Tuesday, November 8, 2011

Ya think? Time to Rethink Retirement?

Thanks to Mark's post at his blog, Go To Retirement, I came across this article from Businss Week.

The point is how people are having to rethink their retirement strategies.

Working longer is the main one. Of course there's nothing to rethink for those of us who already planned to work longer. My current goal is 69, but I could hold out for a year beyond that. But even longer? Hey, I want to enjoy some level of retirement so I have NO plans to work past age 70.

What I found disconcerting was the suggestion to forego the 4% rule--you know, the rule where drawing 4% of one's investments per year guarantees that we won't outlive our money? Apparently that rule no longer applies and the authors suggest that 3% would be a better model.

And I don't know what to make of the suggestion that we stop saving towards our retirment and spend the money now on travel or other things we might otherwise put off to a time when we might wind up unable to actually accomplish them. I understand the point, but for those of us who didn't start to seriously save until we were 50, there's no way we can put those savings on hold.

"Rethinking" is giving Grace a major headache.


Jane said...

Hi Grace - about 4 years ago I created a 7 year plan in order to retire from teaching at 58. I am feeling quite challenged these days (with just under 3 years to go) in keeping to that goal. I frequently plug numbers into the pension calculator at my pension plan's website and I can admit to more than a wee bit of worry. I could easily work 2 more years til age 60 to earn a bigger pension but I have my heart set on retiring early and "living on less". I got into teaching late (age 36) so won't have a huge pension as it is - I guess my challenge is making early retirement work on a reduced pension. Do I go for 2 extra years of retirement or hang in longer for an extra couple of hundred dollars more per month. I don't like to give up my first goal of retiring at 58, I'm stubborn that way but it's not written in stone. Wait and see I guess.

Anonymous said...

I did most of my traveling in my 20's 30, 40 and 50's, while I was working and had income coming in. Now, at 60, I want to stay home! I'm done.

Goal now is to make my home as comfy and enjoyable as possible. Get to re-know the neighborhood and sit back and enjoy, enjoy and enjoy.

Next summer I'm putting in a heated backyard pool (for longer swimming season ((if I sell my other house, that is)). If not, I'll just literally go jump in the lake.

Each season my backyard deck looks better and better.

Nope. Done traveling. (but then again.....who knows?)

Well Heeled Blog said...

I agree! Working longer is a great strategy (even part-time work), but many older workers can't work longer either because of their health or because there are no jobs available. I WANT to work, at least part-time, well into my 70s - I think that will keep my mind sharp and help me stay engaged with society, but I don't want to PLAN on it as an excuse for saving less.

Janette said...

Substituting a few days a week Kees you young, has no paperwork, and gives you a few extra hundred dollars until Soocial Securtiy. That is what I am doing from 54 until 66.

Arkansas Patti said...

Retirement is wonderful and I don't regret in the slightest going out at 62. The extra money might have been nice but you can't count on your health to continue so that you can enjoy the non working years if you wait.

priskill said...

Argghhh! It is too frustrating! I do wish I had traveled in my youth, like Morrison! I am another late starting teacher (@45ish) trying to make it to 66, 67, 68?? but health will determine. Subbing is a great option later on! Have to laugh when they say to "rethink" my early retirement -- this was never an option since I took that time when my daughter was born and slowly reentered the work force part time when she was 8 - 9. I don't regret the "Mommy" trajectory at all but it sure does wreak havoc with the whole retirement chimera.

On the plus side, husband is self-employed and his union is notorious for for lousy, truly miniscule pensions, so we have lived cheaply and saved for years. Mortgage very low, equity (what's left of it) in place, and we are cheap. On the negative, mutual funds taking hit after hit -- and they weren't ginormous to begin with. Ah well, we'll work as long as we can, and strive for health. If I am doing everything I can, then it helps to not think about it all the time so I can enjoy life right now, as Morrison points out.

Linda Myers said...

We retired last year after careful planning on the financial front. We've front-loaded traveling since we know eventually we won't have the stamina.

I see places where we can cut costs - and eventually we will - but our main excesses are going out for dinner and espresso three times a week. Otherwise, we drive older cars and have no debt other than our mortgage.

So far, so good.

MasterPo said...

MasterPo doesn't plan on any great traveling when (if) he retires.

Frankly in the current economy and the outlook for the near and intermediate future ('cause no own can really see beyond that) the concept of "retirement" is passe` at best, a pipe dream at the most unless you really were very successful early in life and socked a lot of it away.

Not trying to pee in anyone's Cheerios.

lita1857 said...

Oh MasterPo Thank you, I don't see it as P 4 cornflakes but it is my reality.We didn't travel much(Cananda-Florida)when young,we paid off house(small)in 2005, all done with college costs(2000)wedding(2005) and my point is we still have to pinch pennies.We both work full time-me 2 jobs.We live a simple life no expensive hobbies.We do have DD coffee every day and go out for breakfast each saturday after the public market.And still retirement looks like a long way off if ever.And I am glass half FULL kind of person.The way the economy is we all will be lucky to keep our jobs,our homes and any 401K/403b we will run through fast NOT on luxuries but essentials.Sad just sad.

Anonymous said...

Freedom 55 is a product sold by London Life.
London Life is an insurance company in London Ontario Canada.
It was developed in the late 70s.

Reitrement until this point was really stop working because" I am physically unable to work".
So if you want to retire early ,for whatever reason ,you will find it difficult because we really aren t supposed to retire because we want to stop working. Humans need to fill their time with a sense of worth therefore sitting on the beach really does nt cut it. Take a yr off, go to half time, sell the house or move to another place and make a change but remember you will live a very long time. How are you going to fill another 10-20 yrs of good yet older health ? You better have a great and cheap hobby.

Louise said...

I've always been one of those "I'll die with my boots on" people, I love working and plan to just reduce my hours as I get older, and take time off to travel. I didn't travel when I was younger, but I intend to start travelling soon, our plan is to downsize pretty drastically and cut our living costs as much as possible

Living Almost Large said...

My mom retired at 55 no problems. Depends on the situation. And she's not alone. Many people her age and older retired from the state with a very generous pension. She was a social worker to boot. She really doesn't have to worry after working for 35 years and getting 70% of her income for life. The state? Well that state is now in the crapper for promising all these pensions.

Grace. said...

Really, LAL? It was the pensions for state workers that got your state and our country in the current economic mess? Not the banks? Not the SEC? Not the laissez-faire Bush years? Not people's use of their homes as piggy banks? Not the corporate greed?

Living Almost Large said...

Here's the deal, they promised free medical premiums for every one and their spouses for life after retirement. They didn't have to pay into the pension but got a pension for life. How do you fund a pension when there is 0% pay in?

I think they deserve it because they worked for it. But stupidity of the state to promise something that is financially impossible. Getting money from nothing.

I think that lot of problems occurred because we didn't consider the long term. People didn't save and used homes as ATMs. Banks allowed it. People bought homes they couldn't afford, hence foreclosures. The gap widens between rich and poor.

I don't think that reality has set in yet. Too many boomers still have pensions. Give it another 20 years when people who mostly don't have pensions start to retire. Then see what happens when they actually have to live on what they saved.

Grace. said...

My father didn't graduate from high school. He was a longshoreman. He retired with a pension and lifelong healthcare. I have a post-graduate college degree. My employer contributes 6% to my 401(k) but that only started 20 years ago. Bottom line? My retirement is taking a lot more work than my dad's.

There are a lot of reasons for this recession and not many of them have anything to do with the pensions of state workers. It galls me that politicians try to make these folks (I'm NOT one of them) the fall guys for two decades of bad economic policies and corporate greed.

Josie said...

LAL, you're painting with a pretty broad brush there. A lot of people DID consider the long term, but the rules changed in the middle of the game.

Not all of us used our homes as an ATM, or took out mortgages we couldn't afford, or live large on a small income.

I echo Grace's sentiments about politicians and media blaming the financial mess on state pensions and unions, etc. This country had a `casino economy' for decades - whatever could go round, did go round, and regulating anything at all went straight out the door. Add to that 10 years of war financed by .... oh wait, that's right, they weren't financed! Point being, many causes to this problem.

A lot of people did scrimp and save, and still DO, and aren't any the better for it through very little if any fault of their own.

freedowload said...
This comment has been removed by a blog administrator.
MasterPo said...

Grace - State pensions and retirement bennies the cause for the recession? Probably not. It it surely is a reason we are now in this funk and can't get out.

So if a person made $80,000 at retirement, retires at 65 and lives another 20 years that means the state has to pay them $56,000/yr for doing nothing. That's equal to a decent wage for a working person! (and that doesn't include the healthcare coverage)

Then add in disability, cashing in unused sick or vacation time for more pension $$$, etc and it really adds up.

The other key factor NOT to be over looked is the VAST majority of private sector workers (union and non) don't have anywhere near all that retirement bennies.

Living Almost Large said...

Exactly it's compounded. The pensions are costing a lot and they are taking away jobs from people.

It's not an easy thing to fund pensions while growing the jobs for people. There's a reason why it's an unsustainable model.

And a lot of people do not have pensions and have no idea how to retire with the idea of saving money. Not many people 60+ have no pension. If that's the case they are still okay.

But those who don't have pensions now are preparing more because they realize it. But there are those who realize it.