Why Retirement Isn’t for Everyone, but a Healthy Relationship with Money Is
Age is neither an entitlement nor a guarantee of wisdom. Nor is it a life where retirement is bliss because it has been well planned to make that retiree financially secure. Millions of seniors are planning to come out of retirement and rejoin the workforce in 2025. In fact, in a survey sponsored by Resume Builder (September 2024), 1 in 8 retirees say that they plan to go back to work in 2025.
In some ways, this might sound like bad news. However, remember the movie, The Intern. The contrast in lifestyles between these two characters highlights some issues with the FIRE Movement [1]. Anne Hathaway (as Jules Ostin) is a successful entrepreneur building a popular online fashion company, FIT. Robert Di Niro (as Ben Whittaker) is a retired widower, who decides to rejoin the workforce. There are different reasons to come out of retirement and in this case, Ben believed there was more for him to contribute given his past work experience.
Only 750 seniors responded to the Resume Builder survey, but it’s a healthy sample. 79% of the respondents are looking for part-time work, and only 13% think they will pursue a full-time job. Of course, given the spike in inflation it should not be a surprise that 69% of respondents said they are concerned about the rising cost of living, but noteworthy is the fact that 42% reported being bored. Such results suggest that there are multiple reasons to come out of retirement.
Does Working Longer Counteract Inflation?
Will coming out of retirement help offset inflation? In the 2015 movie, Ben Whittaker is a young 70-year-old former sales executive whose demeanor helps relieve Jules Ostin from the pressure and conflicts associated with leading the thriving venture-capital-backed internet business with 200 people. Jules is married with a young daughter, so this strong woman is also struggling with pleasing that side of her life. In the movie, Mr. Whittaker is hired full time, and the health insurance benefits and W2 income clearly help him manage the costs of life post-retirement. Even working for an additional 3-5 years in one’s 70’s can make a meaningful difference. Afterall, as inflation has spiked, many seniors living on a fixed income find themselves working simply to pay for necessities such as weekly healthcare costs and food. This may not have been the case for Mr. Whittaker, but his temperament is inspiring to all those around him in the movie.
There are no benefits of waiting until age 75 to claim Social Security. The increase in benefits due to delayed retirement stops at age 70, with a bump of about 8%. However, we would argue that working those next 5 years until 75 may reduce nonsensical spending and, if you have the Whittaker temperament, extend your life. Some companies also provide lunch plans, and there is also free coffee that everyone should not be drinking!
A healthy work environment paired with a positive perspective can also reduce the pressure to worry about money. The feeling of being needed and adding value to a community also plugs a hole of loneliness, a future epidemic of mammoth proportion for seniors.
Men are Clearly Coming Back to Work
3.15 million men over 70 in America are working, with about 144,000 men rejoining the labor force in October alone. This follows about 191,000 men going back to work in September. The U.S. Labor Department reports that among men aged 70 to 74, nearly 25% are now working. This percentage gets cut in half at 75+, but that 12.5% is also a record high since COVID-19. [i] Conversely, Women aged 70+ are generally choosing to remain retired. The difference in this trend may be the subject of a future article.
People can speculate about the difference in trends for working seniors, but from a personal perspective, it would seem that my next 15 years will be quite exciting! The mind is a “terrible thing to waste” and being a hands-on participant in future technology disruption is what inspires me to keep learning and being curious. My thinking is that people who are 70 (which I am not) who remain curious will be inspired to continue evolving as people. Maybe you can learn from traveling on new adventures and remain cultured when looking at the past. But as I age, I become more excited to learn about the future. A healthy outlook on money in your retirement can give you freedom of perspective. Moreover, having lived through history and seeing how disruptive technology and industry paradigm changes have impacted people’s lives, I feel like seniors can see a timeline of the transformations that have ended up leading to evolution instead of stopping at revolution.
Plain Truth: Retirement Age 65 is a false Number
The truth is also that we should all expect to live longer. Age 65 being “the retirement year” is unrealistic and dates back to a man named Otto von Bismarck, the German Chancellor from 1862 to 1890. History also points to the age of retirement being extended in 1881 to 70 and then lowered in 1916. Ironically, life expectancy back then was only 31 years, and today AI says the life expectancy for men and women in 2024 is 81.7 years and 83.8 years, respectively. There is no real reason for the number 65 to be the target year for retirement.
Circling back to the need for a healthy perspective around money. More people are going to need to work past 70 years old, but you can’t displace experience and life perspective. In addition, if money is a numbers game or a score card for retirement, maybe a bigger boat will make you happy, but how big does the boat really need to be? Pleasure time with family is about sharing and caring. An active mind for seniors is more important than a premature rocking chair! Financial planning should provide everyone with healthy independence so they can grow and be curious and inspired. This is why the FIRE [2] community has it right. Retirement is about working to please yourself on your own terms. Retirement is about a state of mind earned through financial independence. Self-sacrifice early may be difficult, but what we know from experience is that addressing challenges upfront is always better than a strategy built solely on “hope.” Ask any financial planner – “HOPE IS NOT A STRATEGY.” Lastly, maybe every entrepreneur who is stressed out should have a Ben Whittaker in their life!
1: FIRE Movement: The FIRE movement, which stands for “Financial Independence, Retire Early,” is a lifestyle movement that has gained significant traction among millennials and Gen Z.
2: FIRE: FIRE, aka “Financial Independence, Retire Early,” is a financial lifestyle and philosophy focused on achieving financial freedom at a younger age through a combination of aggressive saving, smart investing, and mindful spending. The goal of FIRE is to accumulate enough wealth to support one’s living expenses without relying on traditional employment, allowing for early retirement or a shift to more fulfilling pursuits.
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* As of 11/30/2024, Mike Venuto manages a total of 236 accounts, including 60 registered investment companies and 176 other accounts. The AUM for the 60 registered investment companies is $8.2 billion, and the AUM for the Other accounts is $43 million.
** As of 11/30/2024, Dan Weiskopf manages a total of 33 accounts, including 5 registered investment companies and 28 other accounts. The AUM for the 5 registered investment companies is $1.2 billion, and the AUM for the Other accounts is $14 million.
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