By Kate Ashford | NerdWallet
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Now that retirement lasts longer than before, you might need to reconsider how you imagine that period of your life. Even though Americans are retiring a bit later than they did 30 years ago, they're also living longer. Retirement isn't just a brief time in life—it's a substantial chunk of time.
While your parents may have retired and never worked again, you may find that working part-time when you're older meets your mental needs and helps your retirement savings last. You may need to be more bold with your investments than you thought. And staying healthy is extremely important.
“The questions I'm being asked are different, and the discussions clients are having with me are different,” says John McGlothlin III, a certified financial planner in Austin, Texas.
Here's how retirement could be shaping up for you.
You’ll have more money invested in stocks
People used to enter retirement with a conservative-leaning portfolio that held a substantial portion in bonds and cash alternatives. While advisors are not recommending clients be reckless, they're adjusting the investment plan at this stage of life.
“We may just stay a little more aggressive, because the day you retire, you don’t need all this money,” says Jonathan Swanburg, a CFP in Houston. “Some of this money is for 30 years from now, some of it is for your kids and grandkids because you’re never going to touch it.”
McGlothlin urges his clients to leave target date funds upon retirement because he believes they become too conservative. “The minute you reach that retirement date, they suddenly shift to 50% bonds, and within a few years, you're at 60% and 70% bonds,” he says. “While bond yields are much better than they were a few years ago, I don’t necessarily think I can get clients 20 to 30 years of sustainable withdrawals if I’m that bond heavy.”
You may opt to continue working
The number of adults aged 65 and older who are working is nearly twice the number who were working 35 years ago, according to a 2023 Pew Research report. Taking on part-time work or consulting during retirement allows you to withdraw less from your savings and potentially postpone taking Social Security, giving your investments more time to grow.
“It gives us flexibility in our asset spend-down picture,” says Catherine Valega, a CFP in Winchester, Massachusetts. “The notion of transitioning to no more income coming in—it's very stressful.”
Valega also encourages clients to pursue work and other activities to avoid becoming restless. “You’re going to have 10 extra hours in the day that you didn’t have before,” she says. “You can exercise, and that’s great and you should, but beyond that you need some amount of mental stimulation.”
You may want to save for in-home care
Most individuals 55 and above desire to age in place, as per a 2023 survey from the McKinsey Health Institute. 80% want to reside in their own home, and 71% of older adults who aren’t living in their own home wish they could.
With home health aides costing a median of $27 per hour nationally, according to Genworth’s 2021 Cost of Care data, planning for in-home care may require working longer to save up to pay for it, or even moving to a city where home services are more affordable. Renovations to make a home more accessible or single-story livable can also be beneficial.
“I think the generation that’s retiring right now, they’ve seen their parents or their family members go into nursing facilities or assisted living facilities and are pretty much unanimously like, ‘I really don’t want that,’” McGlothlin says.
You’ll (really) want to stay healthy
The average 35-year-old woman today can expect to live to about age 81 — which means many will live even longer. David Foster, a CFP in St. Louis, now includes articles related to physical fitness and health alongside financial tidbits in his email newsletters to clients.
“That probably just wouldn’t have been on top of people’s minds 30 or 40 years ago because they weren’t likely to live until they were 90,” Foster says. “Exercise is beneficial for avoiding cognitive decline and aiding with heart health.”
Even though it may seem distant, taking care of your health now can decrease medical expenses later, and also help make sure you can work (and play) for as long as you’re capable. That means regularly exercising, consuming reasonably healthy foods and getting sufficient sleep, among other things.
“You can’t do anything else if you don’t have your health,” Foster says.
This article was written by NerdWallet and was originally published by The Associated Press.
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The article The Evolution of Retirement — and What It Might Mean for You originally appeared on NerdWallet.
