Reimagining your retirement

Retirement as we know it is barely 150 years old.

Otto von Bismarck introduced the world’s first State Pension in Germany in 1889, setting the retirement age at 70, a milestone that only a tiny minority of the population actually reached.

The concept was simple: work until you could no longer physically do so, and then society would care for you in your final years.

That world no longer exists. The forces reshaping how we live, and work are so fundamental that the retirement of the future is unlikely to resemble the retirement of the past. The question isn’t whether retirement will change, but how quickly we can adapt our thinking to match this new reality.

For the first time in history, we have the tools and longevity to completely reimagine what the later decades of life could look like.

Unprecedented forces are reshaping your future

Several powerful trends are making traditional retirement planning obsolete.

Longevity is the new normal

Today’s 65-year-old couple has a 50% chance that at least one spouse will live to 92. Today’s retirees are looking at 25 to 30-year retirements, not the 10-year periods our grandparents planned for.

Health spans are extending

People aren’t just living longer, they’re staying active much deeper into their lives. Many 70-year-olds today have the energy that 50-year-olds had a generation ago.

The workplace has been revolutionised

People change jobs every four or five years and can switch careers multiple times. Remote work has made location independence possible for millions, and the gig economy enables flexible arrangements that were previously unimaginable.

Technology has eliminated barriers

You can work from anywhere, manage your life from your phone, and stay connected regardless of geography. The infrastructure that once tied us to specific locations has largely disappeared.

These changes are unlikely to be temporary. It’s more likely that they are permanent shifts requiring us to fundamentally rethink how we structure our lives.

Your retirement could look very different from that of your ancestors

The above factors mean that your life no longer needs to follow the patterns of the past. Instead of working until 65 and then stopping completely, consider a more flexible approach that leverages these new realities.

While these four possibilities were not available to previous generations, future retirees will have the luxury of considering them:

1. Periodic sabbaticals throughout your career

Take three- or six-month breaks every few years to recharge, pursue passions, or spend concentrated time with your family. Remote working makes this increasingly feasible.

2. Strategic family time

Rather than missing your children’s childhood, consider taking a year off when they’re young to travel together or be fully present in their daily lives. Those memories can’t be recaptured later.

3. Extended exploration periods

Take that year abroad at 45 when you have the energy to embrace the adventure. Test whether your retirement dreams match reality.

4. A shorter traditional retirement

By taking breaks throughout your life, you stay energised and can potentially work longer. Instead of 30 years of full retirement, you could work until 75 with a much shorter final retirement, having already lived many dreams along the way.

Taking periodic breaks throughout your career means that you may arrive at retirement with a much clearer vision of how you want to spend your later years than someone who worked non-stop for 40 years.

You should be prepared to plan for multiple possibilities

Research shows that we’re not very good at knowing what our future selves will want. The only way to see how you’ll feel about unstructured time, different locations, or various lifestyle arrangements is to test them.

If you want to embrace the changing forces shaping your world, I have the following suggestions:

• Start small. Plan a two-month sabbatical.
• Try working remotely from a different city for a month.
• Experiment with part-time consulting in a field you’re curious about.

More importantly, start building these possibilities into your financial planning. Instead of just saving for one big retirement, consider creating separate funds for periodic sabbaticals, location experiments, and extended family time. The monetary cost of these experiments is often much less than the lifetime value they provide.

If the future of retirement is expected to be more flexible, health-conscious, and globally connected, your financial plan should reflect these possibilities.

I’m here to help you align your investment strategy with whatever vision of the future most excites you.

Get in touch

If you would like to talk about your own retirement plans or any of the issues raised in this article, please get in touch.

You can call me on 07769 156 250.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.