NPR series: The New Future Of Life After Work

[LOL!]

Series: The New Future Of Life After Work : NPR

among other things, the ranks of early retirees appear to be thinning.

 

[Nords]

among other things, the ranks of early retirees appear to be thinning.

I wonder if they survey-shopped to find results that supported their show.

Brindley says all of his and his wife's retirement savings are now in CDs — safe but yielding little income. He's not convinced yet that the markets have settled down enough for him to even look at low-risk funds.

I think we're beginning to focus in on the problem...

 

[CuppaJoe]

I think they are seriously cherry picking.

Saw an elderly person at work yesterday: follow the bouncing hat. In the last photo, the slow moving security guard says, too late, “you can’t do that.” [images have been mod. edited].

 

[ziggy29]

I think some of the results are cherrypicked as they always are in tough times -- they ignore the people doing well and focus only on those who support your preconceived thesis that the sky is falling.

Having said that, there's a clear theme in these pieces: 401Ks suck and if you don't have a DB pension, forget retirement.

 

[W2R]

Having said that, there's a clear theme in these pieces: 401Ks suck and if you don't have a DB pension, forget retirement.

Yes, we do often see such pieces. And if the guy with the 401K expects to spend as much during his working years as a guy with the same salary and a DB pension, he might as well forget retirement.

We see this all the time in federal government. For example, a recently retired clerical worker that I know, four GS levels lower than my GS level, is in the CSRS system that provides a hefty DB pension compared with my teeny one.

Although my pay is much larger in theory, her take-home pay was usually higher than mine, because she was putting nothing into the TSP while I was maxing out my TSP plus over-50 catchup. She spent most of her take-home pay and I did not. Now that she is retired, she will be doing just fine and will still have more disposable income than I will.

As Frank says with an engaging grin, "Frosts you, doesn't it?" She is an excellent worker but had only a high school education. I need to accept, as we all need to accept, the fact that times are changing and that retiring is harder than it used to be. On the other hand, we knew they were changing. At least 401K limits are higher now than they once were. I guess some people really got squeezed in a "crunch", with their DB pensions failing and their 401K contribution limits hemming them in.

 

[ziggy29]

Yes, we do often see such pieces. And if the guy with the 401K expects to spend as much during his working years as a guy with the same salary and a DB pension, he might as well forget retirement.

We see this all the time in federal government. For example, a recently retired clerical worker that I know, four GS levels lower than my GS level, is in the CSRS system that provides a hefty DB pension compared with my teeny one.

Although my pay is much larger in theory, her take-home pay was usually higher than mine, because she was putting nothing into the TSP while I was maxing out my TSP plus over-50 catchup. She spent most of her take-home pay and I did not. Now that she is retired, she will be doing just fine and will still have more disposable income than I will.

I think the "new normalcy" in the coming years will create a transitory period of retirement haves and have-nots to a large degree defined largely along these lines, until most of the populace has adjusted. To some degree I'm sure the feds see that in the CSRS and FERS people, and many private companies see that with newer hires with only a 401K and those with decades of longevity a more secure DB pension. I always wondered how that affected morale, or if it creates resentment.

It feels unfair but there's not a lot we can do about that at the moment.

The best we can do is assume that we're entirely on our own for retirement, save and invest for decades until it hurts, and then you may be able to retire even with no DB pension or SS, and if you're fortunate enough to get any of those it will be gravy. I guess I was ahead of my time, since I first made this assumption when I was first 401K-eligible in 1988 (at age 22). It turns out that we may get two SS checks and one, maybe two small pensions (depending on how long my wife stays with her new job), but even if we don't, we'll likely be able to retire some day. Maybe not early, but some day. That's more than can be said for people who have set little aside for retirement and suddenly find themselves middle-aged with no DB pension.

Eventually the "new normalcy" may mean retirement is expected at an older age (like 70) or that retirement won't happen at all unless you save your butt off for a long, long time. Maybe it means a resurgence in the extended family household (I hear a lot of you screaming!). But what it can't mean is the same deal that the parents and grandparents of many of today's young adult workers received. Those days are going, going, and once many public pension plans start closing the DB plans to new hires (I have trouble imagining they can keep these going forever and stay solvent), gone.

 

[W2R]

Eventually the "new normalcy" may mean retirement is expected at an older age (like 70) or that retirement won't happen at all unless you save your butt off for a long, long time.

I would even suggest that may already be the case and may have been for quite a while. I know people in their 70's and 80's who would like to retire but can't because of insufficient assets. You probably do too.

We can't stop the way our retirement system is changing over time, and resenting it doesn't harm anybody but ourselves. So, we just use the knowledge we have to figure out how to retire anyway, and carry on. Meanwhile I am thankful that I will probably get SS but I am not counting on it.

 

[ziggy29]

I would even suggest that may already be the case and may have been for quite a while. I know people in their 70's and 80's who would like to retire but can't because of insufficient assets. You probably do too.

There have always been people like that, I think. But we're going to see them in greatly increased numbers in the next 2-3 decades at least.

Personally, I think the economic changes that are precipitating this shift had their roots in the 1970s, but through the creative use of debt -- personal, corporate AND government debt -- people of that era (until very recently) were able to party like it was 1959 and leave the hangover for their kids and grandkids.

And over the last 30+ years, that house of cards grew and grew until it became as big and tall as it could get without collapsing completely. We can't add many more cards without a spectacular collapse.

The post-WW2 bubble of *true* U.S. economic growth and trickle-down prosperity started to pop at least 35 years ago in the face of declining demand for U.S. manufactured goods and the rise of the "global economy," and we were in denial for a long, long time. There's no denying it any more. It has to be faced now.

 

[CuppaJoe]

.... there's a clear theme in these pieces: 401Ks suck and if you don't have a DB pension, forget retirement.

One thing I saw over the years in smaller businesses is that most people didn't vest in DB pension plans, even if they stayed with the same company for many years because the employer would discontinue a plan just before many people would vest. I was lucky and did vest in some of them (in one case only 2 qualified and in another only 3) and later qualified for a Keogh which is a very strong leg on my 4-legged stool. I've known people who have plans similar to my Keogh and if the employer didn't fund his own account some years, the employee's account was also not funded. Bennies make good advertising and enticement to join a particular company but don't always materialize.

 

[ziggy29]

One thing I saw over the years in smaller businesses is that most people didn't vest in DB pension plans, even if they stayed with the same company for many years because the employer would discontinue a plan just before many people would vest.

For sure -- but the tone of these NPR pieces is all but giving the "abandon all hope" message to anyone who is forced to rely almost exclusively on personal savings.

 

[LOL!]

OK, so to counter-act the cherry-picking, y'all have to go to the NPR web site and tell your story. As in:

I'm an early retiree. I saved my butt off in my 401(k) and elsewhere and didn't load up on risky assets. I follow my asset allocation plan even today, so I am doing just fine.

Why all this gloom-and-doom when so many of us are doing so well? Please paint a more realistic picture of the world we live in: It's beautiful! Early retirement with my massive 401(k) is even better than Viagra!

 

[FIREd]

I think that there will always be motivated people who will find ways to retire early. It may not be as easy as before, but people will find ways. Today, youngins have greater access to advanced degrees and well-paid jobs than previous generations. DW and I benefited from this and we are lucky to have an income far exceeding what my parents could ever dream of. While guaranteed pensions and SS were their way of saving for retirement, higher incomes combined with a high savings rate and a frugal lifestyle is ours. I think that people will adapt and there are already signs that young people are getting the message.

 

[Zoocat]

I was in Maui last week and the bag lady at the grocery store was AT LEAST 80 years old. She was doing a good job but I was extremely embarrassed that she insisted on pushing my grocery cart out to my car because she "had to go get the other carts anyway." Some other people going into the store stared at me and her!

There are unexpected obstacles to elderly employment, the least of which is embarrassment of all things!!

 

[Midpack]

I'd add something, but I think Ziggy has it absolutely nailed here in all respects...

 

[clifp]

And over the last 30+ years, that house of cards grew and grew until it became as big and tall as it could get without collapsing completely. We can't add many more cards without a spectacular collapse.

The post-WW2 bubble of *true* U.S. economic growth and trickle-down prosperity started to pop at least 35 years ago in the face of declining demand for U.S. manufactured goods and the rise of the "global economy," and we were in denial for a long, long time. There's no denying it any more. It has to be faced now.

I agree. I also think a bit of perspective is important. The period of a time when many people could retire in their early 60s, expect to live another 20 years, with a standard of living similar to what they had while working is short span of time.

Defined Benefit pension (DB), only became popular after WWII. Then only for government or Fortune 500 employees, from what I have been able to research no more than 1/3 of America every got large pensions. So the golden age of retirement is a short one in American history starting in the mid 60s (you need to work 25 or 30 years for the same company to get a good pension) and ending by the mid 90s when DB got frozen and phased out so roughly 30 years out of 225 years of American History. Most people never ever were covered and so they had to depend on saving, family, and more often frugality to make do in their later years.

As a society I don't think it is sustainable that people can work for less than two years for each year of retirement. A ratio of roughy 2.5 years of work/per year of retirement seems more realistic in today global economy.

 

[REWahoo]

As a society I don't think it is sustainable that people can work for less than two years for each year of retirement. A ratio of roughy 2.5 years of work/per year of retirement seems more realistic in today global economy.

I sure hope you're wrong. Retiring after 35 years of work and with no pension, that would buy me only 14 years - and I've already spent four of them.

 

[ejman]

I sure hope you're wrong. Retiring after 35 years of work and with no pension, that would buy me only 14 years - and I've already spent four of them.

Me too. Finished grad school in 1976, ER'd end of 2002. 26 years of work and also no pension' Lets see - been ER'd for 7 years now. By the 2.5/1 calculation I only have 3 more years.... I REALLY don't like that!

 

[harley]

One of the reasons I worked so hard for so long, saved so much, and learned about managing my finances is that I fully intend to be a drone for longer than I was a worker bee. I worked for 34 years, retired at 50, and have great hopes that I'll make it past 84. I suppose if my health starts to fail I can add in the 16 years of life from before I started working full time. But I don't wanna.

PS - No pension, but some help with healthcare.

 

[walkinwood]

From the article
""The hard reality that we're coming to face at this point is that society can't afford to have a huge segment of our workplace sitting idle for 20 to 30 years,""

That's the unvarnished truth. If you want to be part of the small segment that can, you need to plan for it. Can't expect society to hand it to you on a platter.

 

[walkinwood]

OK, so to counter-act the cherry-picking, y'all have to go to the NPR web site and tell your story. As in:

Edit update: Sorry.. comments are closed! disregard my message below.

Great idea! I'm going to add my comments there.

WE ALL SHOULD DO THIS..

 

[clifp]

From the article
""The hard reality that we're coming to face at this point is that society can't afford to have a huge segment of our workplace sitting idle for 20 to 30 years,""

That's the unvarnished truth. If you want to be part of the small segment that can, you need to plan for it. Can't expect society to hand it to you on a platter.

Exactly right. I am struck by how many of the profiles of "victims" in this recession have spent more than 100% of their income over long periods of time. We can't as a society afford to give these people anything more than meager existence in their old age. Both because our competitors in Asia, and even Europe don't do this and also as deterrence. e..g if you don't save money for your retirement you'll end up eating catfood and be a burden on your children.

The average America who saves up to the employee match in their 401K (say 6%) and perhaps moves up to 10% during their 50s well need to work through their 60s, and hopefully on average die before they turn 90.

The almost 1:1 ratio (or in my case more than that hopefully) requires a massive savings rate. Virtually every regular on this forum maxs out their 401k, contribute to IRA if available and saves outside also. This even includes those folks with a generous government pension. There are a heck a lot of people in the forums who's saving rate exceeds 20%. Unfortunately while this saving rate is good for us as individual, it is potentially ruinous for the economy as a whole. E.G Japan or the Q4 2008.

On the other hand, spending 102% of our income as society is even worse.