Jan. 20, 2006

Retirement is a wonderland

"Retirement is a wonderland...But it's also a minefield. There are patches of quicksand in retirement, where if you make the wrong step, you'll suffocate."

By Marshall Loeb

So says one of the leading experts in this fast-growing field, Dr. Ken Dychtwald, psychologist, gerontologist, and best-selling author of eleven aging-related books, notably "The Age Wave" and "The Power Years."

Dychtwald has just joined with Ameriprise Financial and the Harris Interactive polling firm to produce a telephone study of 2,000 mostly affluent Americans, who are in or nearing retirement (they are aged 40 to 75), about their expectations.

He found that -- unsurprisingly-- most people approach retirement with high hopes and great expectations. On the eve of this new stage in life, nine out of ten figure they will be happy.

Dychtwald had anticipated that this euphoric state, the honeymoon of retirement, would hang on for quite a while, lasting for five or ten years after real retirement. But in fact, he found that the sense of liberation that most people get upon leaving the job lasts for only a year at most.

He concludes, on the basis of the survey, that only 38% of retirees are enjoying their liberated status, but a walloping 62% are not. They are failing to get the fun they crave out of retirement.

What is the hardest thing to deal with in retirement? Says the survey: "Health -- and the costs of not having health insurance -- has emerged as the biggest issue, emotionally and financially. Health changes are so unpredictable."

What, on the other hand, is the best thing about retirement?

The answer: "In today's time-starved world, where everyone is accessible by email, Blackberry and cell phone, 24 hours a day, balancing work, family life and commuting, we are ruled by the clock. During retirement, we finally regain control over our time."

Fully 44% of retirees said this was the best thing, far more than those who cited "the opportunity to relax" (21%), "having the chance to reinvent your life" (17%), "reconnection with your spouse or significant other" (15%).

To find out what would stimulate retirees even more, it might be wise to look at the biggest cohort in the American population: the 78 million baby boomers. They are now aged 42 to 60, and the oldest of them are well on their way to retirement (the average age of retirement in the U.S. is now 64).

At least half of that group would like to start on a new career in retirement. But in many cases that would not be the same one they had before retirement, not the career they used to put their kids through college.

They now want to do more than accumulate wealth, or so they tell Dychtwald. They are, he says, "thinking about making the transition from success to significance." That means "simply having a pile of money is not the key to a happy retirement."

That means, too, that they yearn to eventually leave a legacy to their children and grandchildren, as well as to their community and church.

Typically, they will leave about 10% of the assets in their estates to their favorite charities and churches. And the remaining 90% or so they intend to will to their children and other family members (though some super-affluent people will leave much more to charity and less to their children to avoid robbing them of the incentive to work).

They also tell interviewers that they rather urgently want help in teaching their children about financial planning.

Says Dychtwald: "A lot of boomers realize that they have not acted responsibly when it comes to long-term financial planning, and they worry that their own children will adopt that behavior. They see a future in which benefits and entitlements will become more and more uncertain. So they know that their kids will have to start saving and investing at an earlier age than they did."

But the "legacy" that retirees speak off goes far beyond estate planning. It also means, says Dychtwald, "how do I want to be remembered? What mark do I want to leave on this earth?"

The people who desire to achieve significance instead of success in retirement will have to answer -- and act upon -- that question.