At the “Boomertirement Summit” recently held under the auspices of the Million Dollar Round Table, gerontologist Dr. Kenneth Dychtwald, Founder and the CEO of Age Wave Inc., reminded us that the desire to stay young forever is not new. “Remember,” he said, “that in the 16th century, people believed that somewhere in the world there were fountains of youth.”
Although we have still not found a magic elixir that will stop the aging process, we have, it might be said, done the next best thing. We have developed real life solutions to some of our most menacing and deadly health problems. Among many advances that have added years to our lives are antibiotics, sanitation and immunizations. But finding ways in which to extend our lifespan has led us to the crossroads we now face. People are living longer, yet all too often not taking the time to consider or discuss how the extra years are going to impact their financial situation.
We are all living busy lives and it is certainly my perception that most are putting in more career hours than they were 10 years ago. However, has the quality of life improved? Frankly, I regard it as essential to accept only those clients who commit to make available to me two to three hours every year for a detailed review meeting.
We DO find time to have our annual physical. We DO find the time to have our dentist provide his services and that is as it should be. Our financial health is also important and if we are to avoid having too many years to live at the end of the money we need to take these annual review meetings seriously. Happily, our clients do.
Can such meetings guarantee your financial success? Of course, they do not. The annual examination with my physician does not guarantee that I will not become ill but it DOES greatly improve my chances of leading a healthy life.
Expectations all too often are unrealistic. A while ago, a 58-year-old professional was referred to me. Although a high-income earner with over 30 years in practice, he had no investments whatsoever – not even an RRSP. He planned to retire at age 60, yet still had a large mortgage payment. He actually thought that all he had to do was find a good financial planner/investment advisor and all would be well. Obviously, I did not accept this man as a client.
The traditional retirement age of 65 is no longer old. As Dr. Dychtwald pointed out “We have to start thinking about what will happen if we live to 90 or even 100. We are entering into new territory,” he said. “Today’s elders are the first of their kind. Throughout history, people did not age. They died.”
For the first time in our history, there are more than four-million Canadians aged 65 or older. In fact, we have the oldest median population in the Americas. The under five share of our population has never been lower. In just 10 years from now, more Canadians will be leaving the work force than joining it; and we think we have a worker
shortage now!
At the end of World War 2, 65 year olds had a 7% chance of living to age 90. Today, our 65 year olds have a 35% chance of reaching 90, and that is growing exponentially.
“The longevity revolution,” as Dr. Ken refers to it, “changes the face of old age, as well as how we think about retirement. John Glenn was 77 the last time he went into space. Dreams are not just for the young. We can have new dreams at the age of 65, 80 or 90.”
Through his research, Dychtwald has found that people are going back to school. They are learning new skills. They are taking more leisure time and they are starting new businesses. This recent trend has fundamentally changed how baby boomers view retirement. The linear life model of the past is beginning to look more cyclical.
Dr. Dychtwald recommended that financial planners start reflecting the cyclic life model. “Advisors need to start talking to the baby boomers about their life dreams and then help them find ways to fund them.” He added: “According to my studies 42% want to find a nice balance between work and leisure. 56% want to start a new career! Few intend to never work again. The most urgent thing is to get the baby boomers to admit that there is a serious problem facing them. Then, you will have to get them to accept the valuable help available from the person most qualified to help them – you.”
In my practice, Financial Planning is described as the art of moving from living from earned income to living off investment income at a pre-determined age and with a continued quality life style. Does the planning guarantee success? Unfortunately, it does not. However, without a plan, financial failure is the probable outcome.
