By Debbie Gardner
dgardner@thereminder.com
Retirement in the 21st century isn’t what it was when your parents – or grandparents – got that golden pocket watch. Things like longer lifespans and economic uncertainties have radically altered what it means to be “retired.”
For help understanding this shifting landscape, Prime reached out to AARP State Director Mike Festa for his take on today’s retirement. Here’s what he shared:
Q: My mom, now 94, chose early retirement at age 62 in the 1990s. In 2023, individuals often look at retirement differently. What has – and hasn’t – changed?
“One of the things we recognize is the workplace has changed. It depends on the nature of the work you do – in the service industry people have to be present for jobs they are doing – but there are a lot of people in white collar jobs and positions where you can do your job from wherever you are located, including working at home, work from the office and anywhere in between – and I think that has made it easier for some people to continue to work past traditional age when they would have retired. But in many cases they are also butting up against changes in technology, which compels one to stay up with [tech] to stay good at your job. There are also older workers who want to stay working past 65 because they need to afford all the [expenses] – not just inflation but rent, taxes, cost of living – when you have a fixed income, it’s hard to keep up.
“People really are postponing retirement for twin reasons – needing the income or because they feel they can be productive and engaged and ‘in the game’– but not taxed in having to get on the train [commute] every day – and that can make postponing retirement more attractive.
“Overall, I would say things have changed because people are living longer, in particular because the economy has changed and become more flexible – as long as you keep up with technology, the prospect of staying employed through retirement years are greater.”
Q: What are some of the major factors influencing retirement decisions – and planning – in the 21st century?
“First of all, it is important to recognize you have to make a conscious decision about your financial decisions. Understand Social Security, when you are eligible, what happens when you retire as 62 as opposed to 70.
“Of course, your health is primary – but also, can you afford to retire? When you look at the current state of the economy – many people receiving Social Security in Massachusetts are relying on that for 90% of their income – if you have the option to continue to work with the prospect that if you don’t you are limited to a small fixed income, the situation may compel you to continue to work.
“Next, we have to define retirement. When I hear ‘retirement’ are you talking about working and earning an income in retirement, or are you talking about actively retiring from a work environment, or are your talking about retiring and working for three volunteer organizations, where you are busier and working harder than you did in you real job?
“People are challenged with ‘how do I live in my older years – how do I stay engaged in my community’ in a way that is meaningful to you. The vast majority of folks want to be around others. The fear of being lonely, the fear of being isolated, the fear of not being valued – looking in the mirror and thinking, ‘I used to do xyz – now I’m not valued by my friends and my family’– the best way to counteract that is to stay ‘in the game’ – however you define that.”
Q: Is there a “future” for retirement planning? What might that look like?
“In many parts of the country, in particular in Massachusetts – we [at AARP] are really concerned that almost half of workers don’t have retirement savings, additional income or a 401k because employers aren’t providing it. We are trying to get changes in law to provide a way to save through [Massachusetts’] Core Plan – a state run retirement plan that is available for people who work for nonprofits with employees of 20 or less. We’re trying to expand that bill with the help of State Treasurer Deb Goldberg, that would make it available for anyone who works for a nonprofit of any size.
“We also have a bill before the state Legislature for retirement savings for people who work for for-profit [ companies], regardless of size, so they have a guaranteed way to save for retirement even if employer does provide automatic IRA or a 401K retirement plan.
Editor’s Note: Mike Festa was scheduled to testify before the Joint Commission on State Administration on the Care Plan expansion issue on July 11.
