“Preparation for old age should begin not later than one’s teens. A life which is empty of purpose until 65 will not suddenly become filled on retirement.” Arthur E. Morgan

Key Insights include:

• Financial Health, Physical Health and Emotional Health…the Three Pillars are all vitally important to the lifestyle one expects to experience during retirement.
• Just getting by and/or covering basic living expenses is retirees’ most frequently cited financial priority.
• Social Security remains the cornerstone of retirement income for many Americans.
• Retirees’ confidence about maintaining their lifestyle exceeds the size of their retirement nest eggs.
• Most retirees are happy and enjoying life.

In The Three Pillars for a Prosperousand Fulfilling Retirements, the importance of Financial Health, Physical Health and Emotional Health are important aspects of retirement. All three pillars are vitally critical to the lifestyle and contentment Americans expect to experience during retirement.

Many people look forward to retirement because it represents freedom and a new phase of life. You don’t have to get up and go to work every day or do what a boss tells you. But just because your time is your own after you leave work doesn’t mean you have no rules to live by in your later years. In fact, it may be even more important to adhere to some guidelines.

Americans are living longer than ever in retirement, thanks to advances in health care, improved nutrition and diets, and better exercise. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95, according to data from the Social Security Administration.

This great news also presents Americans with a significant financial challenge in retirement of how to make sure their money lasts as long as they do. The possibility of running out of money is one of the biggest concerns and biggest risks many retirees will face in the years ahead.

Challenges in Retirement

• There are a plethora of challenges and potential threats to retirement in the United States. Those nearing retirement realize they may have missed out on key saving or investing opportunities during their career, according to results from a new TIAA-CREF survey.
• Despite all having access to an employer-sponsored plan, more than half of the people (52 percent) approaching retirement (age 55-64) wished they had started saving for the future sooner. In particular, 47 percent wished they saved more of their paycheck, and 34 percent now realize they should have invested their savings more aggressively.  According to findings that come from TIAA-CREF’s 2014 Ready to Retire Survey.
• The critical importance – during retirement — of “core pursuits” which are hobbies and activities that one pursues with passion and regularity, according to Wess Moss.It’s normal to crave the freedom that retirement brings.  Most people look forward to retirement. But like many other pleasures, it may be bad for your health.  It may even kill you, according to a WSJ article.  Wess Moss has devoted his professional career to helping people retire early and enjoy a happy retirement.

Financial Health

• Americans have put away $18.5 trillion for retirement in 401(k) contribution plans and defined benefit pension programs, according to the report published by the Investment Company Institute. Yet, retirement savings are non-existent or barely exist for many Americans. More than one in five Americans have zero retirement savings and another 10% have less than $5,000 in savings. Pensions have all but disappeared and many of those remaining are underfunded.
• It is said that money doesn’t grow on trees, however, it can grow when you start early to save and invest, you pay yourself first and develop a system. Knowing how to secure your financial well-being is one of the most important things you’ll ever need in life.You don’t have to be a genius to do it.You just need to know a few financial literacy basics, form a financial system and plan, and be disciplined to stick to it.
• No matter how much or little money you have, the important thing is to educate yourself about your opportunities and the system of success. No one can guarantee that you’ll make money from investments. But if you get the facts about saving and investing and follow through with an intelligent plan, you should be able to gain financial security over the long-term and enjoy the benefits of managing your money.

Physical Health

• 96% of retirees—and 99% of those age 75 and over—say that health is more important than wealth to live well in retirement. Yet health and wealth are very intertwined. People with financial resources can invest more in their health, and those in poor health have a harder time enjoying what their money can buy.
• Adults who remain physically active are healthier, feel better, and are less likely to develop many chronic diseases, such as cardiovascular disease, type 2 diabetes, and several types of cancer than are adults who are inactive. Regular moderate-to-vigorous physical activity also reduces feelings of anxiety and depression and improves sleep and quality of life. Even a single episode of physical activity provides temporary improvements in cognitive function and state of anxiety. Adults who are more physically active are better able to perform everyday tasks without undue fatigue.
• Increased amounts of moderate-to-vigorous physical activity are associated with improved cardiorespiratory and muscular fitness, including a healthier body weight and body composition. Adults who are more physically active can more easily carry out daily tasks like climbing stairs, carrying heavy packages, and performing household chores. These benefits are true for men and women of all ages, races, and ethnicities.
• Adults gain most of these health benefits when they do the equivalent of 150 to 300 minutes (2 1/2 hours to 5 hours) of moderate-intensity aerobic physical activity each week. Adults gain additional and more extensive health benefits with even more physical activity.  Muscle-strengthening activities and exercises also provide health benefits and are an important part of an adult’s overall physical activity plan.

Emotional Health

• Eighty percent of success in any endeavor, including retirement success, is based on mindset, behavior and habits. The other 20 percent is based on goals and following a plan. Once you cultivate a mindset that gives you the ability to appreciate life despite obstacles and challenges, then you will have the freedom to do the things that matter to you most.
• Emotional health and well-being are the ability of an individual to successfully handle life’s stresses and adapt to change and difficult times. Emotional Health is more than the absence of mental illness and anxiety; it is a condition that allows people to realize their aspirations, satisfy their needs and to cope with the environment in order to live a long, productive, and fruitful life.
• Well-being, on the other hand, is dependent upon good health, positive social relationships, and availability and access to basic resources (e.g., shelter, income).  Numerous studies have shown in general, life satisfaction is dependent more closely on the availability of basic needs being met (food, shelter, income) as well as access to modern conveniences (e.g., electricity). Pleasant emotions are more closely associated with having supportive relationships.

The pyramid is a better way to think about retirement resources because households do not need to rely on each part of the retirement pyramid equally to maintain their standard of living in retirement. The composition of the retirement resource pyramid varies to reflect the resources available to an individual household.

1. Older Americans report they are struggling with increased financial risks, namely inadequate income and unmanageable costs of healthcare, as they try to deal with reductions to their social safety net.
2. For an increasing number of older Americans, their golden years are fraught with financial, health and emotional risks.

• An Investment Company Institute (ICI) study recommends that people use a five-tiered system “pyramid” to build their retirement financial security.
• Home-ownership,
• Pensions,
• IRAs, and
• Other financial assets supplement their
• Social Security benefits.
• This model should carry them through retirement.  Social Security is still the foundation of the pyramid plan, but it has become an increasingly smaller portion for many retirees.

Social Security provides resources to nearly all retirees, but provides a higher replacement rate to retirees with low lifetime earnings. Because Social Security benefits typically replace a smaller share of earnings for higher-income households, these households rely more on other retirement resources, such as employer-provided retirement benefits, such as pensions and IRAs, and non qualified brokerage accounts.

Retirement planning, exploring the seriousness of an unhappy retirement through data on critical topics like depression, cognitive decline and even mortality.  The common factor in all of these studies was inactivity, the opposite of adventure, the opposite of social supports, the opposite of caring for you physical health.  In short, if you can stave off inertia, which leads to withdrawal from life, you can reduce the likelihood of an unhappy retirement.

Reap what you sow

“Your life mirrors what you put into it or withhold from it. When you are lazy, it is lazy. When you hold back, it holds back. When you hesitate, it stands there staring, hands in its pockets. But when you commit, it comes on like blazes.” Ted Orland

What a person sows in their early ages as teens, twenties and early thirties, they tend to reap in their later stages of life in their forties, fifties, sixties and beyond.  We are all an accumulation of past decisions and behaviors, of the system or habits that have directed our lives.

Americans must embrace the notion that it is never too late to change and improve the trajectory and destination of one’s overall retirement health outcome.  Which reminds me of a favorite proverb:

“Best time to plant a tree was twenty years ago.  The second best time is today”. Chinese Proverb

What this Proverb confirms is that starting early is important to living a life of contentment and fulfillment in retirement. However, if we have missed the best opportunity or season in our life to plan for financial security, take care of our health and nurture our emotional wellbeing for retirement, it’s never too late to start saving, since…the second best opportunity is today.

Retirees are living longer than ever before. Nowadays, the age of sixty is the new thirty-five for many people. Besides living longer, studies also reveal that:

1. Americans values have changed and they seem to desire freedom over money in retirement.
2. There are many challenges and threats that must be understood and successfully navigated to achieve the dream retirement.
3. It is imperative to make sure you don’t run out of money when you’re living on a fixed income as a retiree.

Success are Financial Health, Physical Health and Emotional Health. All three areas are vitally important. This future guide will provide insights to achieving a better life in retirement, in each of three areas — financially,  physically and emotionally.

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References:

1. https://www.tiaa.org/public/pdf/3_November_Transitioners_Survey-Executive_Summary_11-12-14_KRCedits.pdf
2. http://icief.org/blog/19_blog_investing1.html
3. https://transamericacenter.org/retirement-research/retiree-survey