Holding off on Retirement

[Purron]

Interesting article from AARP. Retirement Plans Dashed - AARP Bulletin Today

 

[W2R]

The article says that a lot of people are putting off retirement due to the economy, and cites examples.

That's sad! The story of the 68 year old and her 72 year old spouse, both of whom are still working despite plans to retire, is especially horrifying.

A third of workers ages 55 to 64 said they postponed plans to retire due to shrinking portfolios, as did 19 percent of people ages 45 to 54, according to the AARP survey.

I am 60 years old with 513 days to go, and NOTHING is going to delay my retirement. If the economy goes in the toilet, I suppose I'll have to just smile and cheerfully join the dumpster divers talked about in that other thread. But I won't continue working.

 

[Moemg]

That scenario happened to my sister .She retired after they built a house in Florida but their house in New York did not sell so she went back to work . It finally sold and she reretired at 64 . She was sooo miserable that year !

 

[Sarah in SC]

Moral to the story--house is a USE ASSET, not a retirement asset!
Go get 'em, Finance Dude!

 

[FinanceDude]

Moral to the story--house is a USE ASSET, not a retirement asset!
Go get 'em, Finance Dude!

The amount of folks whose house is their primary "source of retirement money" is staggering............

Many of them look confused when one asks: "If you turn your home into cash, where are you planning to live"??

 

[Notmuchlonger]

The amount of folks whose house is their primary "source of retirement money" is staggering............

Many of them look confused when one asks: "If you turn your home into cash, where are you planning to live"??

Hey wait! Oop time to rethink my retirement plans..

 

[Gotadimple]

The article says that a lot of people are putting off retirement due to the economy, and cites examples.

That's sad! The story of the 68 year old and her 72 year old spouse, both of whom are still working despite plans to retire, is especially horrifying.



I am 60 years old with 513 days to go, and NOTHING is going to delay my retirement. If the economy goes in the toilet, I suppose I'll have to just smile and cheerfully join the dumpster divers talked about in that other thread. But I won't continue working.

Me, too!

Oooops!

I already retired -- it's been a month now. I hope there is Nothing than would get me to go back to work.

And what have I accomplished in the last month Why Nothing of course -- and it feels fine.

-- Rita

 

[W2R]

Me, too!

Oooops!

I already retired -- it's been a month now. I hope there is Nothing than would get me to go back to work.

And what have I accomplished in the last month Why Nothing of course -- and it feels fine.

-- Rita

What a coincidence! That's EXACTLY what I want to do during my first month of retirement, too!!!

 

[73ss454]

Me, too!

Oooops!

I already retired -- it's been a month now. I hope there is Nothing than would get me to go back to work.

And what have I accomplished in the last month Why Nothing of course -- and it feels fine.

-- Rita

I hope you get more of the same, I've been retired a 1 1/2 years now and I'm still doing nothing. The plan is to keep it that way till I get tired of it.
Don't see that happening so far.

 

[Marquette]

Sharon Saunders put her suburban Chicago home on the market and promptly gave notice that she was retiring. She and her husband bought property near a lake in sunny South Carolina, she told her boss, and she needed to focus on packing up the family home.

Bought new property. Planned to finance it with current property. Gambled and it didn't work out. If retirement was important to her, I think we could identify a few things she could have done differently.

Others were more troubled by their diminishing investments and fluctuating 401(k) accounts, which replaced the more stable employer-provided pension plans for many over the years.

If they're approaching a planned retirement date, they should have an AA that matches their risk tolerance. Were they stock-heavy because they were trying to catch up or because they got greedy? In either case, they gambled.

For many, depreciating property values spoiled plans to sell the family home and downsize, a common retirement strategy. Declining home values in particular prompted 31 percent of workers age 45 to 54 to say they were delaying retiring; 18 percent of those age 55 to 64 aid the same.

Now this is actually a bit heartening... and interesting. Looking at a slice of American, and knowing that most people are not E-R types, I would assume that the 45-54 age group is further from retirement than the 55-64 age group. So, the people with the longer horizon are more worried about current volatility as it relates to future plans than those with a shorter planning horizon. This means that not only is it more likely that things will correct themselves for the 45-54 group but it is also easier for them to plan and adjust. Meanwhile, the 55-64 group has planned better and is less worried about volatility in the housing slug of their networth as it relates to retirement plans. Maybe they have their house paid off and realize that they can retire in-place while waiting for the market to rebound without relying on an influx of cash in the short-term from selling their property and downsizing.

 

[FIREd]

My aunt and uncle retired 3 years ago. In the first 2 years of their retirement they really enjoyed life, traveling extensively around the world and (I suspect) spending a lot more than 4% of their nest egg. But with the latest stock market slump and with the declining purchasing power of their SS income, my aunt has returned to work early this year. They have also cancelled all vacation plans for this year at least.

 

[W2R]

My aunt and uncle retired 3 years ago. In the first 2 years of their retirement they really enjoyed life, traveling extensively around the world and (I suspect) spending a lot more than 4% of their nest egg. But with the latest stock market slump and with the declining purchasing power of their SS income, my aunt has returned to work early this year. They have also cancelled all vacation plans for this year at least.

What a nightmare that must be for them!! I wish them the best and hope she doesn't have to work too much longer than she wants to work.

 

[d]

The amount of folks whose house is their primary "source of retirement money" is staggering............

Many of them look confused when one asks: "If you turn your home into cash, where are you planning to live"??

and as the recent realestate market attests, a house is not a particularly liquid asset (unless it's in a flood zone).

 

[Marquette]

and as the recent realestate market attests, a house is not a particularly liquid asset (unless it's in a flood zone).

This week in the Wisconsin Dells:

http://wm.kare.gannett.edgestreams.net/news/news/0600908_513834_huppert_kare.wmv?213436524624

 

[d]

that video raises lots of questions about "fixed" and "liquid" assets!

 

[Milton]

That was two years ago. Today her home is still up for sale.... “We had no idea it would be so difficult to sell our home,” she told the AARP Bulletin Today.

Aside from very rare exceptions involving toxic waste and similar situations, there is a willing buyer for every real property, at the right price.

If her house has been on the market for two years(!!!), it's because she is asking too much for it. Drop the price to what the market is willing to pay, and it will sell quickly.

“Because of the run-up in housing prices, people had thought they could retire earlier than they otherwise would’ve,” Weller says. “They had unrealistic expectations. Most people don’t figure out how much they really need for retirement. It’s only in the last six to 12 months to retirement that they do that planning.”

Oh boy.

 

[ls99]

Two years ago folks were still asking pie in the sky prices for their houses. It was the same two years ago when I sold my old house. There were hundreds on the market at the same with insane asking prices.

There also were at least 20 comparables to mine, asking prices that were "gettable" 2 years before that. Most were ill kept, or very poorly prepped. In the sellers mind it was still a sellers market, when in fact that was long gone.

Spent six month prepping, before calling several agents for interviews, to see who would get listing. Most agent were pi$$-poorly prepared when they arrived. Out of 5 only one came with homework done. And it was superbly done homework. They (2 agents working as a team) got the listing.

The agents made a few suggestions, complimented on the prep work done.

4 Days after listing there was a bidding war, final contract 20K over my asking price. Closed in 20 days.

Moral of the story: chasing last years market, poorly prepared will give the seller some serious bellyache, besides buggering up retirement plans. And a lesson I learned the hard way a very very long time agoroper Prior Preparation Prevents Pi$$ Poor Performance. AKA the 7 Ps

 

[Milton]

Two years ago folks were still asking pie in the sky prices for their houses. It was the same two years ago when I sold my old house. There were hundreds on the market at the same with insane asking prices.... 4 Days after listing there was a bidding war, final contract 20K over my asking price. Closed in 20 days.

In most urban centres, it is very difficult to underprice a house. If the listing price is too little, a bidding war will usually correct the situation.

Conversely, it is all too easy to overprice. And then potential buyers are scared away, and the house 'sits' with no offers.

 

[ls99]

In most urban centres, it is very difficult to underprice a house. If the listing price is too little, a bidding war will usually correct the situation.

Conversely, it is all too easy to overprice. And then potential buyers are scared away, and the house 'sits' with no offers.

Aye, except this was in a very nice suburban area with stable population About 30 miles from major city, reasonable commuting routes.

 

[rs0460a]

I read the article, and I don't understand a few things (I'm sure the "smart folks" on this forum will "instruct me" ).

Quote: For many, depreciating property values spoiled plans to sell the family home and downsize, a common retirement strategy".

I know that this comes up in a lot of financial pubs (including here), but in my "small world" of family/ friends, I know of nobody who has done this "common retirement strategy". While I'm not saying it's not done, I just wonder about the frequency, based upon the "newly retired" population. I could see it in the case in later life if one (if married) person dies, or late-life medical reasons (old-age care/home), but not "we're retired - we need to sell/downsize".

Quote: “We weren’t counting on the high health care costs when I retired (Jerry Wood, 69)."

Ok, he's (and I assume) his wife is on Medicare, and part D (Unless he's on the Part C plan - where drugs are included). I don't know the complications from his diabetes (BTW, I'm a T2, myself) but I've already had surgury (cateracts) and pay for my testing supplies (which are covered by Medicare, but mine are not - I'm too "young" ).

Delaying retirement (or in this case, going back to work) just dosen't "ring true". I'm not going to try to understand the situation (maybe he has too many "toys", paid for by CC debt and the current medical "extras" are causing a problem?)

I just don't get it; or is this just another piece of "editorial fluff"?

- Ron

 

[Milton]

Quote: For many, depreciating property values spoiled plans to sell the family home and downsize, a common retirement strategy".

I know that this comes up in a lot of financial pubs (including here), but in my "small world" of family/ friends, I know of nobody who has done this "common retirement strategy". While I'm not saying it's not done, I just wonder about the frequency, based upon the "newly retired" population. I could see it in the case in later life if one (if married) person dies, or late-life medical reasons (old-age care/home), but not "we're retired - we need to sell/downsize".

I agree, Ron. People sometimes move during retirement but from what I have seen it is usually to a warmer climate, to be near their grandchildren, or some similar reason. I don't personally know any retirees that have sold their houses and moved to more modest accomodations as a way to raise capital and fund their retirements.

I recall reading several newspaper articles a few years ago, to the affect that boomers were not planning to downsize in retirement and were instead equipping their existing (large) houses with expensive amenities intended to make them easier to live in during later years (whether such stories were mere "editorial fluff", I don't know!).

 

[FIREd]

What a nightmare that must be for them!! I wish them the best and hope she doesn't have to work too much longer than she wants to work.

I am sure that my aunt would have preferred to stay retired (and not have to become a cleaning lady at age 65) but I think they'll be OK in the end. They have a few things going for them: they will have cheap healthcare coverage for the rest of their lives and their paid for house was completely renovated right before they pulled the plug. They also have no debt. I don't think they have problems putting food on the table at this point but clearly they have a lot less money left at the end of the month that they had anticipated. Last time I saw them they were complaining about the increases in the cost of food, gas and heating oil especially (like most people nowadays!). In addition, my aunt has always been a hardcore saver (though she has always given generous amounts of money to her kids which probably account for the fact that they don't have a million dollar stashed somewhere) so she might be prematurely freaking out about their shrinking bank account. But they probably spent a bit too much in their first years of retirement. My uncle (the spendthrift) in particular went a bit crazy and blew the budget. He bought a brand new travel trailer and a new car to boot (and forgot to ask for his wife's approval prior to the purchase... surprise!!!!!). And as I mentioned earlier they went on a lot of expensive trips during the past few years...

 

[BunsGettingFirm]

I agree, Ron. People sometimes move during retirement but from what I have seen it is usually to a warmer climate, to be near their grandchildren, or some similar reason. I don't personally know any retirees that have sold their houses and moved to more modest accomodations as a way to raise capital and fund their retirements.

I recall reading several newspaper articles a few years ago, to the affect that boomers were not planning to downsize in retirement and were instead equipping their existing (large) houses with expensive amenities intended to make them easier to live in during later years (whether such stories were mere "editorial fluff", I don't know!).

Milton, I think your suspicion is well founded. A lot of "trends" are nothing more than PR releases that get picked up by overworked newspaper editors as if they were facts. Remember shortly after the 2001 recession, there were a bunch of stories about how traditional suits were making a come back in the workplace and that casual Fridays were going the way of the dinosaur? It didn't ring true, and it turned out to be a PR blitz by the men's suit makers.

 

[kaudrey]

My parents downsized when they retired, but they did it because they wanted to move off of very crowded, expensive Long Island to their 5 acres of land with lake access in small town NH.

They sold their house on LI, and rented a house for a year in NH while their new house was being built. No gambling involved on the timing. They've been in that house for 14 years now...

 

[Milton]

Milton, I think your suspicion is well founded. A lot of "trends" are nothing more than PR releases that get picked up by overworked newspaper editors as if they were facts.

Oh yeah. And most 'lifestyle' articles are pre-packaged nonsense, where the author comes up with the theme first and then searches around for examples to support that thesis (remember this thread: http://www.early-retirement.org/forums/f29/any-anti-downsizers-out-there-35345.html?).