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The daily drumbeat of layoff, furlough, and unemployment news is almost enough to make you forget that sometimes people actually want to stop working. Retirement — a voluntary one, that is — remains a goal for many working Americans. But longer life expectancies, pension plan freezes, tanking 401(k)s, and concern about social security call into question not just the viability of imminent retirements but the prospect of retirement in general. Will today's 20-year-olds have to work for the rest of their lives?
Financial planners like to talk about retirement as a stool propped up with three legs: retirement accounts (whether public or private pensions, or 401(k)s), personal savings, and social security. With serious question marks surrounding all three, is it time for a new model? What might employers' roles look like in the future? What about a government safety net?
Were you hoping to retire soon? Have the upheavals of the last year forced a course correction?
If you're in your 20s or 30s, do you hope to put your feet up by your 80s? How do you plan to get there?
GUESTS:
- Robert Hegwood: Student at Portland State University
- Raymond Brooks: Professor of finance at Oregon State University
- Robert Brokamp: Editor of the Motley Fool Rule Your Retirement newsletter service
Tagged as: employment · labor · retirement
Photo credit: mewrow / Flickr / Creative Commons
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Long time ago I looked at retirement and realized that you have to get to retirement to retire and there were at least 5 decades to get through first. I went to the financial planners, etc and the advice was all similar. The problem was that the amount that I was supposed to save was larger then the amount that I had left after paying the basic bills. You have to get there to retire…
Then we had the recession of the 80’s and I did not lose my house but I did clean out my retirement to provide for my young family.
Watching this current crash coming I sold that house, I liquidated my retirement out of range of the impact and yes I paid the penalties. Compared to many of my friends I retained more of my savings. You have to get there to retire…
I have learned and today’s economy confirms to me that only a fool invests in non-tangibles.
If you do not own something physical you are gambling. There is no difference and just as with any casino the house wins or the house fails. Yes, you could lose the tangible; however that usually occurs because of something that you did rather then someone doing something to you! There is always a risk to life.
At age 50 I have seen the common investment system falter or fail twice in my working lifetime. I have friends that have investments that are now worthless, thus they now have retirement funds that equal my simple savings account. That has to sting.
I have no illusions of ever being able to retire; I never planned on it, nor do I want to!
I will not deliberately put a dime into the stock market gambling machine; unless I want to gamble, not invest. What then besides real estate (which I have yet to lose on) and a savings account at my LOCAL bank will provide a relatively safe stable and sustainable return?
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I'm 58 and have always considered retirement a luxury of the previous generation. With no 401k or personal savings, social security will have to supplement an income that I long ago resigned myself having to earn as long as I am physically able.
When I listen to Suzi Ormond tell people to set aside their "latte money" I wonder if she realizes that half of her audience can't afford to buy a latte if they wanted to. I hope your guests today have a better grasp of reality.
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Having been laid off 6 weeks prior to retirement, but after 32 yrs of service, I find myself in the heat of the subject.
I get no medical / no pension. I returned to grad school and will soon be fighting for a new job. Gen X and Y are very angry that olders workers are staying in the work force, and blogs promote the idea that 'Boomers got what they deserved' via the economic collapse. These types of attitudes are brewing a social collapse.
The economic pundits are not proving to be capable to understand and address the crisis, and future taxation will be a huge challenge.
I drive a $35 car that gets 50 mpg (on free grease), and spend less than $200 / month on food and all discretionary spending. My healthcare is $1,000 per month and my property taxes are $1100/month. My income is Zero and I am 12 yrs away from medicare. Not pretty.
On to Plan B... (Living under a bridge)
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Fixing Social Security is easy, there just isn't the political will to do it. All that is necessary is to tax ALL earned income instead of just the first $106,000 an individual earns.
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I'm a 56 year old Encore careerer who worked 30 years in the high tech industry, went back to community college and got a degree in gerontology. I now work in an non-profit as an advocate for older adults. I live on about one-fifth of my previous income but my job satisifaction is way up. I spend most of my time previously outsourcing, downsizing and being controlled by a Blackberry. Now I go home every night knowing I've made a positive difference in other people lives Could I do this without having significant savings to supplement my current lifestyle probably not as well but I have scaled back how I live. I am now convinced that people should work into their seventies but they should change what they do. They don't have to work 50 or 60 hrs per week but staying engaged and active keep you young. Our current buzz phrase is quit talking about what you did in the Sixities and what you are going to do in your sixities.
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I'm currently 45. I do not expect that I'll be able to retire until I'm at least 70. That's 25 years from now. I do think that Social Security will be around by then, however, I'm pretty sure that the montly social security payment will barely cover a week's worth of groceries by then due to inflation - that's if we're lucky.
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I'm 29 years old, live in Portland and work in the Creative Industry as an Art Director / Graphic Designer. I'm began saving about 4 years ago with a 401k, basic savings account and an HSA. But, their is no job security in the industry I work in. I've already been laid off twice this year. Therefore, my ability to save has been slowed and may continue to be slowed as I get older, it's just a part of the business. I'm aware of it and doing my best to adjust.
My future plan is to continue to diversify and sock more money away as I can (maybe even under the mattress :) ). But I still don't think it will be enough to support myself when and if I retire. I'm ok with that.
I see everything I do as supplementary. Anything that allows me to even slow down a bit, is just fine with me. I'll probably continue working as an instructor or in some other creative related field when I retire.
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I'm 49 and have never planned to retire.
I graduated into the recession of the early 80's, and since then I've watched private companies lay-off workers and gut their pension plans, while the government has either dithered over fixing Social Security, or else has tried to destroy it via privatization.
So basically, I figure I'll always have to take care of myself, and therefore I plan to work until I drop; as did my Father before me.
My Dad was a young man during the previous Great Depression, and he warned me to never completely trust any institution, from Banks to the Government.
So far his pessimism has been validated; so I expect to work until I die.
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Retirement for 61-year old Career Waiter!!!
401K - ugh! Lost a ton!
Universal Life Policy - Lost 50% in last 6-months
Hours reduced at work but hospitality consulting has picked up 1st quarter of 2009.
Here's my retirement plan: the morning I don't wake up I'm retired. About one-gazillionth of a second after taht event... I really won;t care! :-)
Paul Paz www.WaitersWorld.com
Please ask for my station! :-)
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I hope someone on this show will figure out that the folks who don't benefit from pensions are not retiring!! I have been working for 35 years and have been an agressive contributor to a 401K plan but this will not allow me to retire any time soon. I fear that there is going to be a real class warfare in this country due to those of us (still working) paying for those that are retired. The Public Employees in Oregon are a classic example of this inequity. When these folks retire (in their 50's) they will be collecting pensions for the next 20 years; which makes these packages half million to million dollar retirement packages. This is absolutely wrong and unsustainable.
Fortunately; we have also been buying real estate for most of our lives. It will be this real estate and essentially the annuity payments (rental) which will allow us to retire someday; not the 401K.
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My husband and I are investing 20% of our income into retirement. I am 30 and working as a nurse, and I wish to retire early in my late 50's to travel around the world. We even started learning some foreign languages so we may retire to go to other country where our money can go much farther.
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I reprogrammed myself so that when I consider buying something I think of how many hours I would have to work to pay for that thing and then ask myself if I would rather work for that thing or enjoy the pleasure of not working.
So. Which is more pleasurable, working to have that thing or enjoying my own free time to play, read, or do whatever I want to without it?
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Most of us are going to have to learn to live with less. Our standard of living in the US peaked a few years ago and likely will not be at that level again for a generation or more due to the current economic crisis.
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Another comment which has not been brought up is the realization that our 401K might be adequate if we elect to live outside the US when we retire. We have been visiting a number of countries where the cost of living is significant less. This frankly is an option we are considering upon retiring.
I am very concerned that the tax structure will signifcantly change over the next 10 years to cover the growing deficit. Perhaps being outside the US will not be such a bad thing when this landslide hits and increases taxes at all levels.
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my wife & I both retired in June/08. She taught High school; I'm a nurse. We both have PERS and had no credit card or other debt except for our mortage payment. The key here is that we had no other debt. We have always lived simply.
We retired 'early' so as to travel while we are still healthy. Our 401k plans have lost about 1/3rd value since retiring but since we don't need to tap into it until age 70 - 7years in my case - we are doing okay.
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I'm not sure I buy this "pipeline" idea. If we had a growing economy then young people would find new niches in the economy even if old people weren't retiring.
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WOW!
The workforce Pipeline theory is some of the best delivered BS since the campaign ended!
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Talk about annunity's. A way to lock in 5% to 7% to start and build a income that you will never out live. To manage your money in a way that rollover to still give you axcess and to buy life insurance early in life to build value. Buy bonds and long term care plans to help off set health cost.
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Interesting, I think the radio show was seriously disconnected from out here in the world.
It feels like there has been a paradigm shift and the establishment is still trying to hold the old line... Maybe the establishment can turn.
What I'm actually seeing is decidedly not what the state and federal leaders are mouthing in the press!
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Social Security will never be cut.
As the last administration discovered it is still a third rail of politics and will likely continue. The government will cut from other programs and invent new creative taxes before they even think of cutting social security and thats the way it should be. I work with retired people and while social security is difficult to live on, many people manage. I can't Imagine what these folks would do without social security.
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I was quite surprised by the comments in fear of non-retirees plugging up one end of the "employment pipeline" so that younger people do not have jobs to enter into. The study of economic growth tells us that as long as an economy grows, jobs will continue to be created. When countries grey to the point where more people are retiring than entering the workforce, like Japan, that's when there are problems. Not the other way around. The US is in the envious position of having had steady growth in recent decades and the ability (to some extent at least) of turning on or off the flow of immigration to take up any slack. As long as these continue, we will have jobs for all who want to work. Please dont let the current but transient reshuffling in the job market validate comments that dont make economic sense.
(Of course there are unusual conditions, like huge and sustained spikes in productivity that could mean fewer jobs in an economy. But that would affect everyone regardless of who is retiring, or not.)
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Guess it depends on whose economic sense one considers. There are many respected economists who subscribe to the idea of non-retiring older people plugging up employment pipelines. Let us not confuse declining birth rates in some countries (Japan is an excellent example as are many European nations) with the need for old people to keep working.
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orangelady -- No confusion here - Actually it sounds like you agree that when more people retire than enter the workforce (for whatever reason -- lets say due to a decling birth rate) there are economic problems. Now let's say that we have an economy with a labor force and a real gdp growth rate larger than the growth rate of the population, for whatever reason. More jobs are being created than there are people being added to the economy to fill them, even if everyone in the country worked. Exactly what problem is caused by older workers in this economy not retiring?
If you can give us some references to journal articles by some of these "respected economicsts" that describe these problems, that too would be enlightening....
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I was interested to hear one caller say that "retirement seems to be a uniquely American idea..." He might be interested to check out the ideas about retirement in other Western countries; people retire younger and in some cases on much more liberal government programs than we do in many. Also expressed was the idea that, "retirement may not be good for people. People need a sense of fulfillment." Now, that IS uniquely American, the idea that fulfillment comes only from working. This idea also disregards the many, many people in physically demanding jobs who can't physically continue their work after 60 or so. Tough to get anyone to hire you to do more sedentary work after a life time of logging, farming or constuction.
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Comments are now closed.
Fools Rule! Long on Optimism, baby! Thanks for having Robert Brokamp on the show. I'm a member of Motley Fool so I appreciate their Foolish (with a capital "F") advice and wisdom.
Question for Mr Brokamp: What should people do with their investment or retirement dollars if the economy is not fixed in the short term, or continues to be negatively afflicted by corruption?
Question for Mr Brooks: Do you perceive there will be a "credit card crisis" in America and how will it affect the American/global economy?
Question for Mr. Brooks and Mr. Brokamp: Is the $8,000 average of credit card debt per household true or an urban myth? I see conflicting information on the Internet.
If you're 20 or 30, I hope you intersperse career with travel or whatever you want to do with your life. Most careers end up taking more than their fair share of your "life" time.
If you love your career then work and be happy. If you don't love your career find something else to do before you break down and go postal. (No offense intended toward USPS employees.)
In my opinion America must change it's attitude toward, work, materialism, retirement - just about everything. Our current path dead end's on the hamster wheel of stupidity and arrogance....