Is There A Better Approach To Retirement?

Is There A Better Approach To Retirement?

As a financial planner I discuss retirement goals with virtually every client. Those that don’t plan to remain in their own homes typically talk about moving to a retirement community or an assisted living facility. Yet there’s a growing body of evidence suggesting that segregating older people, particularly by age, may not only shorten their own lifespans but also limit their potential contributions to their communities and the overall economy.

Caroline Servat and Nora Super at the Milken Institute Center for the Future of Aging have produced a report for city and community leaders recommending greater age diversity in strategies and planning for economic growth and resiliency. They argue that the stereotype that older people are a financial burden on society is false. Seniors over age 50 account for over $7 trillion in direct economic activity today, an amount expected to nearly double by 2032, representing over half of U.S. GDP. Nearly 25% of older adults volunteer their services for a myriad of nonprofit activities, boosting community vitality. They also represent over half of unpaid family caregivers, besides acting as the primary driver of jobs in the healthcare and personal care industries.

As a labor force seniors can be a valuable resource for training and as a source of institutional knowledge. Having been around for 60 years or more, they surely have picked up at least a few tidbits along the way. Yet only 18% of respondents in a Deloitte survey of companies viewed age as an advantage in their organizations. Quite the reverse: many companies still offer incentives for older employees to quit in order to make room for lower-paid younger workers. That unfortunately denies seniors one of the most valuable opportunities to enhance their well-being. Studies have indicated that living a purposeful life improves both physical and mental health.

The Milken Institute report provides a roadmap by citing various municipal initiatives already underway. They include things like more flexible working conditions for older adults to better match their lifestyles and mixed-use housing environments such as those integrating multifamily housing with healthcare and even with libraries.  

The most interesting trend in my view is the growth of mixed old and young living environments. Which would seniors prefer: being surrounded exclusively by other seniors (the typical retirement community) or live in an environment where they can interact with younger people as well? I’d argue the latter. One intriguing model is called a University-based retirement community (UBRC), where retirees live on or very close to a college campus and participate in college activities just like students. According to Money Magazine the leading ones have specific programs for older adults to engage with regular students as well as provide multiple levels of care. Students benefit from the wisdom and even services such as babysitting that their elders can provide, while the latter get to enjoy the interactivity and mental stimulation. That’s clearly a win-win for everyone.

As longevity increases and birth rates decrease, retirees are becoming a larger segment of our society. This is leading communities to rethink how to support them. More and more choices are evolving. It’s a great time to be growing old!


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