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5 Trends Changing Retirement

Group of senior friends goes hiking and discusses trends changing retirement

And How They May Impact You

The retirement landscape is currently undergoing rapid changes that could impact the way Americans plan and save for the future. The following trends are transforming retirement in significant ways.

#1 – An aging population

The United States is experiencing a shift in demographics due to a combination of declining birth rates and longer life expectancies, leading to an aging population. This shift will have a significant impact on our nation’s retirement system. This is due to the current birth rate in America being 1.66 children per woman, whereas the replacement birth rate is 2.1 children per woman.

The U.S. Census Bureau estimates that for the first time in history, American senior citizens will outnumber American children.1 This shift in demographics places significant financial pressure on our retirement system, government and employers. It also makes it more important than ever to save for one’s own retirement, as the financial support many Americans have come to count on (such as Social Security) may be severely underfunded in the future.

#2 – A widening retirement savings gap

In a recent survey conducted by AARP, 20% of Americans reported having nothing saved for retirement. In addition, when asked if they think they’ll have enough money to be financially secure in retirement, 33% of respondents said “no,” while 31% responded, “I don’t know.”2

Another report indicates just 46% of American households have savings in a retirement account. Of those who have saved, 26% reported having more than $100,000 in retirement savings, and only 9% have more than $500,000.3

Among Gen Xers (those born between 1965 and 1980), the average household has $243,000 in retirement savings, while the median household has only $40,000 in retirement savings.4 This means most Gen Xers aren’t on track to have enough savings to retire.

This is telling of a significant savings gap for many Americans, given that many financial professionals recommend their clients be able to replace at least 80% of their pre-retirement income in their retirement years. In addition, external factors, such as inflation, escalating housing costs and the rising cost of healthcare, make it even more vital to save for retirement.

#3 – A demand for comprehensive wealth advice

Another trend in retirement is the demand for more comprehensive advice. Given all the financial challenges Americans face, many are beginning to realize the importance of optimizing every aspect of their financial lives by taking a more comprehensive approach to planning for the future. Finances, taxes and estate planning all play crucial role in your financial well-being and should be integrated so that you have a clear picture of your financial security.

A comprehensive financial plan can help you take control over your current finances, provide you with more freedom to enjoy life, help you prepare for unexpected expenses and keep you on track toward achieving your long-term goals, such as retirement planning.

#4 – A shift toward different types of investments

As individuals struggle to save for retirement, some are seeking different types of investments, such as lower-cost exchange-traded funds and index funds. This shift toward more-efficient investments is expected to continue as investors increasingly strive to optimize their retirement savings.

Meanwhile, others are tempted by the guaranteed lifetime income provided by annuities. Although lifetime income may seem appealing for some, it can have high fees associated with it, and often growth is traded off for safety. At Creative Planning, we strongly believe there are more efficient and more cost-effective ways to an income stream than investing in annuities.

#5 – A demand for technology

Retirement planning has traditionally been a mostly manual process, but younger generations are making a push for more automation and additional technological capabilities. This is leading to a shift toward more online learning tools as well as enhanced projection and modeling capabilities. In addition, this generation expects both their employers and their financial services companies to understand their needs and provide more personalized services. Could you use some help navigating these shifting trends in retirement planning? Creative Planning is here for you. Our experienced teams collaborate to help ensure all aspects of your financial life are working together to achieve your goals. To get stated, schedule a call with a member of our team. We look forward to getting to know you.

This commentary is provided for general information purposes only, should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.


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