By Joni Lindquist, CFP®
Good news! Multiple studies show that we are living longer and are healthier for longer. In research done by Oeppen and Vaupel (2002), it documented that the life expectancy has been increasing two to three years every decade. That means if you base your life expectancy on the age of your parents or grandparents, you could be short 10 or 20 years! The fastest growing cohort in America today is the centenarians.
Bad news, now that you can potentially live into your 90s or higher; are you really going to retire at 65 and live another 30+ years in “retirement”? One, will you be able to afford it? Two, will you be happy and productive in that phase? What does this mean for your career and financial situation? If you live to 100, how do you support yourself for all those years?
For the last couple generations, life could be thought of in three phases: 1) youth – learning/education focus 2) adult years – career “earning” years and 3) retirement. This last phase often spanned only 5-10 years. The Social Security system was built when people largely retired from physically demanding jobs and would only live another handful of years. In the near future, these phases might instead be 1) youth – education/learning 2) first career 3) New education & training/skills development 4) second career 5) re-training/education/skills development and 6) Third career …. and so on until retirement at a much later date than your mid-60s.
The traditional financial planning process, focusing on goals, often has retirement or financial independence as a high priority. Indeed, popular advertising focuses on retirement as the reason to save. However, as financial advisors we know that you have aspirations and priorities beyond retiring. The evolving financial planning model’s focus will not be retirement, but helping clients live the life they want and find work that supports their lifestyle to the age of 100. It means you will be investing in not only financial assets, but yourself as well. For these multiple careers, you may have to obtain new skills. I’ve had two distinct careers and might yet get to a third. More and more people are likely to do this. I can’t imagine working in the same career for 50+ years, which is what Gen Xers and others will need to do to afford their longer life.
After all, do you really think you can only do one profession well? Most of us choose our college majors and career fields in our early 20s, when we barely know ourselves. Most everyone I talk to lands in their primary career out of college or advanced degree and keep going. Given continual technological advancements that alter or eliminate professions, we’ll have to re-train ourselves mid-life for the next career. Adaptability and life-long learning will be critical skills to succeed in this new environment.
You can be an engineer and then an attorney. Or a physical therapist and then a coach/trainer. Or perhaps a corporate executive to a financial planner. (me) Or an engineer to an AI (Artificial Intelligence) specialist.
It will take an ongoing process to determine how you will navigate multiple careers and lead a happy and successful life. It’s no longer just about saving for retirement. How much will you need to save for your mid-career re-training and potentially time off work to do this? How do you manage that with your other commitments, such as family and health? Which career makes the most sense to evolve to? How do you make smooth, multiple transition in your life? These will be the new key questions that a comprehensive financial planning process will help you with.
It’s more complex and daunting. Yet it promises to be exciting and challenging as well! Consider finding a trusted financial planner to help you navigate your LONG life.
Joni Lindquist, MBA, CFP®, is a Principal at KHC Wealth Management. She strives to help clients live the life they want by helping them identify their goals, create a plan, and take action. Lindquist is an active member of the Financial Planning Association of Greater Kansas City.