Article: biggest decline in retirement is in the 55-59 age bracket

[EastWest Gal]

So ya'll are bringing up the child rearing cost issue. Here's the irony of the article: people are having less children, many more couples are DINKS compared to 30 years ago, and they still can't retire like the previous generation did (who had many more children).

Astronomical rising cost of education, housing, and health insurance and wages not keeping up are part of the picture. The wage picture has started to improve somewhat.

 

[ShokWaveRider]

Astronomical rising cost of education, housing, and health insurance and wages not keeping up are part of the picture. The wage picture has started to improve somewhat.

Not for us, we were DINKS, decided 35 years ago (a year after we got married and moved abroad) that we did not want children. No reason other than we did not want ancle biters around 24/7, and I travelled almost every week or 2 and did not want to be a part time dad, and I liked my career. We were perhaps in retrospect a little selfish as we earned good money and had everything we wanted and more and enjoyed and are still enjoying the lifestyle. We have discussed it on occasion, and given all our experiences, would make the same decision again. We had family with children, some were great, others grew up to be disrespectful towards their parents. Not that we did not like kids, we loved them .... as long as they belonged to someone else, and we could give them back after a day or 2.

 

[MichaelB]

<mod note> There are very few topics that are as personal as having children. If it must be discussed, please do so in a way that respects the situations of others and the choices they made.

 

[tbis]

These are late-end boomers, and early Gen-X'ers. They saw the removal of pensions - after they'd started working, and the early days of 401k which were not as competitive with matching as now. This is also the era when staying at the same company forever became not-a-thing anymore. Outsourcing and offshoring surged after they hit 35. Many corporate dynamics were different from 2000 on vs. prior years.

2008/9 impacted them when they were already well into their careers. They took layoffs, paycuts, and pay freezes in their prime earning years. They likely had mortages under-water homes for years as well. Many probably sold out what was left of their 401ks at the wrong time.

(So, while the child/marriage approach might be useful for general planning, it doesn't explain why this group is retiring at far lower levels than those before them.)

This certainly rings true for me and my spouse. Although she retired in January, at 63, it was really a lay-off that she just rode into the sunset. We had both survived any number of layoffs at our respective Megacorp gigs and lived through pay freezes every other year for a decade. Neither of us have pensions. I am still working (mid 50s).
I do my parents taxes for them every year now and given how modest their income was in their working years I am amazed at how well they do on my Dad's two modest pensions plus SS. I often find myself doing calcs like "the average 401k would need to have over $X to generate that kind of income at a 4% draw".

Honestly, I'm not sure how lucky the folks with pensions realize they are in this day and age. A co-worker and his wife (early)retired just last year...both have pensions and healthcare from a prior job. It's a game changer for them.

Looking back at my own career I might have prioritized working for places with a pension in retrospect...of course given how the rug can get pulled out form under them (in the megacorp world anyway), that may not have worked out regardless.

 

[JoeWras]

Looking back at my own career I might have prioritized working for places with a pension in retrospect...of course given how the rug can get pulled out form under them (in the megacorp world anyway), that may not have worked out regardless.

When I started in the 80s I worked at a Megacorp that was one of the most famous of all Megacorps, and was well known for respecting their employees and never giving them the shaft.

A lot changed in 10 years, and I saw the writing on the wall. I took a job for 30% more and left behind safe MC. My coworkers were in denial and thought I was nuts leaving the womb of safety.

I put all of that raise in my new company's 401k and after tax savings knowing that pension days were over. Meanwhile, old MC went through severe turmoil and killed the pension. Old timers were OK and grandfathered. Newbies got a small payout. Those in the middle (my age) were left in a limbo and to choose between bad and worse. It didn't end well at all. Layoffs were massive. And Megacorp never raised their wages to anything competitive. Just horrible.

I'm so glad I max-funded that 401k and other savings. DW did the same and it allowed us to retire.

 

[EarlyandLate]

But got here by 1) maxing 401k, 2) paying off my house with extra payments, and 3) being one of the cheapest mom's on the block. I fit the GenJones description linked above and have carefully avoided the 'keeping up with the Jones' thing.

We drive older cars and our "rv" is a beater van. Our kids have learned that thrift stores are a great place for 'finds'. One son likes clothes a lot - but shops at Goodwill. The other is moving into his first non-dorm housing - so we're outfitting him with hand me downs and thrift store finds. I have peers (mom's with kids the same age) who are horrified I encourage this.

Ding! Ding! Ding! This is how it's done!


I was fortunate in that my first job ended in an unfortunate manner. I joined a start-up in the Bay Area. They had a very convincing story about how secure their funding was since they were started by a privately owned megacorp. After two years, the board member who sponsored us retired and the others immediately pulled the plug on us. Lesson learned!
After that I was fortunate to get a job at a well regarded megacorp. I was given the BS story that as long as I worked hard and kept my nose clean, I was set for life! In over 100 years, there had never been layoffs, not even in the 1930's. A huge pension was waiting for me at retirement. Even the janitors were full employees with pensions. Older employees often repeated this legend for us youngsters.
I never trusted the company one bit! Therefore, I not only maxed out my 401k, but also dumped everything I could in Vanguard funds, bought a great house that was well below what I was told I could afford and paid off the mortgage in about 9 years. All that was possible because I lived as Rodi describes. When the pension reductions and retiree healthcare cuts were announced, I didn't sweat it. When the layoffs were rumored, I smiled and said "show me the money and I'll leave". When the massive RIF happened, I ran for the door!

 

[JoeWras]

Yep. I know that megacorp. Oh yeah, that no layoffs during the 30s sounds so familiar. They probably told you the legend of people cutting grass instead of being laid off.

Seems like we also shared the start up experience. My time was brief, but fun. They had a good 401k. All was good until one board meeting, the VCs decided to cash out. They ejected our beloved founder. It all crumbled down quickly after that. Fortunately, I didn't wait and started my job search the day they announced our CEO firing. I got ahead of the curve of the collapse.

 

[HI Bill]

Pensions have got to be the major factor.

...and the Full Retirement Age of SS being raised to 67.

 

[luckydude]

Me thinks another reason for decline in number of retirees in the 55-59 age bracket is that technological advancement in the last couple of decades have made things like smart phones, gaming consoles, big-screen TVs, and all sorts of electronic gadgetry available for people to blow their money on.

Back in the "old" days people made do with a color TV and a landline phone, and entertainment was provided by free network TV. They didn't cost much. But nowadays everyone has to have the latest smart phones, game consoles, iPads, etc., as well as all sorts of monthly subscriptions such as Netflix, Amazon Prime, game passes, cable services, etc. etc. because they are now deemed "necessities" of modern life. But all these things cost money and they add up quickly, not only the products themselves but the monthly subscription fees to enable their use. It's no wonder nowadays people have less money to save and invest for retirement.

 

[scrabbler1]

Me thinks another reason for decline in number of retirees in the 55-59 age bracket is that technological advancement in the last couple of decades have made things like smart phones, gaming consoles, big-screen TVs, and all sorts of electronic gadgetry available for people to blow their money on.

Back in the "old" days people made do with a color TV and a landline phone, and entertainment was provided by free network TV. They didn't cost much. But nowadays everyone has to have the latest smart phones, game consoles, iPads, etc., as well as all sorts of monthly subscriptions such as Netflix, Amazon Prime, game passes, cable services, etc. etc. because they are now deemed "necessities" of modern life. But all these things cost money and they add up quickly, not only the products themselves but the monthly subscription fees to enable their use. It's no wonder nowadays people have less money to save and invest for retirement.

The cost of popular electronics such as color TVs and desktop PCs have gone down a lot over the last 30 years. But the cost of recurring fees related to their use have risen a lot, such as cable TV and internet. Yes, there are new devices which didn't exist 30 years ago, such as smart phones (which I don't have), and they have their own usage fees.

But taking out books from the library is still free.

 

[jldavid47]

My old 80 something friends are never surprised at my late 50s retirement. My peers are perplexed and call me "lucky". (Another topic we all know too well.)

Just quote the immortal words of Branch Rickey (and John Milton):
"Luck is the residue of design."

 

[ShokWaveRider]

As mentioned before the simple answer is that most do not have enough dough! Same reason others are working (or having to work) way past normal retirement age.

 

[Timeisprecious]

Glad to get out at 59!

And me at 62. It's hard to imagine working after 70, isn't it? I do know many folks do it. Ugh!

 

[CaptTom]

Me thinks another reason for decline in number of retirees in the 55-59 age bracket is that technological advancement in the last couple of decades.

That's an interesting idea. I think that's got a lot to do with it.

I've known people who "just can't live without" the biggest TV, newest iPhone, full cable subscription, every streaming service, "premium" high-speed internet, a new luxury car or truck and a $7 coffee at Starbucks every day. They also rack up their full limit on their credit cards.

Then they have the house foreclosed on, get evicted from their apartment, or cry about how they can't afford to pay their bills.

I don't mean to be demeaning. These are not people I dislike. I wish there were some way to reach them. They just can't see through the continual barrage of marketing and figure out how to establish their own priorities.

So, yeah, the temptations of modern technology can push some people over the edge.

 

[Timeisprecious]

We have noticed that most of the members in one of our retirement clubs, one that is kind of pricey by my standards because a lot of the events are at country club type places, do have military or megacorp pensions, and sometimes even both. We thought as we got older there would be more younger members joining after us, and by younger I mean under 65, but that hasn't happened. Just an overall membership decline as the older members age out.

Wow. That says a lot, doesn't it?

 

[disneysteve]

Me thinks another reason for decline in number of retirees in the 55-59 age bracket is that technological advancement in the last couple of decades have made things like smart phones, gaming consoles, big-screen TVs, and all sorts of electronic gadgetry available for people to blow their money on.

Back in the "old" days people made do with a color TV and a landline phone, and entertainment was provided by free network TV. They didn't cost much. But nowadays everyone has to have the latest smart phones, game consoles, iPads, etc., as well as all sorts of monthly subscriptions such as Netflix, Amazon Prime, game passes, cable services, etc. etc. because they are now deemed "necessities" of modern life. But all these things cost money and they add up quickly, not only the products themselves but the monthly subscription fees to enable their use. It's no wonder nowadays people have less money to save and invest for retirement.

I don't buy that argument. There have always been things and gadgets and toys for people to blow money on. The specific things may have changed but living beyond your means isn't anything new.

 

[Cobra9777]

I don't buy that argument. There have always been things and gadgets and toys for people to blow money on. The specific things may have changed but living beyond your means isn't anything new.

+1

It seems to me that a person who values current consumption over saving will always find something to waste their money on. There's nothing different about today's tech devices or services. It's just the latest thing to waste money on instead of saving.

The article cited several reasons for the increases, which I find much more plausible:

1. increases in FRA for SS
2. decline in employer-provided retiree health insurance
3. shift from DB pensions to 401K plans
4. less physically-demanding jobs, which allow for longer careers
5. longer life spans, resulting in a longer planning horizon for retirement

 

[punkinhead]

I don't buy that argument. There have always been things and gadgets and toys for people to blow money on. The specific things may have changed but living beyond your means isn't anything new.

True to a point, but the growth of the internet has magnified it by orders of magnitude. Entertainment has always been a non-essential spending category but streaming has increased the options to an unimaginable level. Similar for shopping. Sure, a century ago people had the Sears catalog but the options and convenience to impulse spend now are insane so a lot of people get caught up in it.

 

[Pellice]

True to a point, but the growth of the internet has magnified it by orders of magnitude. Entertainment has always been a non-essential spending category but streaming has increased the options to an unimaginable level. Similar for shopping. Sure, a century ago people had the Sears catalog but the options and convenience to impulse spend now are insane so a lot of people get caught up in it.

I wonder if kids are taught the hatred of debt that my parents, children of the Depression, taught me? They genuinely feared debt. Those of you with children, how do you convey the fear of debt?

 

[ShokWaveRider]

Honestly, I am having trouble finding a "Toy" that I will actually use for more than a week. Our interests do change in time, I used to be an early adopter, but we were making good money and purchases did not affect our savings or QOL. When I need a phone, I buy one, same for computers, TVs etc. But just for the sake of buying something, we do not do that anymore.

Our (my) only vice is we lease our daily driver every 3 years whether we need to or not. Trouble free driving, GAP insurance and protection from car devaluation based on accidents are luxuries we have earned, and do not intend on give up.

 

[JoeWras]

+1

It seems to me that a person who values current consumption over saving will always find something to waste their money on. There's nothing different about today's tech devices or services. It's just the latest thing to waste money on instead of saving.

We now have more variety to waste it on, especially fast convenience like high priced coffee. There are better marketing machines at work today too.

To support your idea, I present the color TV. In 1954, RCA offered a 15" color TV for $1,000. Inflation adjusted, that's $11,000 today. You didn't need a monthly streaming fee to really eat the budget.

So, yeah, opportunities existed to waste money back in the day also.

 

[Gumby]

+1

It seems to me that a person who values current consumption over saving will always find something to waste their money on. There's nothing different about today's tech devices or services. It's just the latest thing to waste money on instead of saving....

I have always thought that the best way to become rich is not to live like you are rich before you actually are. There have always been people who fall into that trap, but I think our current society, particularly social media, gives people more unrealistic expectations as to what they can afford and what they "deserve".

 

[Trailwalker]

I wonder if kids are taught the hatred of debt that my parents, children of the Depression, taught me? They genuinely feared debt. Those of you with children, how do you convey the fear of debt?

My youngest learned the hard way. During the first year of college, the credit union used an automatic line of credit to cover his overdrawn account. He was making the minimum payment each month and got himself into a small amount of trouble. We bailed him out once (he is fully disabled), but told him that would be the last time. It has been.

My daughter saw how we avoided debt by sacrificing stuff vs. paying off the house early and never running a balance on the credit card. We paid for four years of college education, and she paid for an extra semester that she needed to graduate.

She has a nice job now, maxes out her 401k, and has no debt at 26.

 

[JoeWras]

gives people more unrealistic expectations as to what they can afford and what they "deserve".

"deserve": Gumby, you hit the nail on the head.

It is insidious marketing. The whole "influencer" thing is a game changer in marketing and, well, it works.

 

[ShokWaveRider]

The whole "influencer" thing is a game changer in marketing and, well, it works.

Only with those who are gullible and impressionable.