor should carefully consider the risks associated with the investment, as discussed in the applicable offering memorandum, and make a determination based upon their own particular circumstances, that the investment is consistent with their investment objectives and risk tolerance. Lower expenses do not guarantee better investment performance. Certain information contained herein may constitute forward-looking statements. Due to various risks and uncertainties, actual events, results or the performance of a fund may differ materially from those reflected or contemplated in such forward-looking statements.

Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.

Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.

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