August 3, 2017

Did You Know That.....


...retirement was an unknown concept for most of human history. Work until you die, or can't do anything productive any longer was the "rule." With most of us living in rural situations, retirement made no sense. The cows needed milking and the crops had to be planted, regardless of your age.

Most experts cite the start of Social Security in the United States in 1935 as the official recognition of a change in mindset. But, not until Medicare was enacted in 1965 were most people able to even consider retirement at some point.

As you are aware, 10,000 Baby Boomers are retiring every day. This massive flow will continue for another several years. That many people puts Social Security and Medicare under tremendous pressure. Neither was designed to support so many folks for so long. In 1935 the government figured setting the retirement age at 65 was a safe move; the majority of recipients would not live for very many years after that.

Well, we showed them! Within a few years after the 1935 start, those aged 65 had an average of 12 more years to take those monthly payments. Today, that figure is more like 20 years. Those living into their 90's and 100's grows every year. 

Satisfying Retirement has been tracking and discussing all of this for the past seven years. Even after the major economic upheaval of 2008-2009, interest in retirement topics didn't really wane. Sure, a lot people had to delay leaving work, cut back on their plans, or consider some serious downsizing. Some had to abandon the idea of retirement completely. But, the dream didn't die. The belief that there would be a future of freedom and exploration continued.

Today, I am seeing the unfolding of a trend that is pointing us back to a place we were a generation or two ago: retirement as an uncommon choice for many working men and women. Studies that cross my desk all say the same thing: a growing percentage of those who have reached a typical retirement age are in no rush to leave work. Those in their 40's and 50's see retirement as a receding point on the horizon. Adults in their 20's and 30's don't see retirement as a desirous (or possible) option at all.

Of course, with projections that Social Security and Medicare will be unable to pay full benefits starting in just 17 years, maybe the younger folks are just accepting reality. Maybe they'd love to enjoy what those of us who are retired have learned: this phase of life can be the most fulfilling and exciting of all. 

Maybe they accept that Congress will not make the tough choices necessary to fix the system developed 50-70 years ago line up with the reality of longer life and a drop in employment. Maybe they can't or won't save enough to be away from a job. Maybe the movement away from social groups and organizations and into social media where human contact is minimized has something to do with it. A report by Bloomberg on July 17th says that retirement dread is replacing the American dream. That is a very sad state of affairs.

I don't know. What does seem apparent is that those of us enjoying our retirement now and those within five or ten years of leaving the workforce may be a vanishing breed. The system that supports us may not be available for our kids or grandkids. Even if we have taught them the importance of delayed gratification and saving, the lack of fiscal discipline from others could mess up everyone's future. The lack of leadership and will in Washington will catch up with us all.

The message for us is two-fold:

1) Enjoy every moment of your satisfying retirement. Things may sort themselves out and retirement will be possible and enjoyed by generations to come. But, you are here now. Make the most of all your opportunities and freedom.

2) Urge your family to plan for a future that may throw more burdens on them. If possible, leave some financial help for those who follow you. If you can't, leave them your wisdom, experiences and an attitude that all things are doable. It seems clear that more responsibility for our future will rest on us, on the individual's shoulders. 



37 comments:

  1. Replies
    1. In a sense, yes. On the other hand, if we have more individual control and say over our future, then whatever does or does not happen in Washington is a bit less of a concern.

      My youngest daughter works at a job that keeps her on the road a little more than half the year. It provides enough for her to live the way she chooses but with limited opportunity to save a meaningful amount for retirement. That doesn't seem to bother her. She loves what she does and has no intention of stopping until she can't do it anymore. Her "rules" and expectations are different from ours...not wrong, just different.

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  2. Some wise words here Bob, but I personally am not ready to throw in the towel on these issues. In my mind all it takes is to finally get through to many of the bull-headed people to vote without question for the GOP. Given how radical that org has become in recent years I can only see the writing on the wall for them.

    If we need examples to follow in this arena we only need to look at the Scandinavian countries. They have healthcare for all, free education, and retirement for the elderly and at the same time are the happiest people on earth according to many statistics. Yes, all this stuff takes taxes to accomplish, especially on those of us in the 1%.

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    1. As a culture, there is a quote that describes us that goes something like this: Americans will keep making all the wrong choices until they are forced to make the right one. The author has us pretty well figured out. We generally only react to a building problem in a positive way when it directly affects our daily life.

      For most people, what the lawmakers are doing hasn't reached that level. At some point, though, partisanship will crumble before reality. Even so, the trend toward working longer maybe one that isn't going to stop. For many, the satisfaction from a job has been built up over a lifetime and walking away just isn't in the cards.

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    2. A quote I have heard is: "The Americans can always be trusted to do the right thing, once all other possibilities have been exhausted"

      This quote is sometimes credited to Winston Churchill but there is no record of him saying that. In any case it makes the point in a humorous manner and it sure feels that way watching politicians in action.

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    3. Yep, that is the more accurate rendition.

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  3. While we staked our only child to a great beginning (no school loans, we hold her zero interest mortgage, etc), I still am old school in that I would like to leave her a nest egg when we are gone, as you suggest in your final points. Deb feels we have done all we should and if it happens it happens, but don't worry about it. Yet we still differ somewhat.

    The current approaches in Washington will not work to fix what is broken with the system. Our first foray into socialized medicine, obamaCare, is a train wreck. Medicare is imploding on itself, and Social Security has been so changed over the years that it is shouldering a much greater burden than it was ever intended to. Those that call for more government intrusion in such areas are only asking for a faster ride to the train wreck than would be the case otherwise. New approaches are needed, no doubt, but until people are willing to honestly look at what the root causes and problems are, we will continue to band-aid solutions that solve nothing in the long run.

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    1. You and I have some different opinions in this area, which is why I always enjoy seeing your opinions and thoughtful comments. I believe the reason the programs you mentioned are struggling has more to do with the way they were established and the limitations each possesses. That doesn't mean the issues aren't very serious and will take a lot more intelligence from Washington to solve than we have seen for quite awhile. But, that is for another post.

      One thing you and I agree on: leaving a nest egg for our kids. This is a firm commitment from Betty and me. It does raise the perplexing question of how much we should sacrifice during our retirement years to make sure that happens. I will have a post on that subject in a few weeks, but, the subject always generate some strong opinions.

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    2. I agree with much of what you say, Chuck Y. More personal responsibility is needed rather than more government intrusion.

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  4. Very good points and history lesson. I know my sons and DILs have taken to heart the fact that they are responsible for funding their later years and Social Security or inheritances are going to be a bonus. I have to admit that we did count on Social Security in our plans as one element but did not count on inheritances. Most importantly we did not count on the ability (health or opportunity wise) to work in our later years. Lots of people, Baby Boomers included, are going to be unpleasantly surprised at their financial situation past 65. I know we have relatives who are in that boat now having not had any longer term perspective in their financial decision making their entire adult lives. That being said we also have friends who have taken an honest look at how little they have and moved to low cost areas and created happy lives on very little.

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    1. The rules of behaving responsibly with money and lifestyle are learned early on. At 65, someone who has never budgeted or denied a want is not going to suddenly become fiscally smart.

      Like you, we knew we had an inheritance coming but did not count on it at all in our planning. In fact, that money will likely be what becomes our kids' inheritance when the time comes. We are giving them a portion of that money each year, realizing that waiting until we are gone will mean the money that they will eventually receive won't have been available when it would have been the most needed: raising and educating young kids.

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  5. The problems caused by our generation need to be solved by the same people. Some of the ideas I have heard?
    1) If you did not contribute to SS, then you should not be able to withdraw from it. What that means is if only one spouse worked, then the other receives nothing until the spouse who worked passes (leaving them a widow or widower). This is not about SSI (which also needs to be addressed).
    2) If you have a generous 401K/IRA/SEP income, then your SS should be cut back. Yup, that would be income based SS. That would leave more for those who really need it. SS was put together, originally, for the poor, widow and orphans....
    The same can be said about Medicare... the golden goose. Why should all of society pay for upper middle class treatments when they can pay for it/ afford insurance? Of course this MAY cut back on inheritance.
    These should not be grandfathered. They should be for those who are currently receiving and will soon receive. You want to see health costs go down? Start having people pay for those end of life treatments.
    3) Raise the min age for receiving to 70 unless there is a terminal diagnose after age 65. This 62 thing is crazy.
    None of these are popular ideas.
    Hard Core.

    OTOH- my kids (31 and 35) are saving for retirement like crazy. They have been since they began to work. They both plan to pay off their houses before their working years are over. Our job is to supplement education for our grandchildren. Experiences, school equipment, teaching skills. We will probably not leave an inheritance, as such, but plan on giving them a part of ourselves.

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    1. The ideas of reducing or eliminating SS and Medicare for those wealthy enough not to need it makes all sorts of sense. It does create one major problem that would have to be addressed: those who end up well off pay into the programs through payroll or self-employment taxes throughout their working days. Do they receive back what they put into it, do they receive a tax credit instead? There would have to be some way to prevent them from forfeiting what they were forced to pay into the system.

      End of life costs are a real problem. With our expensive system and advanced medical technology hundreds of thousands of dollars spent in the last few months or year of someone's life is not all that uncommon. You have identified a very perplexing problem.

      Congrats to your kids. They are doing what too few of their peers would even consider.

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  6. What always fascinates me are the people who tout early retirement extreme at 30 to 45 or even 50 years of age. They think it is some sort of badge of honor to be not working and living off the grid. Some boast they have saved millions and can be retired for like forever.
    I just cringe when I either meet them or read their blogs.
    Don't waste your time trying to give them any advice.
    They know it all.
    They're living off the grid, some in an RV as they travel America or have decided not to have children so they can travel internationally. Really? Is that what having no children means? They're so proud of themselves because they can sleep late, have a morning cup of coffee whenever they want, listen to the birds and most of all NOT be beholden to 'the man' or a corporation.
    Really? That's what they think of life?
    The best part is watching them now, 5 to 6 years in to their early "retirement" and their RVs are breaking down. They look unkempt, distraught, disheveled.......guess it doesn't work out like they thought, eh?
    Retirement and a concept of retirement is sort of like a joke.
    To me there is only life.
    You live. You work. You stop. You continue to live.
    What's the big deal?

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    1. Thanks for your firm opinions. THere are a lot of folks who agree with you. I would not be comfortable gloating over someone's failed attempt to live the life they want, but retiring at 30 or 40 isn't for most of us.

      I would never have considered retiring as early as I did (52) if my business hadn't failed and my travel-based lifestyle wasn't hurting my marriage. It has worked out very well, but I didn't set out to retire early. That's just what happened.

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    2. Our son will be able to receive a state pension at age 50. he works hard.He is also a world traveler and has interests in many areas from geology to hiking and fitness to art and music.. He is planning an early retirement with thoughts of perhaps living in another country, doing some frugal travel sin an rv to see the USA first, and..well, who knows? There is life beyond work for some, and for others, work continues to be a fulfilling part of retirement years. Also, you don't necessarily stick with your original plan when you DO retire..the RV-ers may have had a great 5 years and now be ready for something else... All good.

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  7. It really is a truism that you can judge a society by the way it treats its old people. Even in Europe where we have much wider welfare state provision there is a hardening of attitudes (political and social) which to date has manifested itself in little more than a deferring the date of entitlement for state pensions (and in the UK postponement of the date you qulaify for a free bus pass) but as we all live longer and the percentage of elderly people increases, there will be further inevitable changes

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    1. I am sure you are correct. I don't know enough about the various welfare and state supported services in various European countries to comment, but I know some are having a tough time trying to modify vacation and work week policies. I fully expect America's full retirement age to become 70 within the next decade or so.

      Thanks, Caree

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  8. Hi Bob! You and I must be reading/watching some of the same material about how our life course is changing as we age. Lots to think about and consider. And like I write about all the time...far better to do it by design than by default. Great post! ~Kathy

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  9. I think the most important message here is to plan ahead when possible.. a satisfying retirement is a lot more achievable when you have done some research and planning BEFORE hand. not at the last minute.Ken and I were lucky to find a company called Whitehall Management in the 80's.. we learned how to save, to get deb free, to pay off our house, to change how we were running our business.Some of the concepts are Dave Ramsey type stuff, other ideas were unique. Now, years later, since we followed a lot of the advice, we were able to design a decent retirement.The investment portion of the seminars don't hold true anymore! (2008,you know!!) but we're still doing ok.. START NOW.. save, learn to live on less than you make, get debt free..

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    1. If we boil it all down to the essence, a satisfying retirement is about adjusting to what will happen or what may happen, and how to be ready. As we know, a plan is helpful but it will change. Being able to adjust is just as important.

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  10. Well, of course we're all concerned about old people, b/c we're getting old. But I kind of disagree with Caree. As you pointed out, up until recently there weren't very many old people and so it wasn't an issue. Now we're trying to figure it out. But to me, the way you judge a society is how it treats its YOUNG people ... and we're doing a pretty poor job of it these days.

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    1. Yes, I've read that a measure of society is how it treats its women and children.

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    2. I will bridge the gap between Caree and you, Tom, and say the way you judge a society is how it treats its people, the rich and poor, young and old, white and black. In every measurement we are falling short.

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    3. You are a born peace-maker Bob and I agree wholeheartedly. I believe that it was Mahatma Ghandi who said: "A nation's greatness is measured by how it treats its weakest members."

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  11. Until the last decade or so, my 91 year old father had a Satisfying Retirement.

    I think we, as a society need to focus on "healthspan" vs. lifespan. I know my Dad feels that he has exceeded his healthspan (or as he calls it, his shelf life), and he is not comfortable or very happy as a result. After a heart attack, induced coma on a ventilator and 8 days in intensive care he awoke to ask me, "why didn't you just let me go?" It was a good question. The short answer was he was not in cardiac arrest, so his advanced health directive DNR did not apply, and the doctors thought they could "save him" and they did, but he asks, "to what end?" It think we need to have this conversation as a society.

    America was founded the spirit of individualism. That is still evident in our politics today. The anti-government voices are loud and persistent, whereas our European friends tend to be more communitarian in focus (what is the best for the community rather than what is best for me) and look upon government as a means to act on shared interests. I think we have that communitarian spirit still in us as well, but it is hidden. You see it in times of disaster or large threats (9/11 comes to mind, or a major earthquake, hurricane, etc.). I have a feeling it will emerge more strongly in the next generation as fiscal and environmental challenges loom ever larger.

    I tell my friends to educate themselves, be mindful, be compassionate and be a communitarian when you can. I think those of us who are blessed with a comfortable retirement are obligated to do so.

    Thanks again for the thoughtful post.

    Rick in Oregon

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    1. And thanks, as always, for the thoughtful and insightful comments. I agree with your dad. Staying alive just to keep breathing is not living. The costs are ridiculous, but more importantly the quality of life is just not there.

      BTW, with temps over 100 degrees in Portland, maybe your handle should change from rainguy to swelteringguy.

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    2. Headed to Hawaii next week.... to cool off!

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  12. Those are some sobering statistics. In so many areas, we seem to be cycling back to more uncertain times. I've been very fortunate, and will do my best to prepare my kids for the future.

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    1. Preparing our offspring and remaining flexible are our best options.

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  13. I believe that 'retirement' in the sense we are seeing it now, leaving work at 55 to 65 and then not working again until death, was just a moment in time. Perhaps we will return to it at some point in the future. I'm not sure I even believe it's a positive thing.

    My grandfather was retired when I was born, 40 years ago, and he has lived to collect SocSec (in addition to his union pension) all these years as has my grandmother. How realistic is to believe that our society can support seniors for what is essentially another lifetime? I believe the current set of retirees are doing it on the backs of the young workers but that as those young workers age they are discovering that they won't be able to do the same. It may just be unrealistic to believe that you have produced enough 'value' in the 40 years between 25 and 65, to carry you from 65 to 95.

    For myself, I assume I will work as long as I can find employment. I hope to step down to part time as I age but I won't have the assets to stop working entirely.

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    1. The percentage of those of typical retirement who do not want to stop working is increasing quite noticeably. There are many reasons for that, but it is an undeniable fact. How that will affect the funds that support SS and Medicare is anyone's guess. But, as you point out, there aren't enough young workers to support the number of people reaching retirement years.

      It makes no sense to continue with programs that were designed for another time and place without adjusting them to today's reality. In my case I expect to live more years in retirement than I did working. That wasn't how things were set up.

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  14. I have had at least 3 friends that have "retired" because they were terminated from their jobs and, being in their late 50's, found it nearly impossible to even be considered by employers for any position. Age discrimination is real and a widespread problem for older workers. They hung-on until age 62 and then claimed their early Social Security benefit. None would have done so under other circumstances but it came down to survival.

    Rick in Oregon

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    1. What you cite is the reality for many. The belief that one can hold onto his or her job until their late 60's or even 70's is not true for most workers.

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  15. Mandatory retirement was abolished in Canada about ten years ago, and since that time I have seen some of my colleagues in the post-secondary education system hanging onto their positions into their mid-seventies. Although they were being paid at the top of the scale, they were no longer contributing productively in their departments. On the other hand, one of the leaders in my field is 75, a prodigious worker, and a tremendous contributor to his profession and to society. Yet another, in his late sixties, with much to contribute and wishing to continue working, cannot find a suitable position because of age discrimination.

    At the same time, my millennial kids and many of their friends are facing huge challenges finding entry level positions, despite being well educated and eager to work. The boomer bulge along with the corporatization of the economy present hard to resolve challenges. I feel fortunate to be able to retire in my early 60's, and also happy that my leaving the workplace will provide a career job opening for some younger person.

    Jude

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    1. You mention an often overlooked reality: the longer an older worker stays on the job there is one less slot open for a younger person.

      This creates a real dilemma. The older worker needs the money and the satisfaction from feeling needed, the younger person needs to start a career and possibly support a family. The easy answer is to create more jobs but that is much easier said than done, especially in a world moving towards automated everything.

      Every time a Canadian reader comments the more I feel a pull toward the Great White North. Your country has figured out workable approaches to many of the problems that bedevil your larger neighbor to the south. Now, if you could only do something about those winters, without climate change giving you the temperatures that result in the melting of the permafrost!

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