Retirement Reimagined: Pandemic spurs Americans to pursue passions in golden years

For millions of Americans, the definition of retirement has changed.

A new report from Fidelity shows that most Americans are thinking more about the active lifestyle they want during their retirement.

While prior generations' most popular perception of life in retirement involved days of leisure and relaxation, the COVID-19 pandemic made many people rethink their priorities for making the most of their golden years.

Now, retirement is seen as a time for fun, adventure, and possibly part-time work.

Travel, overseas relocation, and entrepreneurship are all par for this adventurous retirement course. Americans now view retirement less as a fixed destination and more as a gradual process involving multiple phases.

A clear cross-generational majority of respondents say they look forward to pursuing work for pleasure after concluding their corporate careers. They also hope for a phased retirement, whereby their workload gradually declines instead of stopping altogether.

"As more people rethink retirement, with new goals such as living abroad or starting a business, we're encouraged to see a growing understanding of the value in creating a retirement plan early," explains Rita Assaf, Vice President of Retirement Products at Fidelity Investments.

How can retirees plan for this active approach to retirement? As the cost of hiring a financial advisor declined in recent years, more Americans now seek professional guidance to craft a plan for their ideal retirement journey.

"If you're financially independent, focus on what you're good at, love, and the world needs. If that happens to earn income, all the better," says Kevin Estes, Financial Planner and Founder of Scaled Finance. "I suggest everyone explore their passions. What energizes you? How could you do more of what you love and less of what you don't," he adds.

Retirement Overhaul

The rise in phased retirements, alongside fears of diminishing Social Security benefits, spells drastic changes to the retirement landscape. Financial advisors are proactively planning for this active retirement paradigm shift, with some even acting as recruiters for their clients.

While some "phases" work to mitigate boredom, others' economic positions thrust them back into the workplace. From 2000 through 2015, the labor force participation rate for American men in their mid-to-late-60s rose from 30% to 37%, according to the Social Security Administration. For women, participation rose from 19% to 28%.

The COVID-19 pandemic unleashed a wave of disruption across the workplace; T. Rowe Price reports that approximately 1.5 million retirees re-entered the workforce by March 2022, though work-from-home arrangements allow retirees to re-enter their former roles remotely. The same study states that in 2024, one in five retirees will work full-time or part-time, while 7% will actively seek employment.

While varying factors contribute to one's decision to return to work post-retirement — or not step away from the office at all — rising numbers of older employees mean employers and workers must increasingly consider health and safety.

"Health is a critical factor in retirement planning," says Ryan Furlong, Certified Financial Planner at Purpose Path Capital. "For clients with health concerns, or when one or both spouses may not be in sufficient health, we emphasize the importance of comprehensive health insurance planning, including Medicare, long-term care insurance, and emergency funds specifically allocated for health-related expenses," Furlong adds.

Embrace and Monetize Personal Interests

For baby boomers wishing to tiptoe into retirement, experts suggest leaning into hobbies or other special interests to maintain a source of income.

"The number one retirement regret is boredom," says Jon McCardle, President of Summit Financial Group of Indiana. "Those who exchange their job for their hobbies, volunteerism, or non-profit work don't have regrets, versus others who do because their identities are usually misplaced, and now they have nothing to do."

McCardle continues, "For those interested in the phased approach to retirement, we help them identify potential jobs and connect them within our network to companies or contacts that would allow them to pursue their potential. We also help them understand how the new income will impact their plan and taxes."

As expectations around modern Americans' twilight years continue to change, experts stress the importance of flexibility and openness. "Retirement has become a stepping stone towards new opportunities," says Jorey Bernstein, CEO of Bernstein Investment Consultants. "Retirement is no longer a static concept, but a dynamic phase of life. The evolving landscape of retirement reflects changing perspectives and longer lifespans."

Retirees' Next Steps

Wise retirees-in-waiting have already begun preparations. Fidelity reports that the average baby boomer kickstarted their retirement planning at age 43, while the average Gen Z respondent began planning at age 20. Some are even planning their post-work life before entering their prime working years by reading retirement planning books and enlisting the help of financial advisors.

Americans no longer perceive retirement as Adirondack chair-sitting and trips to the local golf course. Many modern Americans consider retirement an opportunity to pursue special interests and stay active. Whether traveling, starting a business, or working part-time, many options can lead to fulfilling golden years.

By planning and consulting financial advisors, Americans can enjoy the retired life of their dreams filled with joy, adventure, and purpose.