Retirement Planning

Today’s lifestyle changes

Impact on future finances

From innovative indoor entertainment to telemedicine, to daily commuting and workplace upheaval, the pandemic has had a profound impact on lifestyle. While the changes have been far-reaching, they have been especially clear among those nearing retirement. But change has also accentuated some of divergent concerns of different generations.

“We are used to going to work where others are dependent on us; we fill a gap,” Jack Kirshenbaum of New York-based Starlight Wealth Management told Advisors Magazine. “However, when we retire without feeling that sense of purpose of coming every day to fill a void where others are dependent on us, there can be consequences on an emotional level.”

Most recently, nonetheless, any emotional consequences have taken a back seat to actually taking it easier.

“As employers contend with growing numbers of younger employees quitting in the Great Resignation, the COVID-19 recession and gradual labor market recovery has also been accompanied by an increase in retirement among adults ages 55 and older,” Pew Research Center reported late last year.

“The desire for early retirement has been common among the Baby Boom Generation for many years,” Dennis Channer, CPA, CFP®, AEP® at Colorado-based Cornerstone Investment Advisors LLC said.

“I recall age 55 being a magic point of departure from work life toward independence and a life of leisure,” he added. “As time has passed, life expectancies have increased dramatically along with the expectation of a more active retirement, with travel and a continuation of their ‘lifestyle’ time as we age.”

Channer noted that sometimes a dream home is part of the picture or help with a child’s first home purchase or grandchildren’s’ education.

“Baby boomers have often set lifestyle a priority over savings, often carrying forward debt,” Channer told Advisors Magazine. “There is too frequently an assumption that the traditional age of 65 is retirement time … no matter what. The math has often been ignored.”

Given a typical work life of 40 years or so and realizing that those earnings may have to fund an additional 25 years or more, Channer said that does not always compute. “Conservative investment strategies and retirement rules of thumb can decrease the probably of success,” he cautioned.

But it’s not just baby boomers facing financial challenges as a result of social and economic changes now underway.

“Due to the recent rampant inflation, my largest concern for the millennials and Gen Z is their inability to buy into the real estate market,” said Matthew C. Peck, CFP® CIMA®, founder and CEO at Massachusetts-based SHP Financial.


“As the Federal Reserve raises interest rates to combat inflation, this will make it difficult for the millennials and Gen Z to enter the market as their mortgage rates will be higher,” he explained.

“Meanwhile, with inventory low and real estate seen as a good investment in inflationary times, demand for new homes may not subside,” Peck acknowledged. “Put together, prices may not come down but their ability to afford even today’s prices will be severely hampered by the current inflationary environment.”

In fact, as far as inflation — baby boomers have experienced it, but Gen Z and millennials not very much.

“While inflation is on the rise, no credible economist expects double-digit inflation similar to the late 1970s or early 1980s,” said Brian Cochran, CFP®, CKA® — a financial planner with John Moore Associates in Albuquerque, New Mexico.

“That said, it seems very possible we could see elevated inflation for the foreseeable future,” Cochran emphasized.

Like Peck, Cochran noted that millennials and Gen Zers may have to navigate a very different interest rate environment than that of the last decade.

“For example, younger homeowners have never seen a mortgage interest rate that doesn’t begin with a 2, 3, or 4,” Cochran explained. “Thirty-year mortgage rates in the 5-7% range would dramatically impact home affordability and could prove hard to stomach for a generation who expects a 3.5% rate when they buy a home.”

Still, Cochran allowed that “The Fed may be right, and inflation could prove to be transitory and interest rates could remain low.”

Change and technology have also had an impact on the youngest of generations — and at a time when they could be learning better financial habits.

Specifically, teenagers and young adults spend a good deal of their time on social networks. And a lot of the content shared on social media revolves around lifestyle and self-image—gadgets, clothing, activities, style.

“This can create tremendous pressure, especially with young adults, to impress others or to feel like they are up to par with the latest trends,” Kirshenbaum of Starlight Wealth Management said.

“As a result, many people are making poor financial decisions in their ability to buy certain items,” he added. “Teenagers and adults need to understand the long-term benefits of making proper financial decisions, resulting in them not falling victim to social pressures.”


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