The Changing Path of Retirement

A new study by Edward Jones and Age Wave, “Longevity and the New Journey of Retirement,” examines what it means to experience well-being and thrive in retirement—a journey that is not one-size-fits-all, and instead has many possible paths and variations.

The study of more than 11,000 U.S. adults found that despite Americans’ worries about health care and long-term care costs in retirement, they still desire to live longer, and nearly seven in 10 Americans (69%) want to live to age 100.

More than the fact of longevity is changing retirement, the study says. People’s growing awareness of their potential longer life is changing their expectations, attitudes and preparations for this extended life. In the 20th century, life expectancy in the U.S. rose from 47 years to 79, and despite a setback to 77 years caused by the COVID-19 pandemic, longevity may continue to grow for decades to come.

According to the study, Americans who want to live to 100 said they hope to live longer because they want to spend more years with family and friends (35%), they are enjoying life and want to continue doing so (23%), they are curious about the future (19%) and there is so much more they want to do (18%). Only 6% said they wanted to live longer because they are afraid of dying. Additionally, retirees now see the ideal length of retirement as 29 years.

On the other hand, there are some who said they would not want the extra longevity if they were suffering with terrible health (32%), became a burden on their families (29%), had serious cognitive loss like that of Alzheimer’s disease (20%) or no longer had purpose in life (14%), the study says. Only 5% said they wouldn’t want the longevity if they were impoverished.

The definition of retirement has vastly changed from that of previous generations. Pre-retirees and retirees view their parents’ version of retirement as a time for “rest and relaxation,” the study says. However, when asked about their own retirement today, only 27% see today’s retirement as “a time for rest and relaxation,” while 55% define it as “a new chapter in life.”

The study also found there are blurred lines around what people think marks the beginning of retirement. The top milestones that pre-retirees and retirees view as the “start” of this chapter include stopping full-time work (34%), receiving Social Security and/or a pension (22%), leaving one’s job/career (17%) and achieving financial independence (17%). Only 10% said the start of retirement meant reaching a certain age.

This changing definition is reflected in pre-retirees’ and retirees’ retirement plans, as a majority (59%) want to work in some way during their retirement, with 22% looking to work part time, 19% hoping to cycle between work and leisure and 18% wishing to work full time, the study says.

When asked what they’d like more of in life moving forward, more than two-thirds of retirees said time with family, in particular with their grandchildren; among women retirees, the number was even higher. Forty-three percent of retirees said they look forward to more rest and relaxation, and a third said they definitely want more fun.

The study identifies four distinct stages to describe the overall journey as people enter retirement: anticipation (0 to 10 years before retirement), liberation/disorientation (0 to 2 years after retirement), reinvention (3 to 14 after retirement) and reflection/resolution (15+ years after retirement). Each stage presents unique expectations, priorities, challenges, hopes and planning needs.

In the heart of retirement, seen during the reinvention stage, the study further identifies four distinct journey paths characterized by people’s attitudes and ambitions, retirement preparations and level of enjoyment of life in retirement. Researchers uncovered how decisions and strategies for living throughout the early and middle years of life can impact the retirement years—both negatively and positively.

“Purposeful Pathfinders” enjoy the greatest well-being in retirement and are happy, engaged, productive and contributory, the study says. They are best prepared for life in retirement and 78% said they are in great shape financially. They began saving for retirement earlier than all the other groups, on average at age 34.

“Relaxed Traditionalists” pursue a more traditional retirement of rest and relaxation. This group had a smooth transition and are well-prepared, the study says. Most (81%) retired when they chose to, and while they are the most open to relocating, including to adult-living communities, they have fewer aspirations for personal growth or giving back than Purposeful Pathfinders.

“Challenged yet Hopefuls” lead active lives and have focused on self-improvement, but their lives in retirement are constrained and uncertain due to insufficient financial preparation, the study says. Half said they often worry about outliving their money and this taints nearly all their future hopes. They began saving for retirement later than all the other groups, at age 45, and over half of those in the group with retirement accounts (54%) have made early withdrawals along the way.

“Regretful Strugglers” represent the largest of the four groups (31%). These are the least prepared for retirement. They are the most unhappy and, overall, feel the least positive about life. The study found that 43% said they are financially worse off in retirement than during their working years. The majority (59%) said they have many regrets in life, and 42% feel that life has dealt them a bad hand.

“We are witnessing the birth of a new retirement with unique stages and journey paths for everyone,” says Ken Dychtwald, founder and CEO of Age Wave. “Successful retirees have enjoyed a mostly positive, satisfying life and are looking forward to the years ahead. Their emotional intelligence and hard-earned resilience can provide invaluable guidance as tomorrow’s retirees contemplate how to best plan to fulfill their hopes and dreams for retirement.”

While everyone’s experience of retirement is different, the study says one thing is clear from the research: Retirees who report better quality of life took more steps decades in advance to prepare and plan across all the four pillars of finances, purpose, family and health. From saving early and consistently and developing healthy habits to communicating with close family and discovering passions and interests, there are many steps pre-retirees and those early in retirement can take to make the most of their retirement.

The value of financial foresight cannot be underestimated, as the traditional “three-legged stool” for funding retirement—pensions, Social Security and personal savings—has become even more wobbly, and unexpected expenses can arise in retirement, the study says. Age Wave suggests working Americans double down on the third leg of the stool, saving.

According to the study, retirees said they started saving for retirement at age 38 on average, but in retrospect, they wished they had started saving nearly a decade earlier, at age 29. In addition to saving, other key pre-retirement actions include tending to ongoing health and preventive care, discussing retirement plans and goals with family and friends and beginning or expanding volunteering activity.

The study also says working with a financial adviser can be instrumental in interpreting current market conditions and developing a holistic financial plan to better prepare for a 100-year lifespan—and the expenses that come with it.

“Understanding the way people today view retirement, and what changes retirees wish they could have made, improves our ability to serve them in a human-centered way and help them each achieve what’s most important to them and their families,” says Ken Cella, Edward Jones’ branch development principal.