Retirement Plans Change - Article Finding

[Tekward]

I have mixed feelings on this article. It is interesting, with a big data set (>20,000 from U of M study) but the major findings seems to be that:

• Retirement age is subject to "Regression to the Mean" (thank you Francis Galton) with a 61 years old mean
• There are no good predictors to identify early retirees
• But be prepared because you likely won't retire on your initial schedule.

Nothing particularly earth-shattering but perhaps useful for the people that expect to w*rk forever as a plan:

https://obliviousinvestor.com/61-the-magic-retirement-age/

 

[Another Reader]

Looks like an ad for his book. You can't predict when you will retire and you have no control. Read my book, and you will be more able to deal with the problem.

Other than a debilitating health condition or an unexpected divorce, people here generally have control over their retirement date and are well prepared to deal with a change in plans.

 

[marko]

Other than a debilitating health condition or an unexpected divorce, people here generally have control over their retirement date and are well prepared to deal with a change in plans.

I think a lot of folks here (and outside this forum) would respectfully disagree. My own RE came about 8-10 years earlier than I planned. Actually 13 years ago today. While financially able, I was emotionally unready.

One of the bigger wild cards is finding [-]work[/-] a real job after age 50 or 55 and for many that becomes the sole determinant for entering retirement. It was for me, but I'm not sure how many 50 year olds who get blindsided are as well resourced as I was.

I think one of the fallacies of our time is thinking that age 65 is a retirement target when 55 is more often likely.

 

[braumeister]

I think one of the fallacies of our time is thinking that age 65 is a retirement target when 55 is more often likely.

You might think so, but

Among elderly Social Security beneficiaries, 48% of married couples and 69% of unmarried persons receive 50% or more of their income from Social Security.

... so FRA is probably still a reasonable target for most.

 

[marko]

You might think so, but

"Among elderly Social Security beneficiaries, 48% of married couples and 69% of unmarried persons receive 50% or more of their income from Social Security."

... so FRA is probably still a reasonable target for most.

The point I failed at was that it might be wise to prepare for an unexpected age 55 ER than to hope for a FRA retirement. You could come up 10+ years short of your target and be left scrambling.

 

[braumeister]

it might be wise to prepare for an unexpected age 55 ER than to hope for a FRA retirement. You could come up 10+ years short of your target and be left scrambling.

No question about it. I just think most don't do that.

 

[Dtail]

No question about it. I just think most don't do that.

I didn't either when volunteering for a package just short of age 56. Couldn't get another job, but discovered I could FIRE at 57.
Many business professions in particular, I agree 100% with @marko about prepping for ER in one's 50's. No one warns you about it, unless you discovered this site or other articles.

 

[marko]

I didn't either when volunteering for a package just short of age 56. Couldn't get another job, but discovered I could FIRE at 57.
Many business professions in particular, I agree 100% with @marko about prepping for ER in one's 50's. No one warns you about it, unless you discovered this site or other articles.

When my company was acquired, we had about 300 folks over 50 y.o. sent out on the streets. While they got a generous separation package most of them were unable to get a similar paying job afterwards.

IIR, they gave you a paper listing the ages of everyone who was let go and you can sign a paper if you want to fight it on age. Most everyone thought they'd get another job quickly but few did.

Quite a wake up call!

 

[Dtail]

When my company was acquired, we had about 300 folks over 50 y.o. sent out on the streets. While they got a generous separation package most of them were unable to get a similar paying job afterwards.

IIR, they gave you a paper listing the ages of everyone who was let go and you can sign a paper if you want to fight it on age. Most everyone thought they'd get another job quickly but few did.

Quite a wake up call!

Yes, ageism is alive and well, although not as frequent for some professions such as some aspects of the medical profession for example.
They gave me that same listing. There were folks on the list who were under 40 y.o., so no one really could sue them.
There wasn't one person in my office division who was over 60 y.o., so I knew that fact when volunteering for the package which was salary and benefits for 1 year. I couldn't fathom that I couldn't catch on elsewhere, as my knowledge and contacts were up to date.

 

[Chuckanut]

The age related problems in getting a high paying job are just another reason to LBYM. If one can get the house paid off and have no other significant debt by 55, it might be possible to take a lower paying, less stressful 9-5 job and start enjoying life a bit more.

Retirement should not have be an all or nothing proposition. Work like heck until one is 65 (or whatever age) and then just stop.

 

[bada bing]

There was thread here a couple months ago when Marketwatch originally posted the article on this book.The new link is sort of a rehash of the rehash
http://www.early-retirement.org/forums/f28/the-magic-retirement-age-is-61-a-94105.html

I think it interesting that 61 appears to be where the desirability/necessity statistical curves for retirement cross. Like all statistics, it doesn't predict anything for an individual case. It does make one hedge their bets a little if their plan includes working to FRA.

I work a blue collar job in upstream oil production. The findings match up with my anecdotal observations. I've seen a few peers work into their late 60's, but the norm is to be retired in late 50's/early 60's, and at least 1/2 the time it isn't by choice.

 

[tb001]

The age related problems in getting a high paying job are just another reason to LBYM. If one can get the house paid off and have no other significant debt by 55, it might be possible to take a lower paying, less stressful 9-5 job and start enjoying life a bit more.

Retirement should not have be an all or nothing proposition. Work like heck until one is 65 (or whatever age) and then just stop.

This is a good point. My DH has been in the same situation as dtail and marko. It took him 3 years to find a job and when he did it was at a much lower salary than he was used to. Now at 55 he’s job hunting again, which is incredibly frustrating. We needed two more yrs of income by my calculations.

One upside to being FI is that while we need a couple more years of income, it doesn’t have to be at those same levels. His last job was in the non profit sector and he’s looking there again. There seems to be more of an appreciation for the senior business skills he’s developed and less age discrimination in hiring.

 

[HI Bill]

Yes, ageism is alive and well

When a company downsizes or reorganizes, they often look at a reduction in force (RIF) of the highest paid workers as an easy way to cut overall labor spending. While this could be considered ageism, I think it's usually just economics, unless you're in a physically demanding job.

My office doesn't seem to practice ageism: The floor boss in my office is 68 and still going strong, and he's had a few staff in their late 60s as well. Of course, we are in consulting and can bill them out at higher rates.

Real life example #1: About 10 years ago, my former company laid off some consulting folks who were 100% billable (they billed all of their time to clients). No time spent on overhead. But, they had been at the company 30+ years, and their pay rates were so high that the company lost money on each and every hour they worked. Was laying them off ageism? No, it was simple economics.

Real life example #2: My former friend was in Management at Eagle Harware...when Lowes bought them, they laid off all the high-paid senior staff, and replaced them with cheaper staff with little to no experience. He had to transition to a lesser position at Home Depot.

 

[Dtail]

When a company downsizes or reorganizes, they often look at a reduction in force (RIF) of the highest paid workers as an easy way to cut overall labor spending. While this could be considered ageism, I think it's usually just economics, unless you're in a physically demanding job.

My office doesn't seem to practice ageism: The floor boss in my office is 68 and still going strong, and he's had a few staff in their late 60s as well. Of course, we are in consulting and can bill them out at higher rates.

Real life example #1: About 10 years ago, my former company laid off some consulting folks who were 100% billable (they billed all of their time to clients). No time spent on overhead. But, they had been at the company 30+ years, and their pay rates were so high that the company lost money on each and every hour they worked. Was laying them off ageism? No, it was simple economics.

Real life example #2: My former friend was in Management at Eagle Harware...when Lowes bought them, they laid off all the high-paid senior staff, and replaced them with cheaper staff with little to no experience. He had to transition to a lesser position at Home Depot.

A little of the chicken or the egg scenario.
Most of the highest earners are usually the oldest workers. However in my former industry (Wall Street), this is not always true. The higher earning younger workers were not laid off in my scenario.
Relating to the other post, no one would hire me even while applying to jobs with 50% lower salaries, as they felt I would just leave if a better offer came along.

 

[Teacher Terry]

My husband was laid off as a engineer at age 53. Except for 2 short consulting projects he has not been able to find a job.

 

[pb4uski]

...they had been at the company 30+ years, and their pay rates were so high that the company lost money on each and every hour they worked. Was laying them off ageism? No, it was simple economics. ....

I don't get this... where I worked my billing rate was 5x what they paid me... that was why it made sense to keep me around... every hour that I billed made them oodles of money... even at 70% chargeability. They would gladly take whatever hours I was willing to work.

 

[Another Reader]

My husband was laid off as a engineer at age 53. Except for 2 short consulting projects he has not been able to find a job.

Engineering jobs vary with location. If you were willing to move, would that have helped?

 

[HI Bill]

I don't get this... where I worked my billing rate was 5x what they paid me... that was why it made sense to keep me around... every hour that I billed made them oodles of money... even at 70% chargeability. They would gladly take whatever hours I was willing to work.

Wow, talk about a great multiplier!

In my business line, we work mostly on government contracts, with pre-negotiated mark-ups, and pre-negotated rates by labor category, so we are no where near a 5x multiplier!

 

[Teacher Terry]

Reader, yes probably but we are sick of moving. Plus I am still working consulting and that would have disappeared with the move. We don’t know for sure.

 

[tb001]

It’s not all economics though. My DH was more than willing to take a large pay cut, as evidenced by his transition to the non Profit sector. There were jobs he should have been a shoe in for and never even got an interview. One where they’ve burned through three 30 somethings in as many years. There’s most definitely the not wanting to hire an ‘old man’ at work, no matter the salary.

 

[DrRoy]

Looks like an ad for his book.

+1

 

[pjigar]

I don't get this... where I worked my billing rate was 5x what they paid me... that was why it made sense to keep me around... every hour that I billed made them oodles of money... even at 70% chargeability. They would gladly take whatever hours I was willing to work.

I was billed at 3x my pay rate (with benefits) a decade or more ago. I have heard that margins have all but disappeared after offshoring started. I my industry, however, I feel like a US based worker can be more than 3x productive rather than someone offshore. But if someone at the top management counting heads then offshoring might look good on paper.

 

[HadEnuff]

I remember a huge weight (speaking metaphorically of course) lifting from my shoulders when I realized, around age 55, that if something happened and I could not continue to work, I probably wouldn't starve. I could have retired at that point, but it would not have been to the retirement I desired, or had envisioned.
I had skills and licenses that would pay me well in one field, but would not make me much of a candidate for a late life career change.
But it was a relief to feel that I had at least enough wealth to probably keep a roof over my head, and some porridge in my bowl.
We should never lose sight of the value of that.

 

[athena53]

Real life example #1: About 10 years ago, my former company laid off some consulting folks who were 100% billable (they billed all of their time to clients). No time spent on overhead. But, they had been at the company 30+ years, and their pay rates were so high that the company lost money on each and every hour they worked. Was laying them off ageism? No, it was simple economics.

So... why did management keep increasing their pay, to the point that it was a loss to keep them on even when they were 100% billable? This makes no sense unless they were valuable for other intangible reasons- bringing in new business, great credibility with key clients, good mentors, etc. In that case, they shouldn't have been let go.

I remember a huge weight (speaking metaphorically of course) lifting from my shoulders when I realized, around age 55, that if something happened and I could not continue to work, I probably wouldn't starve. I could have retired at that point, but it would not have been to the retirement I desired, or had envisioned.

I realized the same thing when I was 53 and my company was acquired; not that I would have wanted to retire but I knew DH (age 68, already retired) and I had the resources to withstand a long period of unemployment if it came to that. It gave me the luxury of waiting to see how the acquisition worked out and I stayed with the company another 6 years.

If I can bring up a pet peeve here: I hate when companies use the term "layoff" when it really means "Go away and don't come back". Dad was in the steel business and sometimes they laid off workers when things were slow but always with the intention to bring them back when work picked up- and they did. "Layoff" as it's used today is a euphemism. There is no hope of being called back to work. Call it what it is- downsizing, firing, termonations.

 

[Cobra9777]

When a company downsizes or reorganizes, they often look at a reduction in force (RIF) of the highest paid workers as an easy way to cut overall labor spending...

At my old high-tech Mega, when we had a RIF, it was usually because an older product group was being phased out, and/or an older factory was being shut down. The people RIFed were the ones specifically associated with those product groups and factories. By somewhat natural correlation, the people in those older factories and product groups tended to be older. We never specifically targeted older people or higher-paid people. The target was product groups with declining growth rate and factories with obsolete technology. If there was an across-the-board RIF due to overall economic slowdown, it was always based on well-documented performance rankings.