Op-ed: This isn't your grandparents' retirement plan

Ariel Skelley | DigitalVision | Getty Images

The idea of "slowing down" in retirement is quickly becoming an antiquated concept. To today's retirees, retirement is no longer simply defined as the end of work, but the beginning of a whole new chapter of life, with new choices, freedoms and challenges.

This new beginning is born in part from the idea of "time affluence." All of those 9-to-5 days previously spent at work are now a treasure trove of opportunity for those newly retired if they are prepared to use them. But an Edward Jones study, "The Four Pillars of the New Retirement," found that there is an intention/action gap between what retirees want and what they are doing.

Retirees derive the greatest sense of purpose from time with loved ones, and that's the case regardless of the level of financial wealth. However, 1 in 3 retirees say they have struggled to find purpose in retirement. While only a quarter of retirees have volunteered in retirement, nearly 9 in 10 wish there were more ways for them to help their communities.

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And society agrees. Of all U.S. adults surveyed, 89% feel there should be more ways for retirees to use their talents and knowledge for the benefit of their communities and society at large. Even though retirees intend to share their knowledge and find this sense of purpose and even though younger generations want to hear and learn from retirees, often these actions are not happening.

This sense of purpose, as it turns out, is just one of four important pillars that retirees and pre-retirees need in order to create a more holistic approach to retirement, with health, family and finances being the other three. Following are some interesting findings from the study, which was based on a survey of 9,000 adults across the U.S. and Canada and 975 U.S. retirees:

To be or not to be healthy. The good news is that 93% of retirees surveyed say it's never too late to improve one's health, and there are many ways to help match our health-span to our lifespan. However, few retirees admitted they are taking the necessary steps to be healthy.  Only 55% of retirees say they maintain a healthy diet and only 52% say the exercise regularly.

Families of affinity. The definition of family is changing, especially among younger generations, with the majority in every generation saying that family is "anyone who I love and care for" whether or not I am related to them, according to the study. Covid-19 has brought families closer together, but that closeness may be costing retirees their financial security.

For example, 24 million U.S. parents have provided financial support to adult children due to the pandemic. And this generational generosity has become the rule, with 7 in 10 retirees reporting they are willing to offer financial support to family, even if it jeopardizes their own financial future. The pressing question here is, does this generosity extend to those beyond blood relatives, spouses, in-laws and adoptees? If so, what does that mean for retirees' financial future?

Freedom from and freedom to. Retirees find themselves in a position that they have dreamed about all their working lives — freedom from the demands of their jobs and the freedom to have more time with friends and family and to pursue their passions in life. While this is an enviable place to be in, not all retirees are turning their back on work.

Working is another way to have a purpose in life, and when it's a choice rather than a necessity, there is virtually no downside.

Ken Cella

principal, client strategies group at Edward Jones

Two-thirds of workers age 65 and over say they work because the choose to, compared to those between the ages of 50 and 64, where two-thirds say they work because they have to. Working is another way to have a purpose in life, and when it's a choice rather than a necessity, there is virtually no downside.

Figuring out finances. It has long been true that the role of money in retirement is to provide security and freedom. Yet, more than a third of retirees said that managing their money in retirement is more confusing than saving for retirement. Even in today's volatile market, retirees' greatest financial worry is the cost of health care and long-term care, and not a recession.

The study found that 46% of retirees believe that "providing security for the unexpected" is the primary role of money in retirement, while nearly as many, 45%, reported the primary role as  "giving me the freedom to live how I want."

Clearly, managing money in retirement brings an entirely new set of challenges unique from any other time of life. People are not only past their prime earning years, but many are just living on their savings and Social Security.

For greater peace of mind, it's best to seek help navigating the challenges and opportunities in retirement. The Covid-19 pandemic is a case in point: 84% of those working with a financial advisor reported that their advisor gave them a greater sense of comfort during the outbreak. The pandemic will eventually pass, but new and unforeseen challenges will always arise, if not for society as whole, but for individuals with their own unique set of circumstances.

So, how can you live your best years in retirement?

Ariel Skelley | DigitalVision | Getty Images

First, understand that health, family, purpose and finance are highly intertwined in shaping your overall quality of life. It's not that you can't have one without the other, but the most confident, content and fulfilled retirees embrace all four areas and work to strengthen each in unison. Well-being always encompasses a variety of factors, and retirement is no different.

Second, check your action/inaction gap. Are there gaping holes? Or with a little reflection and work, can your actions be brought more in line with your aspirations?

Finally, don't go it alone. Sound financial advice is invaluable at any stage of life, but one can argue that the stakes are even higher in retirement.

— By Ken Cella, principal, client strategies group at Edward Jones

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