An oft-cited maxim in financial planning circles is that the average American spends more time planning a vacation than planning for retirement. Perhaps that is a good thing because for many Americans, retirement looks as if it could be one long vacation that lasts 20 years or more.
Rather than a period of winding down, retirement is becoming the time of life when most individuals report have the greatest amount of fun, according to a new Merrill Lynch retirement study conducted in partnership with Age Wave.
The study is the first of its kind, an in-depth investigation of how retirees are exploring and enjoying their newfound leisure time based on an online survey of more than 3,700 adults and six focus groups comprised of both preretirees and retirees. “Leisure in Retirement: Beyond the Bucket List” is the sixth installment in a series of studies that Merrill Lynch and Age Wave conducted over the past few years on various aspects of retirement including working, health, finances, family, housing, giving and leisure.
With nearly 10,000 boomers retiring each day, the study found that a profoundly different portrait of leisure in retirement is emerging. Three forces are responsible for this evolving trend:
• Life expectancy is at an all-time high and the ranks of retirees are growing dramatically. The number of Americans ages 65 and over will increase 57% over the next 20 years.
• As boomers retire from a workaholic culture, they will swell the ranks of American adults in this “time affluent” stage of life. The study found that people between the ages of 65 and 74 are at the pinnacle of the “freedom zone,” in which they enjoy the greatest balance of health, free time and emotional well-being compared to those in the stressful child-rearing and career-building years of ages 35 to 54.
• Rather than viewing retirement as the finish line, 88% of retirees describe it as an opportunity for new beginnings, bringing greater freedom and flexibility and often an entirely new state of mind. Anecdotally, the experience of my recently retired friends bears this out as they volunteer in their communities, enroll in adult education classes, travel and work on their golf and tennis games.
As Americans move from work into retirement, 92% say retirement gives them greater freedom and flexibility to do whatever they want and on their own terms. Leaving full-time work behind, retirees say they are able to create their own schedules, open a business, sleep in and exercise more. It's a time to get to know their grandchildren better, fall in love again, travel, read more, volunteer, learn a new skill and try lots of things they could previously only dream about — regardless of how much money they have.
A small number of retirees (7%) said retirement is less fun than their preretirement years. Financial concerns are the primary reason, followed by health challenges.
Between 2010 and 2020, America will reach a tipping point, shifting to a nation where the number of Americans in the most time-affluent stage of life (ages 65 and over) exceeds those in the most time-constrained stage (ages 35-44). “The impact on individual lifestyles, families and leisure marketplaces, both for-profit and not-for-profit, will be unprecedented,” the study predicted.
When it comes to everyday leisure, retirees say they most want activities that help them stay healthy and relaxed, whether that means exercising, reading, playing with grandchildren, going for walks or watching television.
But when it comes to special occasion leisure — such as travel, celebrations and important milestones — retirees say they want to break out of the ordinary and share special experiences with special people and have a chance to create new memories.
In the past year, retired boomers spent more than any other group on leisure travel. The study predicted that as this age group continues to retire, it could create a $4.6 trillion opportunity for the leisure industry.
Perhaps retirees should view retirement more like a college graduation — the beginning of an exciting new chapter. But rather than worrying about repaying student loans, well-advised investors will be reaping the rewards of their years of saving and investing. Consider marking the occasion with a copy of “Oh, the Places You'll Go” by Dr. Seuss — a read for new beginnings at any age.
(Questions about new Social Security rules? Find the answers in my new ebook.)
Mary Beth Franklin is a certified financial planner.
