Retirement unknowns causing anxiety

[MichaelB]

Belt, suspenders, duct tape, super glue, Velcro and two pair of pants.

What could possibly go wrong!

Asteroid! Not much else of an earthly nature, though.

 

[eytonxav]

Or getting nuked by the DPRK

 

[Walt34]

I've seen similar reports before, from a variety of sources, and I have not seen any reports stating that "practically everyone ages 55 to 65 have enough in retirement savings to live on for 30 years", so I'm inclined to believe the report.

I believe it too, especially given what I see with most relatives and most people at work. The ones doing the best are those who get a COLA'd pension and medical coverage post-retirement. But for the most part those days are gone or will be soon.

I think a lot of boomers are going to be eating cat food. And not the good stuff either, store brand only.

 

[DeborahB]

When I was working, people really didn't get it. You have to SAVE $$$ while you work. And not just the 2% or whatever of your salary.

It seems to be hard for people to grasp the concept of not spending all the time. I mean, I didn't live poor. But I brought my lunch to work (saving $50 a week) and didn't buy a new house that was a 45 min. commute... I could go on.

It wasn't easy for me to do this, and I did most of it toward the end of my working life when I finally made decent money. But I did it, I'm retired, got enough $, am hoping that SS still pays me and I inherit SOME... but I know I can cut expenses to the bone and still be okay if none of that happens.

 

[W2R]

I realize that it is probably overkill, that we could retire sooner and that we will probably die with a large chunk of unspent assets, but it helps me avoid worrying about these things. As I learned long ago, plan for the worst and hope for the best. Once you've done everything in your own control, relax and enjoy the ride.

I don't think it is overkill, at all. It is just sensible. But then, I guess I have a cautious nature, too.

 

[Stanley]

Belt, suspenders, duct tape, super glue, Velcro and two pair of pants.

What could possibly go wrong!

Health issues keep you from enjoying all that money you have saved.

 

[bUU]

It wasn't easy for me to do this, and I did most of it toward the end of my working life when I finally made decent money.

And therein lies the problem, at least for those of us in our fifties now. Just when a lot of us were expecting to finally break through and start the "end of our working life when we finally made decent money", it didn't happen: Suddenly, if you're over fifty, you're no longer revving up the engine of retirement savings but instead looking for a job, and happy - happy - to find something paying 20% less, 30% less, 40% less, maybe even 50% less.

A close friend of mine worked for a division of one of the largest companies in the world. She was doing great work. Within a few years things turned sour. She started getting inexplicably poor reviews that had no relationship to actual events or actual performance. It was like a novel was being written about the sudden, inexplicable conversion of a model employee into someone who simply didn't have the skills to do the job. At the same time, the actual working conditions degraded markedly, making the effort of remaining a professional, and competent as ever even more difficult, given how the reward for a job well done was another poor review. My friend wasn't alone. Within the course of four years, the company found a way to either chase away or let go every single employee in her division over the age of 50, and one or two getting close to that age. But the company was smart: They didn't contest unemployment compensation (which, if they did, clearly would have caused at least several discrimination claims), and they had on the record a documented history, albeit fictional, justifying the terminations. The division now enjoys higher profits from just moderately lower quality work from the low-paid twentysomethings they hired to replace the elder workers they got rid of. And the fiftysomethings scramble to find jobs just to keep from dipping into what little they did manage to save previously.

Business used to understand that our maturity and experience justifies our higher salaries. I think business understands now that that was actually never true - that maturity and experience beyond a certain point is worth comparatively marginal amounts, rather than the comparatively more significant amounts that used to feed that phenomenon you outlined, making decent money toward the end of your career, enough to save for retirement. While I think that a lot of my contemporaries definitely could have saved more for retirement by now, given the opportunities they had previously, at this point, the game has changed, and the ability to do that going forward is going to be much more limited for real, rather than just out of lack of will, as you alluded to.

 

[dunkelblau]

And therein lies the problem, at least for those of us in our fifties now. Just when a lot of us were expecting to finally break through and start the "end of our working life when we finally made decent money", it didn't happen: Suddenly, if you're over fifty, you're no longer revving up the engine of retirement savings but instead looking for a job, and happy - happy - to find something paying 20% less, 30% less, 40% less, maybe even 50% less.

Back when I started work, the manager who hired me gave me the heads up about the game I was entering. He basically told me engineering should be treated like a sports career, don't count on reaching full retirement age. Fortunately I had my job issues early on, so FI was in the cards from the get go even though most people thought it not worth the sacrifice.

Besides the risk, another problem with waiting till the last minute to prepare is that you lose the compounding growth over time. My largest accounts I stopped funding many years ago, so my paycheck looks like a trickle. This aspect is where I believe the damage from excessive student loan debt is severe, very few of today's young people can even choose to get an early start as I did. Seems like a long time ago when pension spiking was a viable strategy, and I sure hope today's kids find some analogous opportunity when their time comes.

 

[ShortInSeattle]

The metaphorical grasshoppers will always be with us. And, yes, it may impact our own lives by driving means testing of social security, reducing pension security, tanking the equities and real estate markets and things like that. But rather than worry, I try to plan around those eventualities. Thus, our own plan, which is within a few years of being implemented:

1.) Does not assume any reduction in spending from our current level, except for not saving or paying the mortgage anymore. There is plenty of fat in that budget, so we could cut back if we really needed to;

2.) Does not rely on receiving one penny from Social Security;

3.) Does not rely on any inheritance;

4.) Does not rely on extracting any of the equity from our house;

5.) Can be paid for by pension income alone or by a 4% draw on our stash.

I realize that it is probably overkill, that we could retire sooner and that we will probably die with a large chunk of unspent assets, but it helps me avoid worrying about these things. As I learned long ago, plan for the worst and hope for the best. Once you've done everything in your own control, relax and enjoy the ride.

Gumby, this sounds like our plan too. I figure I'd hate to count on Social Security to find I'm means tested out at the last minute.

SIS

 

[DeborahB]

And therein lies the problem, at least for those of us in our fifties now. Just when a lot of us were expecting to finally break through and start the "end of our working life when we finally made decent money", it didn't happen: Suddenly, if you're over fifty, you're no longer revving up the engine of retirement savings but instead looking for a job, and happy - happy - to find something paying 20% less, 30% less, 40% less, maybe even 50% less.
----
Business used to understand that our maturity and experience justifies our higher salaries. I think business understands now that that was actually never true - that maturity and experience beyond a certain point is worth comparatively marginal amounts, rather than the comparatively more significant amounts that used to feed that phenomenon you outlined, making decent money toward the end of your career, enough to save for retirement. While I think that a lot of my contemporaries definitely could have saved more for retirement by now, given the opportunities they had previously, at this point, the game has changed, and the ability to do that going forward is going to be much more limited for real, rather than just out of lack of will, as you alluded to.

Oh you are absolutely right on all counts. But the people I was talking about had secure jobs and were younger and not saving. My boss was 35 and well-paid, and couldn't possibly forgo expensive vacations to save for retirement past some small amount in the 401k. And these discussions started 10 years ago - on people who really did have good incomes and are still there. Crossing fingers.

The business environment is awful right now. 10% of our dept. was let go, and so we were doing more work. I was starting to get the bad review for no reason syndrome (made me unpromotable) a couple of months before I quit. I was lucky to be a little older and - having survived the cut - not too worried because I planned to retire soon.

I think the business model of use 'em up young, hire them cheap, and get rid of the older people with experience is totally and utterly screwed up and I hope the country and businesses are eventually going to see that. I started seeing that trend quite a while ago.

 

[mickeyd]

To those referred to in the last sentence, what we have saved is a fortune. And I do, at times, wonder if it's enough. I guess it's all relative.

Sometimes just wondering if you will have enough is enough motivation to keep on LBYMing and watching your retirement stash grow and grow and grow.

 

[DeborahB]

Sometimes just wondering if you will have enough is enough motivation to keep on LBYMing and watching your retirement stash grow and grow and grow.

+1 - certainly works for me...

 

[Livin Large in MT]

I started a Roth for my daughter when she was a summer fire fighter and attending college some years ago. Then she got married and she and hubby went into the Peace Corps. When they returned a year ago, they started work and they both invest each year into their Roth IRA's and their company 401k...they are both in their early twenties so I hope the habit sticks with them. They bought a nice house with their savings that built up while they were in Peace Corps and they returned from that experience with a much different attitude about whether owning things was all that important. Saving early and relying on compounding is really the only way that the middle class can get ahead. All the posts regarding how dangerous it is to wait are true. I agree, no one values experience whether any of us think that is good or not.
Back in the day, I remember doing presentations on the work world in which I told people that they will change jobs and entire careers seven to ten times in their work life. What I think we neglected to realize was that, if those same people didn't change careers or grow in their existing jobs, their experience would become so dated, that it would have no value. And their companies would lay them off without any scruples at all. Often people have no way to see the end coming until it is too late. Getting and keeping up with skills is not easy and often not cheap so we are seeing lots of people being cast to the side for no reason other than their wages were not see as being cost effective. It is very sad but what it means is that saving money as early as possible creates options and peace of mind. Of course what THAT means is that people will put off or simply discard the idea of reproducing. Children cost money too and you can't save tons of money and have kids too. What a mess we have made of things. But I know this; my kids have already said they don't want kids. And when I was an investment advisor, I told people who were eager to early retire, that the single most important thing they needed to do was not have kids. I didn't like saying that but the data is there to see. Early retirees (and I mean extreme early like people in their 30's or 40's) generally don't have kids.

 

[coolowl]

Thinker25 nailed it. People who could be saving more aren't. They will be sorry. It's not everybody of course but an awful lot of my colleagues just kept spending and spending. What are they going to do?

 

[warren]

The contributors here are in a select minority. I often wonder how many folks find this place, lurk a bit, then realize how ill-prepared they are, and never/seldom post out of embarrassment, fear, or reality check.
Tyro

I could fit that mold, but after getting by just fine in my ill-prepared state for almost 13 years, I am no longer embarrassed or afraid to talk about it. I figured out the big balances most people deprive themselves to attain during their working years are fine for those who earn six figure incomes, but assets are not the key to a happy retirement in my opinion, the much more critical figure is cash flow. As long as the dooms day prophets don't get to say, "I told you so" if and when the Social Security system ever does really fail, I am going to keep on enjoying a carefree life without suffering anxiety every time we take another trip.

 

[obgyn65]

I agree that NW is not as critical as cash flow. This is why I designed a month by month cash flow analysis for the next 47 years, until I reach 95 years. But I still don't know for sure what my NW is exactly.

I could fit that mold, but after getting by just fine in my ill-prepared state for almost 13 years, I am no longer embarrassed or afraid to talk about it. I figured out the big balances most people deprive themselves to attain during their working years are fine for those who earn six figure incomes, but assets are not the key to a happy retirement in my opinion, the much more critical figure is cash flow. As long as the dooms day prophets don't get to say, "I told you so" if and when the Social Security system ever does really fail, I am going to keep on enjoying a carefree life without suffering anxiety every time we take another trip.

 

[GoneFishing]

I have all my bases covered... If I happen to get an inheritance, I just buy a bigger bass boat......

 

[BLS53]

Whenever I see data like this, it just raises my concerns about how much social security a lot of us will see. One of the proposals which is particularly irksome to me is to set a minimum payout that everyone will receive regardless of what they paid in. SS is so incredibly skewed already to those who have contributed the least.

There's already a minimum payout. It's called Supplemental Security Income. Usually associated with the young who become disabled before earning enough SS credits. But there is also a provision that allows for those 65 and older to receive it. The current benefit is about $700 a month. If the person has a SS benefit that is less than that, SSI makes up the difference.

So anyone, disabled or not, who makes it to age 65, gets a minimum of $700 a month. Even if they never worked a day in their life.