A Machu Picchu moment and what it means for aging and retirement

Younger generations are rethinking retirement — considering more flexibility and well-timed breaks over a traditional model of holding a job until a certain age and then stopping work.

Kelley Long, CPA/PFS, joined the Journal of Accountancy podcast to discuss how modern financial planning is changing. She also explains how health savings accounts can support career flexibility and reduce reliance on employer‑sponsored health insurance later in life.

Long will explore these topics further in June at AICPA ENGAGE, the profession’s biggest conference. She is presenting sessions focused on retirement and on health care financial literacy on June 10 in Las Vegas.

What you’ll learn from this episode:

• A preview of Kelley Long’s ENGAGE sessions and a related JofA article.
• The factors that are leading younger generations to approach retirement differently.
• How “mini‑retirements” can fit into long‑term career and financial planning.
• How Long’s trip to South America crystallized her views on timing and retirement.
• The role of social connections in cognitive health.
• Some ways that health savings accounts can support career changes or time off.
• How potentially being overinsured can affect financial planning.

Play the episode below or read the edited transcript:

— To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.

Transcript

Neil Amato: Welcome back to the Journal of Accountancy podcast. This is Neil Amato with the JofA. Our next guest is an ENGAGE speaker, Journal of Accountancy author, podcast host herself, and an expert on financial planning topics. She is Kelley Long, and we’re glad to have her on the JofA podcast. Kelley, welcome.

Kelley Long: Hey, Neil. Thanks so much. I’m thrilled to be here.

Amato: We are thrilled to have you. You’re speaking at ENGAGE on a topic that should be of interest to listeners. It’s also a topic you’re covering in an online article scheduled to appear later this month on journalofaccountancy.com. Early in that article, you write, “Younger generations are creating a new definition of retirement.” What does that mean?

Long: First of all, retirement is a bad word to a lot of younger workers. The definition is really maybe calling it financial independence, but the idea is really of spreading your working/earning years over more of your lifespan and spending more of your peak health span years living and spending through creative life and financial planning.

That’s the thesis that I’m building my own life on, in addition to this presentation at ENGAGE and the article that’s coming out. People do that through mini-retirements. That phrase has entered the chat recently, which is really more of a sabbatical or what I call a parental leave without having to give birth.

Amato: [LAUGHTER] That’s a good one. Mini-retirement, that makes sense. I think there’s a lot of people my age, mid-50s, who are thinking, I could go for a little mini-retirement now, and then come back to work, and then take another mini-retirement, come back to work. Is that one of the things that maybe people are thinking about?

Long: It’s absolutely something I wish more people would be more open to thinking creatively about. I personally and a lot of my clients are OK with doing something to earn money well into their 70s. But they don’t necessarily maybe want to be grinding at the same career they started in their 20s or 30s, but especially those of us in the CPA profession or in these so-called white-collar jobs or less physically demanding jobs, we have a lot more working years in us than say when the idea of retirement came forward when you had to work on the floor of a factory where there weren’t safety standards.

Times have changed, and the idea of a mini-retirement could be literally quitting your job and taking some time away and then doing a career change or starting a business, or with the right mindset of management or yourself, or companies, or just a variety of things that would have to come together, a mini-retirement could just be taking three months off and then coming back, or taking six months off or even a full year, but restarting your career either with a different employer or a lot of people would love to be able to come back to the same job and just take a year off.

Amato: Right. Sometimes, easier said than done, and a lot of Ts to cross and Is to dot. But the model of my parents and probably the model I’ve had in my head for the first 20 or 30 years of my working life is that sort of older model. You have to get to that certain dollar figure, you get to a certain time on the calendar, you’re in your 60s, and then just stop. So why do you think that doesn’t work anymore, or why are the younger generations looking at it differently, and why do you look at it differently?

Long: I’ve been doing a lot of research on this, and some of it is cultural. It’s very uniquely Western world to want to retire, stop working entirely as soon as possible. The Eastern world, especially in Asian countries, don’t have the same value, but then, of course, they don’t have the same lifestyles or working cultures that we have. There’s a lot of things that would have to shift for us to have the majority of Americans want to work later. It’s not necessarily saying you got to want to work later.

But the model of retirement that the financial planning industry is still really built around — the one that my parents are enjoying, probably your parents, the one that we started preparing for when we graduated college in the ’90s — as it doesn’t work anymore because the systems that were created to support people through their non-working years, aka retirement years, they weren’t meant to support decades of quality life after folks were done.

They were really supposed to be there as a safety net for people who didn’t die while they were working, to enable people who got to a certain age. The whole history of retirement is a whole separate topic, but the way it was created was to basically quell a social uprising in Germany back in the 1800s. Younger people are realizing that it’s probably not financially feasible for them to enjoy the same comfortable financial retirement that their parents or grandparents are enjoying or enjoyed.

But it’s also something that doesn’t necessarily appeal as much anymore. The idea of spending the first half at this point of your adulthood grinding and the second half doing nothing, because people are spending decades in retirement now, doesn’t sound like fun to a lot of people in their 40s and 50s, and definitely not younger.

They’re watching their parents who waited until they were 65, 70, and they waited to do the cool stuff. And they’re seeing that their parents either aren’t getting to do those things, or it’s a lot more of a hassle, or things have changed. Even I’ve already aged out of one of the things was on my bucket list. I always thought I wanted to hike the Inca Trail to see Machu Picchu. Well, I took a bus there last month. It wasn’t nearly as rewarding, but I was like, that would be a definite no for me to hike for four days to get here. That’s definitely something I would have loved doing in my 20s. So I think there’s this recognition that a combination of YOLO, you only live once, and you could die tomorrow, but also we could have really long lifespans. And we want to do some of those things earlier.

The research that I’ve been doing has uncovered some really interesting health information. In America, especially, we tend to focus on the metrics. How many steps did you get? How many grams of protein are you eating? How many hours [of sleep]? What’s your sleep score? Those things are really important to your physical health and your cognitive health.

But the No. 1 predictor of cognitive health, all other things being equal, people with diabetes, people with hypertension, people with MS, the No. 1 predictor of cognitive health is your social connections. And where do you get your social connections? Well, maybe not so much in the work-from-home days, but a lot of people get [that] at work. Even though I’m not with you in the same room, there is a social aspect to this. I’m looking at you on a screen, I’m talking to you, I’m hearing your voice. I would not have that if I wasn’t working. I’d be playing golf, which could be social, but probably with the same three people every week, and eventually we get sick of each other.

In terms of retirement, a lot of my peers have seen their parents quit working and seen a significant decline in their parents’ physical and cognitive health through that loss of social connections, particularly among men, who are not as socially driven as women. That’s a very blanket stereotypical statement, but it’s just something I see a lot anecdotally.

And just getting in your car and driving to work, even if you’re going to an office, is a different level of physical activity than getting up out of bed and going to the chair and watching PGA all day. I think a lot of younger people, especially, are way more interested in that health maxing thing. The social connections thing is the thing that is this nebulous going away really with our increasingly digital lives, but more and more younger people are realizing that they need to stop being in their phone and wanting to go out and create those connections while they’re also sleep maxing, and hydrating, and doing all those other physical well-being things. It’s an interesting confluence of factors that I think is shifting the way people are approaching the whole idea of “retirement” or just old age.

Amato: It is a lot of interesting circumstances and trends. You’ve given us a lot to think about. You mentioned taking time off. You mentioned your research. I have mentioned your podcast, which is called Financial Bliss with Kelley Long, but you’re taking some time away from that podcast right now because, I guess, that research is going into writing a book.

Long: That’s right. Very excited and honored to have a contract with Wiley Publishing to write a book titled But Who Will Take Care of You When You’re Old? Financial Planning for Life Without Kids. It’s a memoir/nonfiction/how-to around this growing demographic of millennial, Gen X. And of course, there’s plenty of older people who don’t have kids. How do you financially prepare for that? But also, how do you enjoy your peak health span years? My thesis is your peak health years should be your peak spending years. But how do you balance that against making sure you’ve got money? That’s who will take care of you when you’re old, by the way, money. But how do you have enough money, and how do you have the mechanisms in place that that money is going to pay for when you really need it?

There’s a lot of fear in our society in general around old age. The media or advertising world tends to exacerbate that, and my profession is guilty as well to a certain extent. But the focus of that question — who’s going to take care of you when you’re old? — is really about a small percentage of our life. It’s those final years, and it is important to financially and logistically prepare for that for everyone, but particularly when you can’t just call up your 50-year-old daughter to come over and carry the 40-pound mattress in and carry the old one out and get the new remote installed and tell you whether or not this text is actually from the Illinois Tollway or is it a phishing scam? Those — actual examples from my life.

But I’m writing not just about the logistical aspects, which I am getting into long-term care, and how that works, and creative living arrangements, and estate planning, and pets. But I’m also talking about the mindset shift that’s often necessary. That’s based on my own personal experience of organizing my life and career for the first half, so far, of my life around the idea that I might be a parent someday. Then when I finally decided definitively, no, I’m not going to go that route, how much that shifted my mindset around how I wanted to save money, what I wanted to spend money on, and how I wanted to spend my career. What were my priorities?

Some of that is questioning some of the cultural aspects of our society, but also giving yourself permission to maybe not optimize your career because you don’t have anything else to do with your time. I’m really excited about it. it comes out next winter, so it’s a bit ways off. I’m in the thick of writing it. But I think that building a fund for your own care to take care of you when you’re old, but also enjoying the heck out of your money while you are in your best is a bit of a holy grail, but it’s super doable and I’m just really excited to help people find the right balance of mindset and planning to get there with the book.

Amato: Yeah, that’s a great topic and should be one of interest to many people. You are part of two ENGAGE sessions, actually. We’ve discussed one of the topics. Tell me what the other session is about.

Long: The first session we discussed is about the evolving idea of the big R word, retirement. In that presentation, I’m going to talk about three financial accounts in the article in the Journal as well, that folks who do want to have a more flexible career or mid-career should prioritize. One of those is the health savings account. If you know me from the Journal of Accountancy, it’s probably because of my writing about health savings accounts, HSAs. I’m passionate about this little dorky financial tool. But the second session is how to make the most of that. It’s titled something like “Your Clients Are Overinsured,” because people tend to pick, at a younger age, the non-HSA eligible plans because they have a lower financial risk when you encounter an expensive health event. But for the most part, barring chronic disease or mishaps — it’s a bit of an able-ist planning point, but so is most of financial planning — the percentage of people who do end up needing significant health care is small.

Most of us end up living pretty healthfully until we’re 40. That’s when we might realize we have the money to save in an HSA and take on more risk, but really we should be prioritizing the higher deductible plans. So I’m just going to talk about that shift in mindset as well as what the other options are available and how folks who might be now beginning to access health care that might be more expensive but still wanting to save in their HSAs, can navigate the healthcare system because there’s a financial literacy aspect to choosing the care when you need it.

Amato: So I have an HSA. I’m not saying I have all that much knowledge about it, and perhaps this is my lack of accounting knowledge showing, but it said in the session description, best practices relating to HSAs can “enable early retirement.” That gets me interested. How does that work?

Long: Well, one of the top reasons that people in their 60s say they’re staying in a job that they hate or one that they might be otherwise ready to leave is because they’re afraid of losing their employer-subsidized health insurance. I’m not a big fan of jargon. So employer-subsidized just means that when you have insurance through your job, and the company pays a significant part of the premium.

You’re not even really aware of how much your healthcare costs. When you’re near 60, you might actually have a high need for decent health care, or you’re at a higher risk of having an adverse health event that could really wreck your future plans. An HSA can serve a couple of purposes [at] that point. First of all, it can help free you from that specific reason of leaving a job. Now, a lot of people would say it’s to retire, but it could also just be to make a career shift. It could be a take a mini-retirement, it could be to go part-time, whatever it is. But it can help alleviate at that. First of all, a lot of people don’t know you can use your HSA to pay COBRA premiums.

Let’s say you want to take six months off, and that’s not really a part of the benefits at your job, but you go to your manager, you go to whoever, HR, and you say, listen, will you hold my job for me for six months? You don’t have to pay me, you don’t have to provide me with benefits. I just want to not work, and whatever you want to do in the background, whatever. But then you can stay on COBRA. You don’t have to worry about even negotiating staying on your benefits through work for that time, and HSA can fund that premium without you having to change your access to health care at all, or it can also in the same context the way I used my HSA when I quit my full-time corporate job was I stayed on my health insurance plan for the full 18 months, and use my HSA to pay the premiums.

That was partly because at the time I lived in Illinois, they had very terrible marketplace plan options, and I really wanted to make sure — I have a chronic health issue — I wanted to make sure I maintain access to health care. Then at the end of the 18 months, I actually moved to Arizona, which had much better health insurance options at the time. But it can also just give you that one final excuse — if I just could quit my job for a couple of months and get my act together, and then go find something else — your HSA can feed you through that. That’s one way.

The other way though is it can enable you to just buy the cheapest plan out there that only covers you in case of a tragedy like an accident, or a surgery, or something, an emergency, where you would have to obviously stay in network to use your insurance. But no matter what type of deductible or plan you have, all the plans have an out-of-pocket maximum. When you use your insurance just for catastrophic events, then you’re probably going to hit your out-of-pocket maximum anyway. That’s the amount of money you need to have in an HSA to cover things. But otherwise, all your other healthcare expenses are at your own cost when you buy the cheapest plan because you’re going to have a wild deductible. My husband and I are deductible $15,000. If I have $15,000 worth of health care, there’s something else going on. I know that I’m paying all my health care expenses out of my pocket, so my HSA is there to pay for those things if I need them. It just can free you from the financial risk of having to have the best insurance later in life.

Amato: These are definitely two topics that I think ENGAGE attendees are going to like, that R word, retirement, and how the definition is changing, and then also insurance, overinsured or not. What do you look forward to about ENGAGE this year?

Long: The best part to me is the people seeing all of the other voices from the podcast and the faces from the screen, and especially I’m a big fan of the PFP Section and all of the folks that they get involved in the continuing education there. Meeting those folks, but I also look forward to the food. I live in Tucson. Tucson has some of the best Mexican food in the world — and that’s it. And I used to live in Chicago, so I miss the diversity of culinary delights, so I eat my way through the week at ENGAGE.

Amato: There you go. That’s a good one. I’m so glad you said that because it’s different, it’s off the wall, and it’s real, and it’s certainly something, food, that I can relate to. Great, thanks for the reminder. As a closing thought, Kelley, this has been great. We could talk for hours about these topics. What would you say is the most common question you get about retirement from clients? Or maybe the people who are just thinking about retirement, what’s the most common question you get?

Long: It might not surprise you, but the No. 1 question is that, am I saving enough? But trying to answer that question is actually more complicated than a lot of financial planners might even give it credit for. Because the questions that I will ask a client back to help me answer that question often stumps them. And that’s fascinating to me, because answering my questions that I have for you around retirement aren’t tying you into a plan.

I like to think of retirement calculating, running the numbers, as a science experiment. You have your controls, and you have your variables. We’re going to plug in some variables and see what the outcome is and tweak a variable and see if that changes the outcome. It’s the same thing as a science experiment. The number one question that sums people is, well, what retirement age do you want to plan for? They’re like, “Well, I don’t even know. I don’t know if I’ll be able to retire at 65.” “Well, that’s what we’re trying to figure out.”

It’s really funny to me about the lack of curiosity that we have trained out of people. Let’s get curious. What age would you love to see? Then we have controls that, for example, how much you already have saved? We can’t change that. How it’s invested? We could change that, but we’re going to use that as a control right now. What is the expected performance of that? How much are you contributing? That may be something we can change. We got to do a little bit more research on that. What’s the match in your job? That’s probably a fixed aspect for now. What’s your projected Social Security benefit going to be? That’s a fixed control. But how much more could you save?

Just by getting into those fixed variables, most notably, what age do you want to project this for? How much more could you save? Those are the two variables that people can tweak, but that stumps so many people from the outset. When you just send a calculator to somebody to fill it in, they don’t even know how to start because they feel like they have to have the answer before they can run the experiment.

Amato: I think that’s a great way to end this conversation. A lot of great information shared today. Thank you so much for being on the podcast and look forward to seeing you in person at ENGAGE in June.

Long: My pleasure. Thanks so much for having me, Neil, and I hope to see you in June.

Amato: Again, that was Kelley Long. Thanks to Kelley for her time and insights.

The Journal of Accountancy article we mentioned, on multiple mini-retirements, is scheduled to publish on journalofaccountancy.com the last week of April. Look for that link coming soon. Also, in the show notes for this episode, we’ll have a link to ENGAGE registration and to details of the sessions we discussed.

This is Neil Amato with the Journal of Accountancy. Thanks for listening to the JofA podcast.