Skip to comments.Thanks to the recession, more boomers are rethinking retirement
Posted on 09/03/2012 3:51:37 PM PDT by TurboZamboni
Just how much the Great Recession reshaped baby boomer retirements is becoming clearer: More than ever they expect to retire later or work when they're "retired."
In 1991, just one in 10 workers told the Employee Benefit Research Institute that they planned to wait to retire until they were older than 65. By 2007, three in 10 said that.
This year? More than four in 10.
Boomers cruising toward a traditional retirement suffered a financial comeuppance in the economic slump that began in late 2007. The downturn sapped jobs, stock and housing values, and interest on savings.
Many also were caught in the shift from defined-benefit pension plans to 401(k) plans that required workers to contribute toward their own retirement savings. Some didn't, a choice that will leave them short financially.
Small wonder that, according to the Pew Research Center, boomers are the gloomiest of all age groups about the health and future of their finances. Boomers were more likely than other age groups to tell Pew researchers that they lost money on investments since the recession hit. Nearly six in 10 said their household finances worsened.
(Excerpt) Read more at twincities.com ...
Their employers may have other ideas about when the boomers leave the workforce however.
That’s me, when I die they’ll say I’m retired
Catch 22--the employers have to be worried about age-related discrimination trumping work performance issues.
Freepers. What is a “safe” or, at least, relatively safe, 401K savings for retirement for one person at age 61? Is $400,000 enough?
If the Death Panels can cut the life expectancy enough, and add in the work til 70 plan, suddenly Soc Security and Medicare look fiscally sound.
The unspoken plan.....
I don’t see a retirement.
The rule of thumb is that you can only take 4% out of a fixed pool of money. So 400k would give you $16000 a year to live on.
I am almost 60 and work with several other older people and we all hold our own. Of course, in a couple of more years, who’s to say?
And one which will not be repealed or replaced, because it is the solution. There will be quiet exceptions for true specialists and the connected. Hospice for others.
The kids I have been working with aren't worth a fart in a wind storm......
Let the boomers stay on.
Bingo. Does anyone think most employers will keep older employees around when they can pay younger ones more cheaply and benefit costs also decreasing? Seriously, as much as the older work force is loyal, hardworking, and committed, when it comes to the bottom line, I’ve seen enough MBA’ers work the bottom line and the easiest way is to cut the older work force. Then what? If you’re in your mid-late 50’s you’re screwed, you’re not high on the list of desirables and waiting ten years to try and get the maximum on your SS so as to help round out your 401-k savings (pension? What pension?) Unless you’re union, most corporate pensions went out the window 25 years ago.) Yup, it’s going to be a bumpy ride, and no matter how much you may have saved, it may not have been enough depending on whether SS, Medicare, etc. are truly reformed or they go over the cliff. Interesting and scary times.
5 or 6 years ago, I could look forward to retiring at 62. Now, it may still be possible, but much less comfortable. Also, I’m in good health, so I will probably wait to 65.
Too many variables here to answer you honestly. For example, if your retirment returns 4-5% a year, that gives you $16-20K BEFORE taxes as an income - this assumes you do not intend to touch the princple. If you do plan to attack the principle - then you need to compute your estimated age before you suddenly die catestrophically (as in no medical bills). Do you expect to drive anywhere, or expect to continue to use electricity? Obama has removed food and energy costs from the equations used to calculate inflation - and he has already stated that he plans on energy costs to "skyrocket". So, can your 'fixed' income tolerate utility costs that will likely be 400% higher than they are now, in ~10 yrs?
Next we have questions as to Social Security income, your living costs, your physical health and questions such as "Do you expect your children to be unemployed, and forced to live with you and help raise their children while they are unemployed?" I work with many 65+ workers, who raised their kids, paid their way through college - and now have the kids living in their basement while the kids fruitlessly try to compete in a recession for the limited jobs that are available.
I expect to die at my desk - I had $250K set aside for retirement 4 years ago, before I hit 50 - it's gone, and I was forced to short-sell my home; because the "stable" employer I worked for, lost everything. I was collateral damage - and it destroyed me.
I have two thumbs, how about 32,000 a year? Seriously, I can take whatever I want out of my 401K, correct-a-mundo?
too many factors unknown:
is your house paid for?
is your health good? what’s your family health history?
what’s your resident sales tax? property taxes?
ya know, i am going to put in for social security as soon as i can.
i will be 59 in a couple of months. i will work, or course, even if I can actually draw it. i deserve it, i have payed for it, and if it would have been put in stocks, the market i would have a lot more.
my dad was always afraid that he would never receive SS. he is 90 now, and is receiving it. but he knew it was a ponzi scheme.
ya think i am not going to collect the first minuet I can?
the government stole my money gave me a “trust” that they will take care of me when i retire. plus, I have paid into medicare all these years.
I don’t owe the feds, they owe me.
Now, they want me to work til i die. probably will have to. but I will curse the lying liberal basturds til the day i DIE!
But the good news is the redistribution of wealth:)
Another case can be made that the exclusion of the federal and state and local apparatchiks from Social Security and granting them and the Congress special pensions and perks at taxpayers expense violates the equal protection clause of the 14th Amendment.
Of course good old White Horse Romney and the bankers and blue bloods over at the RNC and the demented communist scumbags at the DNC are all in agreement that DC and the apparatchiks come first.
This may be true to a large extent, but a large percent of boomers leaving the job market will be hard to replace. I'm not sure there are enough youngins with the requisite skills and experience to replace all the talent going away with the boomers.
I have been studying this lately. There are many variables but the key one is how much you can live on. Many of the other variables are less under your control. The rule of thumb is to not draw down more than 5% per year to feel comfortable you can outlive your money. There is also social security but they may keep raising the age when you can receive it. If you have a simple life style with no debt you might not need too much to live on in retirement.
It appears that China and India are cranking them out by the tens of millions.....
Doing some quick math:
+ Any Social Security Income
- Cost of Food, Housing, any taxes
- Cost of Inflation
- Any COLA (Cost of Living Adjustment) increases
- Medicare co-pays, co-insurance, etc..
= Average Senior Citizen Screwed!
Assume the average Senior Citizen needs $50k to maintain their standard of living, at a 5% per year withdrawl rate, they'll need to have $1,000,000 put aside in some form of savings or investment vehicle.
Assuming a 0% rate of return on that $1,000,000 and a 5% withdrawl rate, that senior citizen will have enough savings/investiment until they reach 85 years old.
Now, will $50k/year be enough for 20 years? Likely not with inflation, increased medical costs, cuts in medicare/medicaid, reduced social security payments, likely means testing as well, and I think you get the picture.
I think what many of us are facing - and not happy in admitting it - is a return to multi-generational housing which includes grandparents.
My wife grew up with her grandmother living with her and her parents until the day she and I married. Her family came here from Europe after WW2 where multi-generational families were commonplace. Here in the United States, the expectation is that once the kids move out, we're done. That's not so much the case anymore with the economy in the state it's in.
Ok. Once I retire, I’ll get a pension that will cover my health insurance. My expenses are about 2500 to 3000 dollars a month, but I get $800 in rent. By 62, I’ll get at least $500 a month in SS. My heath is good, but I smoked for 25 years plus, so I’ll probably make it to 70 at the most. The whole point is to live my remaining years without working.
The loss of any significant interest on savings is the most insideous feature of this downturn. But its been a longterm trend since 1990 or so.
This is no accident. Its basically a backdoor tax on seniors to make the deficit more affordable. Don’t let anyone tell you any different.
Many are on the WAL-MART retirement plan.
“Welcome to WAL-MART, happy shopping.”
Just heard from a 50+ colleague the latest strategy - (1) the company gives you rotten projects; (2) they trash you in annual reviews; (3) groundwork laid for poor performance firing thus alleviating the need for age discrimination.
You can still create a portfolio of blue-chip dividend-paying stocks that pay 4% a year. Moreover, the dividends will increase over time, increasing your income.
My mother is 84, and she has more money than she ever had. We pick the stocks together. She recently pulled a large sum out of a mutual fund and we invested it in individual stocks. We’re getting 5% of the original investment, and the portfolio is up 18% in 9 months.
Of course, you have to be able to tolerate some risk. But every aspect of life is risky, you can’t hide. If you invest in stocks, you will always have some losses.
Depends what your needs, other assets, and intentions are. If you want to play it safe and or leave as much of your account as possible to your heirs, then you will not consume capital until you are required to do so. In that event, you would take around $12,000 out of the account per year. Add that to around $24,000 per year in SS and you come up with $36,000 pretax. To that you would add income generated by any non-401K accounts you may have. The total may or may not be enough depending on what your anticipated costs are.
It probably depends on your spending habits. Some people could probably stretch that for about 20 years.
It’d probably help to, at least get a part time job, even if that job is low pay lime a convenience store job or something.
As others have posted this depends entirely on your financial situation. Check out the How Long Will Your Savings Last? calculator. $400K, withdrawing $30K each year at 5% interest will last 21 years.
Krankor wrote, "If you have a simple life style with no debt you might not need too much to live on in retirement." I agree completely.
The best thing a person can do is start a company, while they are working. You don’t have to worry about profitability, as you are drawing an income already and, if your company let’s you go, you have your own company to fall back on and you’re not going to fire yourself.
You aren’t destroyed yet brother.
Worked out for me, but was not my plan. Feel bad for so many others not in such a good spot.
The best things in life are not things. You are not destroyed, Hodar. We are still a Judeo-Christian nation no matter what the Obama residency has wrought. Hang in there and don't ever be ashamed to ask for help.
I beleive that rule of thumb starts with these assumptions:
retunr on investments 8%
4% to spend
2% for taxes
2% for growth
As you can see it may be less than 4% if you can’t find an 8% ROI.
Also if you don’t allow for growth you will rapidly lose out to inflation.
Where, in the present climate, does one get an 8 or even 4 per cent return?
I am serious. But I am not risk tolerant at my age, as most aren’t.
Everyone on this thread is free to blame me for this calamity. My timing has always been atrocious. As I approach retirement it stands to reason that that SS and Medicare will crater and interest rates collapse.
Heck, I sold off a herd of cattle right before the Adkins diet became popular, lol.
Pension gap divides public and private workers (2007 article but timely)
You can bet the politicians will be looking for ways to steal the 401k savings of the non-government retirees to fund the bloated benefits of the government retirees. The former group has nobody to defend them. The latter has politicians and unions feeding at the trough.
Read pensiontsunami.com . Its a compilation of news reports, mostly local or regional, about pension problems and abuses everywhere. Youll see what were angry about.