Here's a position I never want to be in -- having to work later in life rather than retiring because I've made bad financial decisions for the past 65 years. Yeah, maybe I'll work because I WANT to. But I don't want to HAVE to work.
But that's just the situation many Baby Boomers are finding themselves in -- having to work later in life because they can't afford not to. MSNBC covered this issue recently and I'd like to share their findings with you and give some of my comments along the way. We'll start here:
Two new reports portray aging boomers as better educated, with higher incomes and longer life expectancies than the generations that preceded them. They also have fewer children and are less likely to be married, leaving them with fewer options if they need help in their old age.
So these people have had higher incomes than past generations and yet they need to work longer. Granted, living longer is part of the reason for this, but shouldn't they have factored this into their savings plans? It sounds to me like they weren't very good savers throughout life and they now need to work to stay afloat.
Frey is releasing a report Tuesday that says higher rates of divorce and separation could result in greater financial hardship for aging baby boomers. In 1980, about two-thirds of Americans age 55 to 64 lived in married-couple households. That percentage fell to less than 58 percent in 2005.
This fact has certainly impacted their finances. We've talked in the past how married couples, on average, do better financially than non-married people. For reference, check out these pieces:
Some will continue working by choice — a government survey shows that most U.S. workers nearing retirement age want to gradually reduce their workload rather than abruptly stop.
This is what I'd like to do. I want to shift from a "regular" job to one that allows me to serve reduced hours and focuses more on helping people in some form or fashion. However, I'd like to do this at age 60 (or 55), not at 70 or older.
Others will have to stay on the job as fewer companies offer health insurance to retirees and an alarming number of private pensions fail.
We'll be seeing more and more of this sort of thing in the future as healthcare becomes a bigger and bigger factor impacting people's retirement. This is one reason I think medical tourism will take off like gang-busters.
Don't let this happen to you. If you want to work into "retirement", that's one thing, but don't be forced to work because you didn't save enough now to be able to retire. For some tips on how to think about and save for retirement, see these posts:
People plan vacations, moving, taking a new job, weddings, parties, and all sorts of things. We all understand that it is easier to make anything complex happen more smoothly if it is planned. That's really the secret to retirement. You have to plan to do it. And it is also the pitfall that many people fall into. At some level they realize that they aren't doing what they need to get there. They know they have to give up something from their current lifestyle and they don't want to face it.
I started planning for retirement the day I was first eligible to contribute to a 401(k). I could have done it a little sooner through an IRA, but I didn't waste decades. I am not a paragon of financial virtue. I didn't max out my contributions in my early 20's. I contributed enough to get all of the matching funds my employer would give me. As each year's benefits paperwork came around, and after each raise, I increased it a little. Not enough to hurt. I couldn't have done it without my wife's help. Today, my wife and I are maxing out both of our 401(k)s and a Roth IRA for each of us.
Paying down debt is better than adding to it. Saving is better than not saving. Saving a little more is better than saving a little less. Don't ever let the fact that you don't know how you are going to come up with enough money today stop you from starting your savings and debt reduction. Start now. Set a goal to make next month's balance better than this month's, this year's contribution larger than last year's, even if it's just a little.
Posted by: Anonymous | June 25, 2007 at 07:00 PM
I think its funny that the media is finally catching on to something I've been thinking and saying for years. All the hype about the retiring boomers is just that - a whole lotta hype. Most boomers will keep working for as long as their health will permit - a few out of choice, most out of necessity. The big retirement wave is going to be delayed by about a decade for this reason. I'm a tail boomer, and I can tell you that us boomers start everything late: we married later, finished our educations later, entered the workforce later, had kids later, and started saving for retirement later than we should've. We were too busy finding ourselves. C'est la vie.
The next big headlines starting to trickle out are how the adult children of boomers will soon be saddled with most of the costs of taking care of their parents. That's the real boomer retirement plan.
Posted by: Miguel | June 26, 2007 at 03:09 PM