Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Not sure I agree with Mr Powell but...
Old 06-22-2004, 05:14 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
mickeyd's Avatar
Join Date: Apr 2004
Location: South Texas~29N/98W
Posts: 6,225
Not sure I agree with Mr Powell but...

American fairy tale
Give the heave-ho to the idea of early retirement

By Robert Powell, CBS
Last Update: 8:46 PM ET June 16, 2004

BOSTON (CBS.MW) -- On paper, it sounds great.

Plan for the retirement you envision with Retirement Weekly

Baby boomers -- as the theory goes -- will move in and out of the work force as they age. They will retire early to go back to school, or to spend time with family and friends or to pursue the good life. And then they will return to work, only to repeat the cycle at some point in the future. In and out of the work force. In and out of life's other offerings.

The reality, however, seems quite different. At present, there are only two types of people who retire early: those who have health problems -- the majority -- and those who have the financial wherewithal, thanks to savings or early retirement incentives, to kick back, to pursue the good life and then return to work -- the minority.

And the net result, at least from this vantage point, is that early retirement -- and the notion of weaving in and out of the work force -- is nothing more than yet another American fairy tale.

Yes, there are some Americans who are leaving and re-entering the work force today. Women have been doing it for years. Unfortunately, doing so costs them a great deal. They lose 5 percent in earning potential for every year out of the work force, says one study. And C-suite executives do it all the time.

David D'Alessandro, 53, announced last week that he's calling it quits later this year as president and chief executive of John Hancock Financial Services to spend the next 12 months writing and thinking about his next move. His $16.5 million severance will no doubt take some of the pressure off searching for the next new thing.

Retiring early is one thing. Re-entering the work force is another. Richard Burkahauser, a Cornell University professor, says there are two kinds of workers most likely to leave and re-enter the work force. The first are folks with small Social Security pensions and no private employer pension who take low-wage jobs to make ends meet, such as phone sales, hotel reservations, and the like.

Indeed, those who retire early, either permanently or for a spell, don't necessarily enjoy the good life. Most Americans who retired early, between the ages of 51 and 59, said they were less well-off financially than workers the same age, a 2000 National Academy on Aging Society study showed. The median family income of those who retired early was $24,000 vs. $41,000 for those still working.

Burkahauser says the other type of early retiree who returns to the labor force is a highly skilled white-collar worker, an accountant or manager for instance, with a good combination of Social Security and private pension who wants to stay active. That type either does general consulting or returns to a previous firm during periods of peak demand, he says.

"The notion of a lifetime of moving in and out of labor can only work when worker's skills are easily transferable from employer to employer, ageism is dead and people don't become chronically ill or functionally dependent on others," says Robert Friedlander, head of Georgetown University's Center on an Aging Society.

In fact, Friedlander says most people who are out of the labor force in there 50s are out because either they or a spouse are in poor health or they have been discouraged from remaining in the labor force.

"Yes they might have changed jobs, they did so to collect their pension, but then they found that other employers were not as interested in them [as] their former employer and eventually they decided that it was not worth it to take a physically demanding job at such a relatively low wage," he says. "There are relatively few people who voluntarily leave the labor force in their mid-50s because they have saved enough to do so."

So what will the future hold? For his part, Longino says the economy in America will play a dominant role with whether boomers will cycle in and out of retirement. "I have a gut feeling that (boomers moving and out of the labor force) will be documented as trends and will increase as the baby boom retires," he says. "But the general economic cycle is a strong overlay that tends to mold other trends. In good times, early retirement creeps up and [it] goes down during hard times."

And then there's the "x" factor.

"Early retirement, as well as retirement itself, is a concept and process that is always changing," says Georgetown University's Friedlander. "I do think it will probably change even more over the next two decades -- but I would be careful not to pronounce it as 'dead.' Perhaps it is just 'morphing' into something else."

Robert Powell is a personal finance columnist for CBS MarketWatch, co-author of "Decoding Wall Street" and executive producer of PBS' More Than Money. He also is the editor of Retirement Weekly, a service of CBS MarketWatch.


Part-Owner of Texas

Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx

In dire need of: faster horses, younger woman, older whiskey, more money.
mickeyd is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Not sure I agree with Mr Powell but...
Old 06-22-2004, 06:19 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jul 2003
Location: Kansas City
Posts: 7,622
Re: Not sure I agree with Mr Powell but...

Powell is full of poop. I believe a couple of posters (TH and Billy?) have already gently taken him to task on this one by e mailing him directly.

unclemick is offline   Reply With Quote
Re: Not sure I agree with Mr Powell but...
Old 06-22-2004, 06:23 PM   #3
Thinks s/he gets paid by the post
charlie's Avatar
Join Date: Mar 2004
Location: Dallas
Posts: 1,211
Re: Not sure I agree with Mr Powell but...

IMHO, the idea of weaving in and out of retirement
would be difficult for technical people if they don't
stay current. In my former business (integrated circuits)
it would be the kiss of death. It is hard enough
staying current while still employed.



charlie is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Would you now agree that there is a Real Estate slump??? Texas Proud Other topics 64 01-17-2008 08:17 AM
Do you and your spouse agree regarding retirement decisions? JustCurious Life after FIRE 18 04-20-2007 02:02 PM
Walmart and Unions agree! Rich_by_the_Bay Health and Early Retirement 27 02-12-2007 12:23 AM
Do you agree with Bengen's "Layer Cake" withdrawal rate MikeK FIRE and Money 23 12-16-2006 10:50 AM
Is There Anything That Most Agree On? Tommy_Dolitte Young Dreamers 15 07-24-2004 12:39 PM

» Quick Links

All times are GMT -6. The time now is 07:50 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.