Conventionally, we have always evaluated success and measured wealth by counting our possessions. “The one with the most toys wins”.
In many ways, retirement planning is about accumulating enough money to pay for our assets in life after work. Retirement is also about rewarding ourselves. We’d love to buy that car we’ve always wanted, purchase a new property, travel to exotic places – things we just didn’t have the time for during the decades we were preoccupied with work. But what if you could have it all – without the financial obligations of owning any of it? The good news is, now you can.
The Sharing Economy
Welcome to the sharing economy. The sharing economy uses the Internet as a way of providing services, experiences, and products on demand without ever “owning” them. Sometimes referred to as collaborative consumption, the sharing economy can be defined as the conversion of tangible assets into services.
So basically, objects we generally own may transform into a service available for you to purchase by the hour, day, month, or year. For example, let’s look at the travel industry. Ever heard of Airbnb? With the ease of a button, travellers all around the world can rent a room, a whole house – or even a British castle! It offers nearly 200,000 rooms, apartments, boats, and treehouses in 190 different countries.
Let’s see some more examples:
- Transportation: Rideshare services such as Uber, Lyft, and others leverage smartphone platforms to match rides with riders. These types of services are cropping up all over the world.
- Everyday Tasks: Websites such as Taskrabbit.com allows consumers to go online to post a job they need done, such as watering the yard, mowing the lawn, or cleaning up the garage. Neighborgoods.net provides a platform for people to share, lend, rent, or sell just about anything. With dogvacay.com, dog owners can leave their dog with a host that will take care of it.
- Clothing: Have a special party or dinner coming up? For a fee, renttherunway.com lets you select designer clothes online. When the party is over, you can box up the outfit and send it back. Poshmark.com allows users to buy and sell designer items from their wardrobes.
This new sharing economy will revolutionize the way we think and plan for our retirement.
What Does the Sharing Economy Mean For the Future of Retirement?
The Sharing Economy prioritizes experiences over possessions. In fact, in the sharing economy, experience is king. Cash flows will be more important than ever. Ownership will be less significant to have the agility to change your lifestyle rather than locking away cash in property and other assets. Here’s why:
- Commuting: The cost of getting from Point A to Point B may require weekly fees for transportation rather than parking thousands of dollars in your garage.
- Live where you want: Living in apartments is an attractive opportunity for retirees who seek exciting environments instead of parking their cash in one property. Harvard University’s Joint Center for Housing Studies confirms that the number of adults aged 55-64 choosing rentership, over ownership, grew by 80%, compared to 50% between 2002-2012. It’s a good idea to make sure you have the liquidity to pay for rent and other fees.
- Additional services: Lifestyle changes, divorce, loss of a partner, and fewer children may result in the need to hire professional help for tasks such as home maintenance, groceries, transportation, and other services.
The Sharing Economy may be a lifestyle created by and for the millennials, but it’s also just in time for people planning their retirement. It will have profound effects on our experiences, expectations, financial planning, and how we prepare for the future. In addition, it may be the promise to living a better and more independent lifestyle as we age.
Talk to your Core Advisor to discover how you can plan for your lifestyle expenses to enjoy your dream retirement.