Rethinking Retirement: A New Approach to Financial Planning
The Shift in Lifespan and Its Impact on Retirement
Americans are living longer, with the average life expectancy increasing from 68 years in 1950 to nearly 79 years by 2009. This significant shift has led to longer retirements, with men in 2020 spending nearly 19 years in retirement, compared to less than 13 years in 1970. By 2045, it’s estimated that there will be over 270,000 Americans older than 100.
A New Three-Phase Approach to Adulthood
Traditional financial planning focused on education, work, and retirement, but this approach no longer suffices. Researchers advocate for a new three-phase approach, focusing on well-being, work, and finances. This shift acknowledges that Americans are living longer and need to prioritize their overall well-being, not just their financial security.
The Importance of Well-being in Retirement
Retirement is no longer just about leisure; it’s about overall well-being, including relationships, personal goals, health, and avocational opportunities. Having an adequate nest egg is crucial, but it’s not the only factor. Financial advisors can serve as coaches, helping retirees understand the complexity of this phase of life and prioritize their well-being.
Midlife Adults: Facing Complex Challenges
Midlife adults face numerous challenges, from career advancement to caring for children and parents. This cohort reported the lowest exercise rates and unhealthy eating habits. Financial advisors can help midlife adults arrange priorities, ensuring they take care of themselves financially and otherwise.
Younger Adults: Building a Strong Foundation
Younger adults can benefit from financial advisors’ guidance in adopting healthy habits, building an emergency fund, and creating a net worth. By prioritizing their well-being and finances, they can set themselves up for a successful and fulfilling retirement.
Getting Help with Retirement Planning
Working with a financial advisor can help individuals plan for retirement, including Social Security and Medicare. SmartAsset’s free tool matches users with vetted financial advisors, providing a personalized approach to retirement planning.
Prioritizing Emergency Funds and Net Worth
Having an emergency fund and building net worth are crucial for a secure retirement. An emergency fund should be liquid, with a high-interest account allowing for compound interest. By prioritizing these aspects, individuals can ensure a comfortable and fulfilling retirement.
A New Era of Retirement Planning
The traditional approach to retirement planning no longer suffices. By prioritizing well-being, work, and finances, individuals can create a more dynamic and fulfilling retirement. With the help of financial advisors, Americans can navigate the complexities of retirement and achieve their goals.
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