No generation has ever lived, on average, as long as baby boomers. As a personal example, when my grandfather Herb Strid was born in 1904, his life expectancy was 46.2 years. Luckily, he lived to be 68 – three years after he retired at 65. By the time my father was born in 1943, his life expectancy was 62.4 years. Today, he is 75 and still going strong, with a current life expectancy of over 86 years. This increase in longevity is resulting in an increase in the time we spend in retirement. Unlike my grandfather, most people today experience well over three years of retirement – and we have to prepare for that, both financially and emotionally.
We use the label “retirement planning” to describe the financial and income planning required to save and invest sufficient funds to sustain a desired lifestyle during these years. However, this description does not do justice to the scope of preparation we should do to successfully navigate this stage of life. The issues we often face are more about the quality of our lives, our physical, emotional, and social wellbeing, than just our finances, and they require consideration beyond a savings plan.
Interestingly, it appears that women often approach retirement with this holistic mindset. MIT recently conducted a study on aging, surveying 10,000 people across age groups, income levels, and locations in the United States. In one section, respondents were asked to provide five keywords describing their life after completing their primary career, but the study purposely avoided the term “retirement.” Nevertheless, the words most often cited by male respondents (in order):
Women were another story. The keywords most associated with female respondents:
They referred to avoiding “worry” and “stress” twice as often as men. Put simply, male participants were approaching old age with an optimistic mindset, while women had a much more precise conception of the potential challenges of later life. Men were looking forward to relaxing a few decades. Women were planning to grow old.
Personal experience could have been a significant contributing factor to the female respondents’ answers. Not only do women provide far more care for their own parents than men, but the elder care they provide is more likely to be intimate, involving activities like bathing, toileting, and dressing. In the process, they learn what can happen to the older body and the amount of work that can be required just to keep it running.
These different mindsets hold critical distinctions when it comes to “retirement planning.” While men may be more interested in funding a lifestyle of golf, travel, and dinners out, women are more concerned with the nuts and bolts of aging, both for their families and themselves. For many women with aging parents or in-laws, the idea of a “relaxing” retirement may be complicated by their desire to first ensure that their parents and children will be physically and emotionally cared for as they age.
This financial responsibility, as well as the need to dedicate time and personal energy to these tasks, may weigh on a woman’s mind at a time when she wants to relax and enjoy life. In addition, as she thinks about growing older herself, she is likely to be much more concerned with financing and securing this same level of critical care for herself and her spouse as they age.
When designing a financial retirement plan, it may be worth considering the financial implications of providing long-term care and suitable living arrangements over a long period of time in order to secure “peace of mind.” This is why it’s so important that men and women both serve as the Family CFO to ensure joint decision making and that your individual values and desires are accounted for and achieved.