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 ...
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.
later
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.
Excellent question.
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.
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