Retirement Lifestyle Research Articles

Optimal decisions under price dynamics for Roth conversions

AbstractRetirees are faced with a variety of choices during their working and retirement years on how to best support their retirement lifestyle and estate planning goals. One of these choices is the option to convert a portion of their pretax savings from a tax‐deferred account (TDA) into a tax‐exempt Roth account. In this article, we quantify the Roth conversion payoff and when/how it depends on investment returns. We show that, while the use of taxable account assets may produce a larger payoff than early withdrawals from the Roth IRA, large unrealized taxable account gains and estate plans may change this calculus. Our work provides a recommendation on how current dividends or cash versus appreciated assets should be used to optimize Roth conversion payoffs, and informs FinTech companies and robo‐advisors on how to best support this important option for millions of current and future retirees.

177 Embracing choice: perspectives of older workers on extended working lives

Abstract Background Proposals to extend working lives are a frequent policy response to increasing older populations and associated pressures on state pension systems. However, all the consequences of a later retirement age are as yet unknown, with the perspectives of people potentially the first cohort of workers encouraged to remain in the workforce under-explored. Methods We conducted exploratory semi-structured interviews with 22 people aged between 51 and 63 in service industry occupations in Ireland. Falling just above low-income thresholds, this group were asked about their preparations for retirement, their views on continuing to work beyond anticipated retirement age and what measures, if any, can be implemented to facilitate working later in life. A thematic analysis was performed to provide a rich and detailed account of the perspectives of older workers as they approached retirement age. Results We found a general acceptance of working later in life, however this was contingent on several factors. The overarching enabler was continuing in good health with financial status a key underpinning motivator. For participants with insecure housing, patchwork employment histories and inadequate pension provisions, there was an impetus to continue working to generate savings before retirement. Often with less secure employment trajectories than previous generations, a leisurely retirement lifestyle was a diminishing prospect for our study participants. Working in multi-generational workplaces with the opportunity to shift to mentor roles was welcomed. As retirement approaches, measures such as reducing working hours while protecting existing welfare benefits would encourage people to remain in work for longer. Conclusion The complex and individual nature of continuing to work beyond expected retirement age requires flexible policy responses. An individualised approach to retirement which recognises the increasingly diverse nature of employment over the life-course is needed. This research contributes to advancing knowledge on how the choices of older workers can be facilitated in the context of our rapidly growing older population.

Irrational beliefs indirectly predict retirement satisfaction through the conceptualization of retirement: a cross-sectional study in a sample of recent retirees

BackgroundAlthough most retirees are satisfied, some do not feel well in retirement. The resource-based dynamic perspective explains retirement dissatisfaction as the lack of resources. This study focused on psychological resources, specifically on the role of rational/irrational beliefs and retirement concepts in retirement satisfaction. While irrational beliefs have many consequences, we know little about their role in retirement experiences, nor do we know about the benefits/harm of retirement concepts for retirement satisfaction. We assumed that not succumbing to irrational beliefs and conceptualizing retirement actively and positively add to psychological resources helping to adjust to retirement and retirement satisfaction. Our objective was to examine whether irrational beliefs and retirement concepts contributed to satisfaction or dissatisfaction in recent retirees.Methods200 recent retirees (average retirement time 2.8 years) completed questionnaires containing the Irrational Belief Scale, the Satisfaction with Retirement Scale, and the Retirement Lifestyles Questionnaire, which determines the inclination toward four retirement concepts: Transition to Old Age, New Start, Continuation, and Imposed Disruption. The Pearson correlation coefficients were used to estimate the relationship between irrational beliefs, retirement concepts, and retirement satisfaction. We used a parallel mediation model with multiple mediators in the mediation analysis where irrational beliefs were the independent variable, retirement satisfaction was the dependent variable, and the four retirement concepts were mediators.ResultsWe confirmed higher retirement satisfaction in recent retirees who conceptualize retirement as a New Start and Continuation and higher retirement dissatisfaction in those who see retirement as an Imposed Disruption or Transition to Old Age. The general irrational beliefs had a weaker direct impact on retirement satisfaction than the more specific retirement concepts. Inclination to general irrational beliefs appeared only weakly reflected in retirement dissatisfaction. However, a negative view of retirement as an imposed disruption might increase this inclination by intensifying retirement dissatisfaction.ConclusionsOur results show a negative retirement concept as an imposed disruptive event that amplifies the impact of general irrational beliefs and leads to retirement dissatisfaction in recent retirees. It suggests that using rational-emotive behavior therapy and interventions to change the negative perception of retirement could be effective in increasing retirement satisfaction.

“It’s Always a Beautiful Day in the Villages”: Management Challenges for Large-Scale Retirement Communities

Over the past few decades, there has been explosive growth in the luxury large-scale over 55 community sector. The state of Florida has been one of the largest recipients of the influx in residents to the state seeking such a retirement lifestyle. While many tout the benefits of living in such luxury settings, these communities are not immune to the particular social and managerial challenges that result from rapid growth. In this research, we focus on a specific luxury large-scale over 55 community in Florida, the Villages, to explore the various positive and negative aspects that accompany this lifestyle. Through semi-structured interviews with residents and observational netnography, we find several major challenges. These challenges surround the management of political signage, growth, and the equal application of community rules, to be at the center of residents’ critiques of the community. We offer implications and recommendations on how management can handle these challenges.

Wealth Accumulation and De‐Risking Strategies Among High‐Wealth Individuals

The emergence of the asset economy in advanced capitalist countries has enabled significant asset accumulation by high‐wealth individuals, and the rise of finance has provided new, profitable investment vehicles for those with investable capital. This accumulation process has been described as a form of compensatory logic to achieve protection from future risks, especially in the current neoliberal environment with governments reducing state pensions while promoting tax‐deductible private investments as a substitute for state provision. This article reports the results of qualitative research into the private wealth accumulation attitudes and behaviours of high‐wealth individuals and their worries about achieving a comfortable retirement despite their substantial wealth holdings. Although the interviewees reside within the top 5% of the wealth distribution in the UK and would be expected to feel confident that their wealth will be sufficient to support their retirement needs, they convey a sense of uneasiness and concern that they will still not have enough to support their expected retirement lifestyles. In response to this perceived risk, these high‐wealth individuals engage in a variety of what I call “de‐risking” behaviours with the goal of mitigating the risk of insufficient wealth to support retirement. The article contributes to our understanding of the processes utilised by high‐wealth individuals to help ensure they have sufficient wealth to support their desired comfortable retirement by engaging in strategies intended to de‐risk their financial lives.

Making Sense of Anything thru Analytics: Employees Provident Fund (EPF)

Employees Provident Fund (EPF) has always been a hot topic, from the previous Government permitted “withdrawals” during the pandemic to the present Government disallowing further withdrawals (afraid it would lead to a financial crisis) and allowing emergency loans through an EPF collateral agreement. The latter used median studies to “contribute” MYR 500 to EPF members with less than RM 10,000 in their accounts. Baffled/bewildered by the current Government’s generosity and highlighted in this paper, I used Monte Carlo simulation, a method used by analysts when determining the size of a client’s portfolio to support their desired retirement lifestyle, to establish a reference-type table displaying ideal savings when reaching 50. The Government could use the table mentioned above to give more meaningful contributions to EPF members, apart from EPF active and inactive members, knowing where they stand concerning their current EPF savings.

Satisfied versus dissatisfied: Experiences of retirement village living.

This study aims to understand and distinguish between satisfied and dissatisfied older people, through a comparison of their lived experience within a retirement village. An exploratory qualitative research design was utilized to identify and describe consumer experiences of lifestyle living and how that experience translates to positive or negative satisfaction. The net promoter score (NPS) was employed to identify highly satisfied (Promoters) and highly dissatisfied (Detractors) people. Sixty-two interviews in retirement lifestyle villages were analysed, including satisfied (n=33) and dissatisfied (n=29) consumers of the service. Results reveal that satisfied people: (1) feel grateful for a service that exceeds their purchase expectations; (2) feel connected to others inside or (3) outside the lifestyle village; (4) feel 'heard' by the service provider; and (5) feel that they have retained their independence. Dissatisfied people describe: (1) broken promises, specifically those made at the time of purchase; (2) not feeling 'connected' to others inside the village; (3) feeling unheard or ignored by the service provider; and (4) the service not meeting their needs. Revealing these detailed insights clarified the nuanced, hazy and often ambiguous differences between dissatisfied and satisfied people. It also provided insights into the high priority needs, expectations and choices of people as they transition into and through older age. The research should help industry, government and society in general to provide products and services that fit into this lived experience and better meet the changing needs of older people.

Retiring from ‘University Life’: Critical Reflections on a Retirement Lifestyle Planning Program

While assisting individual workers to prepare or plan for a successful transition to retirement is a key responsibility of human resource (HR) departments, within many large organizations (including universities) preparations related to financial planning are prioritized, with limited evidence of consideration for the lifestyle preparations needed. The purpose of this study was to evaluate a series of leisure education-based webinars focused on supporting university employees to engage in lifestyle planning associated with the transition to retirement. In addition to live sessions, a learning management system provided access to discussion boards and resource materials with senior students available to provide individualized assistance. Participants (n = 44 across two implementations) indicated wanting assistance to make retirement fulfilling or rewarding. Participants were very-to-highly satisfied with the sessions, with the most highly valued focused on self-exploration (e.g., considering values, beliefs and strengths to bring into retirement). Participants also valued opportunities to reflect on what aspects of their work life they want to bring with them into retirement, and what they want to leave behind. Although a ‘readiness’ for self-exploration seemed important, opportunities for leisure-related self-reflection and assessment seemed particularly beneficial. Findings are discussed in relation to considering HR departments’ responsibilities to assist university workers to prepare for the retirement transition. Leisure education as a tool for facilitating retirement planning in the university context is warranted. Possibilities for incorporating peer-to-peer education and support—as well as tailored educational sessions—are discussed.

The Expected Retirement Lifestyle in Malaysia

When people are young, they try to earn as much money as possible for their and their family life. After the hard work to make money, people become old, and their productivity gets lower, and this is the time for them to retire and enjoy the following relaxing lifetime. But currently, the environment is so bad due to the Covid-19 pandemic. The affection of the pandemic is that many people are losing their jobs, and income is reducing. As a result, the people's revenue declined, which may significantly affect people's lifestyles and savings. Therefore, this paper examines the relationship between financial status, happiness, quality of life, and lifestyle in Malaysia during the Covid-19 pandemic. Although this paper is only a conceptual paper, the expected outcome for this study is that there are positive relationships between financial status, happiness, quality of life, and lifestyle. Throughout this study, it may provide general public awareness to provide their quality of life and lifestyle by understanding more information.

Sufficient Income and Sustainable Withdrawal Rates for Retirement

Since the passage of the Employee Retirement Income Security Act of 1974 (ERISA), numerous companies from throughout the United States have chosen to change from providing “Defined Benefit” pension plans to providing “Defined Contribution” pension plans. Successful retirement planning is an iterative process that requires the management of many variables. Some are random and unpredictable in scope and magnitude and others are choices we make as our retirement objectives change. It’s essential that changes be incorporated expeditiously to minimize adverse outcomes. One can begin the process by estimating the annual income required to support one’s “retirement lifestyle” if retirement occurred today. Then extrapolate that income to the planned retirement date based upon the expected rate of inflation. A “modified four percent rule” can then be used to estimate the portfolio value required to support 30 or more years in retirement. The financial planner and client should go through this process at least every two years or when major events suggest a change is required. To assist the planner, this paper extends the Four Percent Rule in the following ways: Time in retirement is 16 – 40 years in 2-year increments with an asset allocation range is 0% to 100% stocks in 15 equal steps.

Your mileage may vary

The traditional model of retirement planning centers around the accumulation of a portfolio dur- ing the earning years followed by a drawdown from this portfolio after retirement. This drawdown is intended to support a desired retirement lifestyle, and central to a successful retirement is the sustain- ability of the retirement portfolio over the expected planning horizon. We define portfolio success to mean the ability of the retirement portfolio to sustain a desired retirement lifestyle over the desired planning horizon, and use simulations and logistic regressions to evaluate the impact of asset alloca- tion, the profile of portfolio returns, the withdrawal rate, and the length of the planning horizon on portfolio success. Our analysis shows that the likelihood of success is inversely related to withdrawal rate, retirement horizon, and portfolio risk increase, and directly related to portfolio return, allocation aggressiveness, and early experience. The analysis also indicates that portfolio success is highly sen- sitive to withdrawal rates, with conservative allocations exhibiting greater variation in portfolio out- comes and aggressive allocations providing more dependable portfolio outcomes for retirees who desire higher withdrawal rates.

The influence of maximizing on personal saving intentions

Prior work has established that maximizing tendencies influence purchase choice behaviors (e.g., maximizers take longer to browse product assortments and are more likely to choose ‘compromise’ products). By contrast, the present research investigates differences in saving intentions associated with maximizing tendencies. Three studies demonstrate that maximizing increases saving intentions in a variety of scenarios constituting both short- and long-term time horizons. Underlying this effect, maximizing is associated with a greater desire to accumulate money to afford the future purchase of status-enhancing products and services. Supporting this theoretical process, the effect of maximization is attenuated in a scenario where the purpose of saving is for future security, as well as in a scenario where the purpose of saving is for a budget retirement lifestyle. These findings are the first to implicate social comparison motives in driving consumer saving decisions. They also have implications for policymakers and practitioners looking for ways to motivate individuals to save more.

Retirement lifestyle conceptualization and well-being in recent retirees

ABSTRACT The retirement literature contains four distinct conceptualizations of retirement lifestyle. Retirement can be seen as an opportunity to make a new start, the continuation of a pre-retirement lifestyle, an unwelcome imposed disruption, and a transition to old age. This research examines the conceptualizations of retirement lifestyle and how they relate to retirement adjustment and well-being in recent retirees (N = 173). A factor analysis confirmed the existence of four factors identifying four retirement conceptualizations. Although previous studies have presented retirement conceptualizations as mutually incompatible, significant relationships were found between them in this research, indicating that recent retirees can synchronously conceptualize seemingly distinct lifestyles. The cluster analysis identified three types of retirees in the sample. These types were labeled to reflect the prevailing retirement lifestyle concepts. The first type of retiree (N = 90) is “New beginning and continuation,” the second (N = 44) is “Imposed disruption without hope,” and the third is (N = 39) “Accepted disruption and ending.” The analysis of variance revealed the three types differ significantly in the level of satisfaction in retirement, subjective happiness, and life meaningfulness – with the highest level being found in the first retiree type and the lowest level in the second retiree type. The findings suggest that conceptualizations of retirement lifestyle change over time and affect psychological well-being in the recent retiree cohort. The theoretical and practical implications of the results are outlined.

Practical Applications of Should a Retiree File for Social Security at 62 or 70?

Practical Applications Summary In Should a Retiree File for Social Security at 62 or 70? from the Fall 2019 issue of The Journal of Retirement, author Michael Harris (at Indiana University Southeast School of Business) challenges the popular belief that all retirees should delay filing for Social Security until age 70 to maximize their monthly income. This way of thinking treats retirees as a homogenous group with one goal: wealth maximization. But retirees are a diverse group with different goals based on their individual circumstances. Those who have little or no retirement savings and need maximum Social Security income or those who want to work as long as possible may wish to file later. Others may be better off filing earlier so they can pursue a wealth optimization strategy—making the best use of Social Security, pensions, savings, and part-time employment—to support the retirement lifestyle they want. The author analyzes different retirement scenarios to help people with different goals understand the costs and benefits of filing at age 62 or age 70. He then encourages financial advisors to work with their clients to pinpoint the Social Security filing strategy that will work best for them.

Continuity and change in the transition to retirement: how time allocation, leisure practices and lifestyles evolve when work vanishes in later life.

With increased longevity and socio-structural as well as socio-cultural changes, ageing research has shown a growing diversity of patterns in retirement lifestyles (Scherger et al. in Ageing Soc 31:146-172, 2011. 10.1017/s0144686x10000577). The transition from work to retirement is of particular interest to the study of the everyday lives, leisure activities and lifestyles of older adults, as questions on the meaning of work and leisure, activity and productivity are re-negotiated. This paper addresses the questions: how are the everyday lives of older adults re-organised when work vanishes? Are there lifestyles that are more easily maintained through retirement, whereas others are more prone to change? And which patterns of social inequalities underlie these processes? Drawing on data from the GTUS, this paper discusses similarities and differences in the time allocation of older working and non-working adults aged 55+ years (matched sample). Results show that the time spent on work is primarily taken up by household chores, media use and personal activities. Hierarchical cluster analysis identifies four activity clusters resp. lifestyles among the 55+: (1) a passive leisure lifestyle, (2) an active leisure lifestyle, (3) a paid work-centred lifestyle and (4) a housework-centred lifestyle. None of the clusters, however, comprised exclusively working or non-working older adults. The active leisure cluster comprised an equal share of working and non-working persons, suggesting that this kind of lifestyle allows for stronger continuity across work and retirement. It was more easily obtained by higher educated women who live separated from their partners.

Spa tourism as a part of ageing well

ABSTRACTDue to increased life expectancy and the prevailing ideological elements of wellness and active ageing, wellness-related consumption has become a distinctive part of many retirees’ lifestyles in affluent societies. This qualitative case study illustrates this trend by examining older adults’ experiences of spa tourism in connection to their broader strategies for ageing well. The data consist of 18 interviews carried out in an Estonian spa destination among Finnish retirees regularly visiting spas in Estonia. Focusing on the perceived benefits, the study shows how spa vacation promotes participants’ wellness very holistically and is therefore an essential part of their individual wellness routines. The study demonstrates how variety of aspects related to ageing and retirement are reflected in participants’ experiences, motives and expectations of spa vacation. Thus the study suggests that the tourist's stage of life should be more widely taken into consideration in tourism experience research and the development and targeting of wellness services to different customer segments. Overall, regular spa tourism is a great example of retirement lifestyle tied to consumerism and wellness-based individualism that supports both individual and societal perceptions of good ageing.

Extending the normal retirement age in occupational defined contribution funds in South Africa

This paper addresses the problems of insufficient retirement savings and increasing longevity through the consideration of extending the retirement age. It is a pilot study of South African employers’ and employees’ perspectives on extending the normal retirement age in occupational retirement funds and the implications thereof. The data used for this paper were collected from two surveys conducted amongst South African employers and employees who are part of occupational retirement funds. The results indicate that most employers appear to have a positive attitude toward older employees, rating positive attributes such as reliability, experience, productivity and loyalty to the firm highly. The most significant factors in predicting whether an employee would be willing to work past the normal retirement age include employees’ expectations with respect to retirement and retirement lifestyle, current age, and whether they believe they will accumulate sufficient savings by their company’s normal retirement age. This study provides a base on which further analysis should be performed to understand whether the occupational sector in South Africa is willing to extend the normal retirement age.Keywords: Retirement; older workers; employers; retirement savings; South Africa

Patterns of activities among Cracow’s young retirees in an urban environment(an example of cluster analysis)

Population ageing has drawn increasingly more attention to the question of retirement. On the one hand, the number of retirees increases and retirement becomes a more prominent part of life. As a result, people at present have developed a distinct retirement lifestyle and retirees become more diverse. This study presents how the choices of young retirees (individuals that are retired for no longer than 10 years) in urban environment differ. The empirical material used for this study consisted of 206 interviews conducted with inhabitants of Cracow. Interviews were conducted from June to December 2014. Hierarchical cluster analysis enabled to differ two type of time usage models (traditional and open) and 3 types of young retirees (active retirees residing in districts that have a wide offer dedicated to senior citizens, passive retirees with limited funds and moderately active older young retirees).

Commoditization of Lifestyle Migration: Japanese Retirees in Malaysia

This paper aims to explore the relationship between mobilities created from individual choices and the market factors driving lifestyle migration. The transnational mobility of elderly Japanese throughout Asia is considered one of the emerging cases of international retirement migration in Asia, an overall relatively new phenomenon. Through examining the sociocultural aspects of lifestyle migration in the case of Japanese international retirement migration to Malaysia, this paper argues that lifestyle migration, as a form of consumption, results in self-realization that has a culturally specific meaning for Japanese retirees. By linking tourism and migration, this paper proposes that the mobilities market serves as a mediator of transnational human mobilities and argues that the commoditization of Japanese international retirement migration reflects on both the socioeconomic and sociocultural aspects of Japan as an aging society. Ethnographic data, alongside media discourse analysis, demonstrates how the expectation of self-realization is mediated through the promotion of Malaysia as a destination country of Japanese international retirement migration and their culturally specific understandings of retirement lifestyle.

Long-Term Returns: A Reality Check for Pension Funds and Retirement Savings

Expectations for investment returns play an important role in establishing business capital cost and capital structure, as well as influencing individual savings behaviour, risk-taking, and long-term funding of institutional obligations such as pensions. Proper and realistic forecasting makes for better long-term investment decisions improving retirement planning. In this Commentary, we demonstrate why pension plan administrators and individual savers should avoid using historical rates of returns to forecast future returns, and provide our own forecast for long-term investment returns on a balanced portfolio of bonds and stocks using current and prospective market information. Our empirical analysis of Canadian data provides substantial evidence that forecasts based on past performance should not form a basis for decision-making, as they consistently point in the wrong direction. The history of stock and bond markets is punctuated with extreme situations – such as the recent global financial crisis – that make drawing on the outcome of these events inappropriate as a predictor of future performance. Thus, relying on historical performance to inform long-run return forecasts in pricing future pension liabilities is almost certain to be misleading. Prospectively, using information available as of February 2013, we predict long-term returns in the neighbourhood of 2.5 percent (0.5 percent real) on long-term bonds and of 6.9 percent (4.8 percent real) on stocks. For a balanced portfolio (50/50 split), we therefore expect a real return of 2.7 percent for the next decade. To incorporate potential risks to this scenario, we have performed a series of long-term simulations that give a sense of varied possible outcomes. We found significant downside risks. There is a 25 percent probability that portfolio returns will be lower than forecasted by more than one percentage point on a 30-year horizon, and lower by more than 2 percentage points on a 10-year horizon. Finally, we draw implications for pension funds and individual savers. The use of more realistic investment return expectations would reveal bigger pension liability for some defined-benefit pension plans. They also mean individuals should save more for their retirement to avoid a larger-than-expected drop in their retirement lifestyles.