WOUTER FOURIE: OK, boomer, are you ready for retirement — and growing ‘yold’ gracefully?
This generation grew up in a period of economic growth but does that mean they will retire in peace and relative economic comfort?
This year marks the start of an expected retirement wave of baby boomers — the generation born after World War 2 and before the mid-1960s.
This generation grew up in a period of economic growth and in many countries today they are considered wealthier and more prosperous than the generations preceding and following them. But does that mean they will retire in peace and relative economic comfort?
The Economist, in a recent forward-looking article, says many boomers — at least more than the subsequent generations — will be able to retire in relative comfort, but that we may not see that happening as expected. The reason? Choice, not obligation.
The article refers to these people as "yolds", a term borrowed from Japan, where people aged between 65 and 75 are known as the "young old". Many in this generation enjoy life as they currently live it. Work is not so much an obligation as a calling, and many look forward to continuing their contribution to their family and society for years to come.
Many of the people in this generation — and this is especially true in SA — still feel very much engaged in their jobs, and many are entrepreneurs who do not feel ready to hand over the reins to the next generation. Others would like to contribute for longer to their retirement savings, before having to draw from them.
"Yolds", we are told, will strive for a more balanced semi-retirement, in which they continue working and also spend more time on travel and leisure.
South African boomers share many of the traits of their international counterparts, but there are some unique circumstances here. For instance, while local boomers are relatively well off, many saw their well-planned careers take a turn for the worse after waves of voluntary severance and layoff programmes in large corporations.
Other South African boomers may have started their own businesses but have seen their projections of future business growth flatten out as our economy stagnated in recent years. Others have found themselves part of the so-called sandwich generation — those who have to care for both ageing parents and adult children.
If you find yourself in this generation and you grapple with the thought of retiring, keep the following insights from the "yolds" in mind:
See retirement as a choice, not an obligation
Many companies still enforce a mandatory retirement age of 65, but often rehire newly retired staff to consult, provide expertise or just offer a steady hand on the tiller.
You may argue that your company is very strict in its retirement policy and that it would never consider this, but changing your outlook and widening your scope to include other businesses in similar industries may open your eyes to new opportunities.
In doing this, you may be able to earn money and save for your retirement for longer, thereby boosting your nest egg and making sure you retire in better financial shape.
Mix business and pleasure
If you are financially but not emotionally prepared for retirement, consider a slow transition. This may take the form of part-time or consulting work, or it may involve a complete change in career to something you always wanted to do. It may even involve taking a pro bono or low-paying position at a nonprofit organisation — one that may be better for the soul than the wallet.
A mix of business and pleasure may also see you travel or relax more regularly, while you still work between trips.
Slow down, don't brake hard
Following from these points, consider the warning by well-known wealth guru Rabbi Daniel Lapin. He uses the analogy of a boxer who aims for a target that is a good 15cm behind his opponent's nose. By aiming to hit that target, and not his opponent's nose, a boxer is still picking up momentum when he hits the opponent, ensuring greater impact.
If you see 65 as the final destination, you will start easing off the accelerator well before that time, which may affect your retirement savings, your wealth creation in general and the impact you have on your career and community.
Why not, as the "yolds" seem to do, aim for a much later retirement? Then, if you do hit 65 and you are forced to make a change, you are still at speed and not slowing down!
• Fourie, a former winner of the Financial Planning Institute's Financial Planner of the Year award, is CEO of Ascor Independent Wealth Managers