The Boomer Touch

This influential generation is about to reshape retirement. Understanding how they will do this will put you in a position to help them reap golden rewards.

By Helen Thompson

Baby Boomers are always in the spotlight because they are such an appealing group—after all, they constitute a huge market. But it’s more than a numbers game. Boomers have been tremendously influential as they have moved through each stage of life, according to Maddy Dychtwald, author of Cycles: How We Will Live, Work, and Buy. And the key to succeeding in the Boomer market is understanding how their influence will play out on the retirement landscape. “We looked up the word ‘retirement’ in the dictionary and found that it meant ‘to disappear, go away or withdraw,’” Dychtwald says. “But knowing Boomers the way we do, we know they don’t want to do that for more than maybe 18 months. What they want to do is to feel connected, to reinvent their lives and enjoy a new sense of freedom.”

Dychtwald cofounded Age Wave, a think tank company that is examining the “emerging mature marketplace,” with her husband, Ken, in 1986. In that marketplace, she says, “there are a couple of paradigm shifts taking place, and they are converging. This has never happened before, and as they converge, many of the models of our society are no longer relevant to the way we are living our lives—including retirement.”

In other words: Fasten your seatbelts. Things are changing, and fast. You’ve already noticed some of these trends, but are you incorporating them into how you sell? Dychtwald recently co-led several retirement-income management summits for Lincoln Financial to help advisors understand the three converging shifts and help them work that understanding into their sales process.

Shift No. 1: Longevity
“People are living longer than ever before,” says Dychtwald. “A hundred years ago, the average life expectancy was 47 years, and the median age was 17½. When they chose the age for retirement as 65, the average life expectancy was 62½. Now, the average life expectancy is almost 78, and shows no sign of topping off.”

Social Security, Dychtwald adds, was designed to be a safety net for those who lived longer than a few years past retirement age. It was never meant to be an entitlement that people drew on for close to a quarter decade or more, she explains.

What this means:
Retirement was designed to last for a short period—a few years, at most, and only sometimes longer. Now, it can be expected to span multiple decades. People might work longer—or have a second, post-retirement career. “And many of them haven’t saved,” Dychtwald says. “But this isn’t a crisis if we reinvent retirement. Most Boomers look at retirement as a new chapter in their lives, to be new people and try new things, rather than a phase of rest and relaxation.”

Shift No. 2: Retirement’s new personality
“Boomers make up a third of our population, and they have always dominated our society from a cultural standpoint,” Dychtwald says. When they were young, education shifted. When they were in the workforce, everything about how we work changed—much of that driven by women. “The way work itself is being done, how we dress, where we work: All of these innovations have been embraced by our society,” she continues.

One of the trends that has emerged in Age Wave’s research is that for Boomers, it doesn’t make sense to follow a linear progression through expected life phases. “We’re beginning to recognize that it may not make sense to work at just one job for your entire life, retire for a few years and then die,” says Dychtwald. “Instead, we’re more likely to take a cyclic approach to life—education, work, and leisure—and mix these up throughout our lifetimes. People are going back to school at 45, 65, even 80. People are having second, third, fourth, even fifth careers. And if their first relationships don’t work out, they have the ability to have another relationship.”

What this means:
Boomers are extremely individualistic and independent; they will not follow their parents to cookie-cutter retirement communities. It may not be enough to talk to your Boomer clients about maintaining their lifestyle after their retirement: Encourage them to talk about what they want to do in their retirement, and help them plan accordingly.

Shift No. 3: A question of trust
Boomers have never been particularly enamored of authority. “Their parents are very respectful of outside authority, but Boomers are not. They don’t trust the government,” according to Dychtwald.

What this means:
Well, first of all, 75 percent of Boomers have never consulted a financial advisor. But all that means is that there is a huge opportunity for advisors to connect with this influential generation. They see Social Security as tenuous, and want to respond to the changes in retirement planning on their terms.