4 retirement trends for the coming decade
The era of trading a long career for a pension and afternoons on the golf course ended long ago. In its place, today’s retirees face growing financial pressure from multiple directions.
Here are four forces shaping retirement in the 2020s:
Flexible work. The pandemic set up less traditional work and more remote work, and that’s good for seniors, says Allison Schrager, senior fellow at the Manhattan Institute. Many may prefer to work part time or switch to a less stressful full-time job. Members of Generation X, who start turning 60 in 2025 and are known for being entrepreneurial, may be especially well positioned to work as consultants and set their own hours.
Evolving entitlement programs. Social Security is expected to run short of money in 2033 and Medicare as early as 2026. To fix the shortfalls, Congress can raise revenue, cut benefits or both. Politicians, though, are unlikely to slash benefits.
That doesn’t mean the fixes will be painless. One solution, according to the Center for Retirement Research, is to raise payroll taxes 1.6% for employees and employers alike, which would fund Social Security for the next 75 years.
As for Medicare, the growing popularity of Advantage plans means millions of seniors are choosing private insurers each year. The trend toward privatization, though, hasn’t been as good for beneficiaries or Medicare’s bottom line.
Unlike traditional Medicare, which lets patients see any doctor they want, Advantage plans are managed care with restrictive provider networks and lower premiums. Several studies, however, have shown that sicker enrollees are far more likely to switch to traditional Medicare, raising questions about the quality of care from Advantage plans. Medicare Advantage also costs the government more.
Any discussion about fixing Medicare must address those inefficiencies and the quality of care before expanding the program, says David Lipschutz, associate director of the Center for Medicare Advocacy.
A tech revolution in care. Adding to Medicare’s burden is the looming shortage of medical professionals. The Association of American Medical Colleges projects a shortfall of up to 139,000 doctors in the U.S. by 2033. The health care industry hopes technology can help fill the void.
Artificial intelligence can potentially improve health care. With AI’s data analysis, doctors and hospitals can detect and diagnose illnesses more accurately, customize treatments and track patient outcomes closely.
Climate disruption. The signs of climate change — wildfires, droughts, hurricanes and floods — are all around us, but many older Americans contemplating where to retire don’t take it into account.
Tom Nowak, a certified financial planner in Langley, Washington, says they should because many retiree locations in the South and West are in the crosshairs of global warming. If grocery prices soared from recent disruptions to the food supply, just imagine what prices will be like when water emergencies are declared in the bread and fruit baskets of America, Nowak says.
The single biggest worry for retirees is the loss of home value, says David Stookey, author of “Climate-Proof Your Personal Finances.” That loss can come suddenly after a drought, flood or fire devastates a community.