It is no secret that the world looks much different today than it did five years ago. Gone is the housing bubble that too many people thought was going to last forever. Gone is an unshakeable faith in the equity market. Gone are once-seemingly-indestructible Wall Street institutions. Gone are countless numbers of jobs. And gone to a larger degree is a sense of retirement security.

Five years after it released the “New Retirement Mindscape,” in which it introduced the “stages of retirement,” Ameriprise Financial has revisited the study to evaluate “how consumers’ journey to and through retirement has changed.” What Ameriprise found is that the impact of the economic downturn on people’s views about retirement has been profound. In fact, things have changed so much in the last five years that a new stage has developed and another stage has been rechristened.

The “New Retirement Mindscape II” study found six distinct stages that occur before and after retirement: 1) Imagination, 2) Hesitation, 3) Anticipation, 4) Realization, 5) Reorientation and 6) Reconciliation. Five years ago, there were five stages: 1) Imagination, 2) Anticipation, 3) Liberation, 4) Realization and 5) Reorientation.

One close look and you can see that what was once Anticipation of retirement has now become Hesitation. And that feeling of Liberation that people felt about being retired? That no longer exists.

“The big thing that we’re seeing is that [five years ago] the stock market was strong, employment was good and everyone was rolling along,” says Craig Brimhall, vice president of retirement wealth strategies at Ameriprise Financial. “I think the good times will eventually return, but right now people are a lot more sober, a lot more concerned.”

The differences on attitude towards retirement between today and 2005 are often stark. Compared to five years ago, fewer people are enjoying retirement a “great deal” (56% vs. 78%), say they are living their dream in retirement (45% vs. 68%) or feeling that retirement has worked out as they planned (57% vs. 77%). All of these results can be found in the “Realization” stage—which five years ago was the “Liberation” stage. 

One benefit to the sobering effect of the economic downturn is that it appears to be causing people to take action on getting their finances in order. This is especially true for people who are nearing retirement like the baby boomers. People in the “Anticipation” stage (two years prior to retirement) are most likely to feel “on track” for retirement (77%). This could be because they are most likely to be setting aside money in their own savings/investments (83%) and working with a financial advisor (54%).

Those who are feeling the best—most of them have done their planning and working with their advisor,” Brimhall said. “Retirement triggers huge shift in people.”

But Brimhall also cautions people that retirement doesn’t always happen when you planned for it to happen. Health issues or company layoffs can put you in retirement earlier than you had anticipated. This is why it’s important to have a financial plan in place long before the date arrives.

“People are being asked to retire earlier than they were ready for all the time,” Brimhall said. “What on earth makes you think you will be able to choose your retirement age? Few people get to.”

What the study from Ameriprise tells us is that people’s outlook for retirement is greatly impacted by how the overall economy is doing. If someone whose finances weren’t quite in order was asked his or her views of retirement when the overall economy was doing well, he or she might have more confidence that things were going to work out in the end for them personally.  But when that same person is asked about retirement during an economy like we have now, the outlook on a personal level worsens.

“People think that what is happening will continue to happen,” Brimhall said. “It’s human nature. It’s the human psyche.”

One silver lining of the economic downturn is that people have gotten serious about planning. The irrational exuberance that people felt during the stock and housing market bubbles has been replaced by muted expectations.

“When people are looking forward to retirement and on a high they may have unrealistic expectations,” Brimhall said.

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