12 New Rules for Retirement
For today's retirees, the only constant is change. Psychologist George Schofield outlines just how different life over 50 can look these days in his book "How Do I Get There from Here?" Cheapism spoke with Schofield, recently named one of Next Avenue's "Top Influencers in Aging," about how retirees and those planning for retirement need to reframe their thinking and adapt in a world where we're living, learning, and earning longer than ever.
One of the biggest problems with retirement is the word itself, Schofield says. "When we created the concept, people retired at 65 and died at 68. Anyone could have three more golden years." But now, people may work into their 80s and 90s in some capacity, and "we don't have a word that describes this new situation. There's no word to describe someone who works into their early 90s."
No, you may not live that long, but your chances are much greater than they were for your parents or grandparents, Schofield says. Yet retirees still assume they need only 15 or 20 years of savings and stop seeking out new experiences, preferring to "coast" instead. But from 50 to 70, we should be laying the groundwork for what the rest of our lives will look like, he argues. "At 85 it's very hard to do the planning we should have done in our 50s. Fifty to 70 is a very important time to acquire what we need for the rest of life."
Schofield says we'll soon have two types of retirees: a small group who can sustain themselves without any paid work, and everyone else. Longer lifespans demand more income, but at the same time, traditional sources of income are drying up. Pensions have all but disappeared, Social Security is unstable, and most people have inadequate retirement savings, he warns. That makes it more important than ever to add more income streams to the mix.
Work after retirement doesn't have to mean the 9-to-5 grind you just left behind, Schofield says. "A huge number of people are doing a number of small things instead of one big thing." He recommends a "Saturday business" done on your own time, or doing some freelancing using existing skills you can build upon. "You can use 50 to 70 to do something entrepreneurial. If you build a small business, it's another asset that can eventually be sold," he says.
It's natural to get a lot of validation from others while you're busy working or raising kids, but after retirement, "those roles begin to disappear," Schofield says. That can leave some people feeling particularly lost if they aren't able to shift from external goals -- a promotion at work, for instance -- to internal ones, such as joining a choir simply because they like to sing. "If you haven't learned [internal validation] by the time you're elderly, that is almost a surefire way to decrease your quality of life," he warns.
Another key for retirees: staying adaptable, and recognizing that change may be sudden and disruptive instead of gradual. For instance, we expect our kids to grow up and leave. "It's supposed to happen and I can see it coming. I know how to work with it," Schofield says. But it's the more sudden changes, such as being downsized or losing a spouse, that retirees need more practice with. Choosing situations that may challenge our worldviews and make us uncomfortable, but allow us to grow and change, can help when the real thing rolls around.
Knowledge has a shelf life, and it's shorter now, Schofield says. "We used to be able to major in one thing in college and depend on that to set us on the path we're on for the rest of our lives. But college degrees no longer prepare us for the rest of our lives," he cautions. Retirees can and should take enrichment classes, obtain new certifications, and look for any other opportunity to broaden their skill sets. "I think everyone needs to work on their employability -- it's like buying insurance," he says.
One persistent stereotype of retirement: lots of solo hours in a comfy chair with a book, a favorite show, or a craft. But Schofield says it's more important than ever to keep up with friends and acquaintances. "As you age, strong networks of close friends and family begin to dissolve -- people move, they get sick, they may die. People get isolated in their lives." The key to avoiding this, he says, is keeping up your "weak network" -- that's people who may not know you well, but who can provide new opportunities and ideas. Don't let those old business connections float away, he recommends.
We used to think of institutions such as marriage or church as infallible, but they've weakened, Schofield says. That leaves many retirees without the safety nets they always thought they would have. So get out there, and don't be afraid to get creative: Join a group focused on a favorite hobby, volunteer with a pet cause, or organize a book club. It doesn't have to be complicated, Schofield says: Something like a weekly meeting with friends at the local coffee shop still keeps you building bridges with others.
You may know your way around a budget by the time retirement nears, but Schofield warns that's probably not enough. "Everybody needs financial literacy for where they are in their lives," he says. For instance, over 50, that probably means understanding how retirement savings are being invested, knowing what those investments cost, and knowing how they're performing. At 65, a deep understanding of Social Security is in order, he says. Having a good financial adviser is especially crucial, and so is a willingness to trade in that adviser for a fresh perspective as you age.
A reality of aging is that women are more likely to outlive their husbands. There are also late-in-life divorces to contend with. Either scenario can leave a woman to manage finances on her own in her golden years, and in both cases, research shows a woman's standard of living drops. "It's a huge problem that husbands still deal with most of the finances," Schofield says. He recommends a basic accounting class for true beginners, or investment courses for those who want more in-depth knowledge. Above all else, he says, women shouldn't shy away from things such as writing wills or making investment decisions.
When are we elderly? There's no one-size-fits-all definition, Schofield says. "I know old 70-year-olds and young 90-year-olds." The thing to focus on instead, he says, is quality of life. For him, that makes "elderly" the point at which we need help with day-to-day life. Still, even once we do need help, Schofield cautions that we're not "done." "Once you stop paying attention … you'll be in trouble," he cautions. "You're not done until you're dead."