Is A 60-Year-Career The New Norm? Perhaps Not With Creative Investing

People are living longer than ever, and life expectancies are only increasing. While we can be grateful to modern technology and medicine for making this possible, longer life spans force us to rethink our financial strategies. With greater life expectancy comes the need for greater financial independence. 

The average career length is about 40-45 years for most people. Now with longer life expectancies, some are speculating the new norm is going to look more like a 60 year career due to the need to save for a longer retirement with higher medical costs. 

But does this have to be the case? Well, that depends on how you approach your investment strategy leading up to retirement.

In this article, we’re going to review the traditional career path and investment strategies, the new mindset that millennials and Generation Z are embracing, and the pivotal role creative investing can play in preventing the 60-year-career from becoming the default reality for future generations. 

A Changing Landscape

Most Americans are still running the same career trajectory script in their minds. It goes a little something like this: Go to college, get a degree, get hired by a major corporation, work there for 40-50 years, contribute to their retirement program, and retire modestly. 

But for better or worse, this path is becoming a thing of the past. 

Macroeconomic forces (and changing generational preferences) are challenging the traditional pattern—even without the added pressure of longer life expectancies. Factors like wage stagnation, inflation, high student loan debts, depleting Social Security, and technological advancements have changed the landscape, possibly for good. 

And it may no longer be possible for investors, especially young investors, to rely solely on 401(k) savings and Social Security to achieve a comfortable and secure retirement.

What Worked: The Traditional Investment Approach

The idea of a 60-year-career is based on the building of an adequate nest egg. In order to retire (i.e., stop actively working for income), you’ll need enough savings to carry you through the rest of your life. But relying on a nest egg built with growth assets alone is a risky prospect—and may no longer be viable in today’s economic climate. 

Imagine the following scenario: You’ve worked for decades and have invested consistently. But now you’re ready for retirement and need to start making withdrawals. You’re banking on the market to keep performing ahead of inflation and earning enough interest to replenish what you take out. 

But what if the market crashes or your investments underperform in a given year? You’ll either have to live on less income that year (or for as long as the downturn lasts) or draw down your principal balance. You may end up in a position where you need to work for an income again.  

In all fairness, professionally managed portfolios are often diversified between traditional assets to hedge against market downturns. But with recent inflation, the unpredictability of the markets, and the sheer amount of capital it takes to produce a modest annual income from traditional assets—this once-safe strategy may not be enough to provide the income you need.

New Horizons: Investing to Retire Early

Millennials and Gen Z, in addition to facing the challenges of a changing investment landscape, are changing jobs (and careers) far more frequently than previous generations. On top of this, their attitude towards and vision of retirement does not include a 60-year-career. 

In fact, the majority of millennials and Gen Zers are looking for ways in which they can retire before the age of 60. Movements like Financial Independence, Retire Early (FIRE) are attracting more and more young people. 

If saving and investing in traditional assets like stocks, bonds, ETFs, and mutual funds is no longer a realistic strategy to build a large enough nest egg, where do the better alternatives lie? 

The answer is with income replacement investments that bring in multiple streams of income on a regular basis. Technology has made it easier than ever to buy into income replacement assets. And these assets allow modern-day investors to create cash flow from multiple sources. 

In turn, this means that such investors can become less reliant on their careers to keep money coming in. This mindset shift away from speculation-driven investments to income-producing ones is key in breaking away from the 60-year-career trajectory. 

How Income-Replacement Assets Can Prevent the 60-Year-Career

With the accumulation of enough income-producing assets, life can truly become work-optional—even for a life that lasts longer. This is because income-producing assets replace the income you’ve worked for actively, usually in the form of rent checks, lease payments, or interest payments. 

And with the right actions taken sooner rather than later, this strategy can be accomplished in well under 60 years. 

As all investors know, compound interest is an incredible thing. The longer compounding has to work its magic, the larger the amounts to be gained. When you add income-producing assets into the mix, your financial freedom only compounds faster. 

Investing in income-producing assets can even allow you to invest more in traditional assets as your income is replaced so that you remain well-diversified. And more importantly, the need to actively work for income decreases over time, even with the threat of downturns affecting the more traditional growth assets. 

Let Chicago Trust Administration Services Help You With Creative Investments

At Chicago Trust Administration Services, we recognize how much the economic landscape has changed for modern-day workers. And we understand why some experts feel that a 60-year-career may be what’s required to retire in peace. But this mentality, coupled with the overreliance on traditional growth assets, can make the 60-year-career a self-fulfilling prophecy. 

We disagree that future generations will need to work this long—but they need to make changes now. By investing in and diversifying their portfolios with income-producing assets, future generations can alleviate the pressure to actively work for income for so many decades.

We’re excited to help our clients do this by leveraging self-directed IRAs. SD-IRAs allow you to invest tax-advantaged retirement savings in alternative income-producing assets, which can help you achieve financial independence in a faster, more durable way. 

If you’re interested in talking to our team and getting started, we invite you to reach out to us for a complimentary discovery call. To see how we can help, we invite you to schedule a meeting with us by calling 312-869-9394 or emailing steve@ctasira.com.

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*The content and opinions in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

**CTAS professionals are not financial advisors and cannot provide advice or recommendations regarding specific investment decisions.