When it comes to leisure time in retirement, “old school retirement” may be on its way out.
Continue Reading Below
According to Merrill Lynch’s recent study “Leisure in Retirement: Beyond the Bucket List,” retirees go through four stages of retirement, experiencing peak happiness, well-being and realizing the importance of social connections and family during this period. According to the study, more than a trillion hours of leisure time will be created among the 65+ population over the next two decades, which will have an unprecedented impact on individual lifestyles, families and the leisure marketplaces.
Lorna Sabbia, head of Retirement and Personal Wealth Solutions for Bank of America Merrill Lynch, discussed with FOXBusiness.com the priorities, hopes, dreams and challenges of the new world of leisure in retirement.
Boomer: What are the four stages of retirement leisure?
Sabbia: As people move to and through retirement, their experiences, priorities and social connections evolve. Our study uncovered four distinct stages that highlight how individuals approach retirement at different phases:
Winding Down & Gearing Up: this first stage occurs in the five years prior to retirement, when many pre-retirees feel overwhelmed with work and look forward to more time for non-work activities. Pre-retirees in this stage are more likely to feel worn out and lonely, and 74% of respondents said work was a barrier for them to having more fulfilling leisure.
Liberation and Self Discovery: this stage consists of recent retirees who have been retired for two years or less. There’s an enormous sense of liberation and relief in this stage, as most (78%) feel they finally have enough free time and nearly all (92%) say retirement provides them with the freedom to now do what they want. However, some retirees feel unsettled, anxious, or bored, and 35% say it’s harder to structure their time than before they retired.
Greater Freedom and New Choices: this stage applies to those who are 3-15 years into retirement. As they embrace their new identity, feelings of happiness, contentment and confidence are high, spontaneity peaks, and anxiety wanes.
Contentment & Accommodation: the fourth stage of retirement leisure typically takes place 15 years or more into retirement. During this stage, retirees strive to maintain their health and independence as well as to enjoy familiar activities rather than new ones. Compared to other stages, people are most likely to prioritize simplifying their lives.
Boomer: The study addresses the new “Social Security.” What is the value of social relationships and developing social networks in retirees later years?
Sabbia: While pre-retirees say that what they expect to miss most from work is a reliable paycheck, retirees report that it is the social connections that are their greatest loss. According to our survey, Americans prioritize their social relationships in retirement more than at any other point in their lives. This is particularly true when it comes to leisure experiences, with 61 percent of retirees saying “who you’re with” is more important than “what you do.”
Whether it’s spending time with grandchildren, friends or a spouse, retirement provides an opportunity for retirees to reconnect and prioritize social bonds. And as retirees come to adopt new hobbies and carve out time for more meaningful activities, they can further expand their networks based on shared priorities and interests.
Boomer: What are some of the challenges of the new world of leisure for retirees in retirement?
Sabbia: A key question pre-retirees should think about as they transition into retirement is: how will I fill my time over the next twenty or even thirty years? Many retirees face the challenge of transitioning from a constantly busy lifestyle to long periods of unstructured free time. While many retirees experience great relief, it’s common for those new to retirement to feel anxious or guilty about not using leisure time productively.
Gaps in planning can also pose challenges for retirees as they enter retirement. There are a small portion of retirees (7%) who report retirement is less fun, enjoyable, and pleasurable than their pre-retirement years, noting financial concerns (65%) as the primary reason. Retirees should identify how they want to fill their leisure time and work with a financial advisor to align leisure priorities to financial goals.
Boomer: Did the study find retirees have done some planning for funding their retirement leisure?
Sabbia: While pre-retirees and retirees are taking steps to save for specific goals, such as taking a family trip or remodeling a home, the study revealed that retirees can be doing more to plan for leisure activities in retirement.
Creating a game plan can be overwhelming, but starting with a few basic questions can make all the difference. For example, retirees should take the time to address and discuss with their family:
How do you want to spend your time and who do you want to spend it with?
What’s on your bucket list?
What are your dream experiences?
What daily activities would you like to have, and what are the financial implications of those?
Our research shows that leisure in retirement can be extremely fulfilling when people take the time to plan and prepare, but it’s uncommon for retirees to focus their planning on leisure goals. We’ve also seen that nearly all retirees at varying asset levels tell us that freedom and flexibility increase in retirement, regardless of how much money they have.
Creating a game plan for leisure in retirement can empower retirees to achieve their goals and make the most of their newfound free time during these key years.