The way we used to retire is retiring. With lifespans extending well into the 80s, many people will experience the “third age of man”, a new period of life that used to be called “old age”. Only it’s not old anymore — just ask the 60-year-olds still running marathons, or those in their 70s who decide they’ll give skydiving a go.
This new reality requires a shift in mentality for many, and a total recast of the way we save and plan for that period of life. In the past, a pension meant a defined benefit plan. You saved to a certain point, and then your employer and/or the government guaranteed you a certain payout every month for the rest of your life.
Now, however, defined contribution plans are on the rise globally, with assets up 5.6 percent per year over the past decade. That compares with annual growth of only 3.1 percent for defined benefit plans.
“DC” plans feature a set contribution from an employee/saver, normally accompanied by a compan