Don't let this happen to you although your presence here suggests that you're already one step ahead of the crowd.
From M* "It's no surprise to hear many people talk about working beyond age 65. The stock market's mediocre performance during the past decade, as well as the housing bust, has left many with fewer assets than they'd anticipated at this point in their careers. The average 401(k) balance is about $74,600, according to Fidelity Investments, and about 60% of U.S. workers say they have less than $25,000 in savings and investments (excluding the value of their homes and any defined benefit plan), according to the Employee Benefit Research Institute."
http://news.morningstar.com/articlenet/article.aspx?id=562105
Comments
Yes, working beyond age 65 is indeed a realistic option. Unfortunately, for some reluctant non-savers and some reckless spendthrifts, it is mandatory. The other side of that coin is that they can work and recover. As our life expectancy has increased, so has our potential for workplace longevity.
Technology and the Information miracle offer positions that are less demanding manually, but more demanding mentally. Age need not be a handicap while experience becomes more highly rewarded. Education and continued learning is a paramount and sometimes decisive factor.
Chasing the Holy Grail, the magic Number (net total wealth that permits a reasonable likelihood that your resources will survive you) can be illusive, given the housing meltdown, a nervous investment marketplace, an uncertain economic environment, and high unemployment levels. These are challenging times, especially when preparing to make a retirement decision.
For many folks, their 401(k) contributions have been reduced to a 201(k) plan, and their home values have been substantially slashed. But alterative options exist. Especially if we subscribe to what Greek philosophers advised: Know Thyself. Identify and capitalize on what you do best while acknowledging and honoring your shortcomings.
The Number is an ever-changing target. If much of that Number is dominated with investment portfolio holdings, diversification is a prerequisite for ultimate success. Conscientious savings, both in good times and bad times, must be considered a compulsory task. To accomplish this, the pre-retiree needs to be flexible in his spending habits. If already in retirement, the retiree needs to adjust downward his planned withdrawal rate when anticipated returns are not realized.
I have completed a mountain of Monte Carlo simulations that demonstrate the survival robustness of a portfolio when minor drawdown adjustments (like don’t cover inflation rate increases) are exercised during spotty investment periods. In the final analysis, it returns to the Know Thyself axiom. Patience and persistence are also useful attributes that permit the making of lemonade from bitter lemons. The conventional wisdom of the baseline 4 % annual drawdown rule requires constant monitoring and some fine-tuning that is situational and event dominated. By adroitly adjusting to a poor period, that withdrawal rate could be stretched by an additional 1 %.
The major mutual fund houses have invested a fortune to develop programs and tools that will help plan and achieve a comfortable retirement. Of course they aim to profit from client accumulation and fees. It can be a win-win game for everyone.
To illustrate, Fidelity saw the future, and developed an organization and a definitive set of private investor-friendly tools in 2002. Today, its 401(k) division is huge and services millions of customers, both individual and institutional.
On an anecdotal level, I retired before this impressive array of financial planning tools became commonly available. Hence, I did much of the heavy lifting myself. I remember arguing with a financial planner with respect to the merits of Monte Carlo simulations before they were popularly recognized. I was a believer, he was not. About a year later he called and apologized for his shortsightedness. I never did do business with him.
For those still struggling with the retirement decision, I would encourage you to stay the course. Keep learning and keep the information exchange network active.
Age alone does not demand any specific retirement date. Again, on an anecdotal basis, incremental retirement is an attractive option, especially if you enjoy work interactions. For the first five years of my retirement, I worked as a paid aerospace consultant. Since that time, I still consult; however, now I do the consulting on a volunteer freebie basis.
The outfits that still seek my service offer to pay for that service, but I reject the monies. I am financially secure and want to give-back to the industry and, yes, even to the Country. I enjoy teaching the younger engineers who benefit from my experience. I feel good about being a “lamp of history” that lights the way and mostly avoids costly pitfalls.
As I age, I do not wish to be judged by how much I made, but more importantly, how much of a difference I made. Everyone sets his own measures of performance. Don’t be shocked that they change over time.
This topic has endless avenues to explore that demand an eternity of time. But for now, enough from this quarter.
Best Wishes.
We may be over-stating the effects of market crash & housing bust. Bad as it was, many here will testify to coming out pretty good on investment end by - not getting greedy, staying informed, and paying attention to Rono's 3-legged stool (err ... 6 legs at at last count).
At the savings levels quoted in the article I think the issue is "Where will I be able to find a job when I'm downsized or forced out by my current employer at age 65?" Sheesh!, $25K will barely cover your groceries and the gas to go get them. Another recent article I read noted that foreclosures last year jumped the most dramatically for those 62 and older. People, what were you thinking and what were you doing with all your income?
Go ahead, mess with their SS. I dare anyone.
There are rumors out there that those who retired in the year 2000 with a one million dollar, all equity portfolio might become the first to find out that the 4% withdrawal rate isn't going to cut it. The short version - that portfolio is only worth $418K today. The housing situation, while appearing stabilized, is still throwing out some nasty, nasty side effects. For example, my sister who bought into a townhome complex just before the big oops, has seen neighboring units selling for less than half of what she paid after going through foreclosure. I'm pretty sure that she would love a do-over on her purchase. People who may have been counting on their home equity to fund their retirement are having to severly dial back those expectations assuming there's any meaningful possibility of actually using them.
These are just the highlights and it will be interesting to see how history unfolds. best of luck to you.
I have read several articles during the past few years; and although I don't disagree with what MJG noted about some being able to be consultants after retirement in some areas; I am of the opinion that the vast majority of boomers without much saved in any type of account do or will find themselves between the rock and a hard place.
When MI was in the boom days of auto production, there were many cases of both wage earners working for any of the big three and during several periods of time also working 6 or 7 days a week, or 5 days with overtime. These couples had very large combined gross and net incomes. The problem with many was that the good times were here and wouldn't disappear. We also know that the percent of folks who were good with household budgets, any understanding of investing and future planning is not a very high number. I recall two real estate folks I knew who noted on too many occassions about the high debt/equity ratio of many of the big three auto employees. When the numbers were crunched to attempt to obtain a home loan, the realtors would find a high gross income, but a poor net ration of monies available. The potential home buyers would have a stack of payment books for every type of toy and didn't always have much left for a larger mortgage payment.
For several decades, from the very large and well paid middle class in MI; this state was far ahead of any other states for the number of registered motorcyles, boats, snowmobiles, travel trailers/campers.....etc, etc. The big money was coming into these households and headed right back out the door via a payment book.
As to consulting after retirement, I know of a few businesses in our area who do offer this from time to time for some professional areas. The businesses find the value of the retired employee, and will ask to work periodically on a per diem basis.
Chatting witj various folks in the area; as should be expected in many places, niether the young ones seeking employment, nor the older ones may anticipate a high wage and worse yet, no full time employment which would usually bring along a benefit package for limited healthcare and a few other goodies. One should not be surprised to find enough job listings that fall a few hours short of a full time position. Of course, this is no accident, eh?
'Course, the recent jobs report from Friday had some jumping for joy; but there remains many uncurrents that are not favorable. Tis all well and good about new job formations; but there have also been many recent downsizings of jobs that had a much higher pay level; and so the balance of "pure body counts" is not always meaningful. A couple today who may both have full time employment at $9/hr. finds about $37k/year gross income, and of course, much less after state taxes, Medicar, SS and perhaps some Fed. taxes. As you noted.........not a lot of cash for today's needs.
I surely wish all of this were otherwise; but it is part of what may be "normal" for many years going forward.
The current condition of the country is part of what tempers where our houses's investment find a nest.
Take care,
Catch/Mark in Michigan
Experience is never out of style.
I was somewhat taken aback by the many replies that emphasized the difficulties of securing gainful employment for older workers. Note that I included the qualifier term “gainful”. I certainly concur that being a greeter at WalMart is less than a gainful and meaningful job. Of course, I recognize and respect those at the lowest end of the wealth distribution curve who must do this task for basic survival necessities.
Life is not necessarily fair, but surely some suffer this dire predicament because of their own life’s choices.
Catch22 opined that “ For several decades, from the very large and well paid middle class in MI; this state was far ahead of any other states for the number of registered motorcycles, boats, snowmobiles, travel trailers/campers….”. Further, he observed that “The big money was coming into these households and headed right back out the door via a payment book.”
This is a recipe for disaster in any state, especially in my high cost state of California. But this is a financial sin of the first magnitude that is not restricted to middle aged or senior citizens. It is pervasive throughout society, in particular a defect that government promulgates and practices.
As a little aside, this reminds me of a description of California that I received recently from an East Coast friend. On July 4th 1850 California became a state. People had no electricity; the state had no money. Almost everyone spoke Spanish. Gunfights erupted in the streets. Not much has changed in the last 161 years.
Even in the best of times, many folks are procrastinators; others are lazy; still others just want the good times to roll. These folks will likely, unless they win the lottery gamble which they frequently play to excess, never approach the magic Number that permits a safe and worry-free retirement. They are typically debt gluttons.
I have very little empathy for such misguided souls. Some folks make poor decisions their entire life. You and I are not responsible for these decisions. They were always free to choose. Of course, I exclude from this grouping the truly unfortunate folks who suffered tragic, personal Black Swan events none of which were their design or doing. Bad stuff happens. I have great empathy for this unlucky cohort.
I strongly believe that experience matters a lot in the business world. Not only does experience matter for the elite worker classes (doctors, scientists, engineers), but also for the more mundane, but essential, groupings (bakers, electricians, lumberjacks, plumbers, gardeners). The list whereby experience contributes to superior performance and outcomes is endless. I’m prepared to challenge you naysayers to identify a legitimate business endeavor where experience is not crucial to success.
Daniel Kahneman acknowledged the experience factor in his book “Thinking, Fast and Slow”. He gave numerous illustrations of how experience permits a worker to develop recognition skills and solution approaches. He used chess masters as one of his examples. In summary, he concluded that at last 10,000 hours of practical experience is needed to gain proficiency in many working assignments. Malcolm Gladwell also highlighted the 10,000 hour rule in his writings.
Growing old is neither apocalyptic nor is it a Golden Age. Education, experience, prudent savings, and wise investing enhance the odds towards Golden and away from apocalyptic. Successful seniors adjust, adapt, and survive. Sometimes events force the retiree to reenter the employment marketplace. I agree that it is not an easy task, but it is doable and the national statistics support that assertion.
Here is a Link to a government study that was completed in 2010:
http://www.bls.gov/opub/ils/summary_10_04/older_workers.htm
The reference report shows employment data dating from 1948 to 2008.
Yes, the over-55 unemployment rate has recently escalated, but it’s at a relatively low, single digit level (see figure 2). Yes, it does take an older worker a longer time to find a new position. But he does. Figure 3 demonstrates that the senior workforce participation rate has been increasing recently while the participation rate for the youngest cohort has been decreasing. Note the trendlines. I’m sure a part of that trendline is caused by poor investment decisions and a shrinking retirement nest-egg. Too bad.
Please visit the reference and form your own interpretations of the data sets.
There is little doubt that aging erodes most skill sets. Youngsters work faster; seniors work smarter. Youngsters work creatively; seniors work with consistency. Tradeoffs are plentiful that naturally include wage and benefits considerations. Some firms now seek senior employees. It is a shifting marketplace. When Bell telephone initially hired an operator staff it was all male. They soon learned that females were better and more reliable at that job and adapted accordingly.
I have sympathy for those individuals who lost positions that reflected both economic realities and age discrimination. It is equally hard on the ego and hard on the pocketbook. I appreciate that it does happen. I never faced that stressful circumstance. I like to think that I avoided that forlorn scenario by planning ahead. I did work for outfits that suffered layoffs. I escaped by working harder, by working cheaper, by changing positions, by moving to other locations, and by continuing my education. I survived by being proactive, by being flexible, and, admittedly, by being a little lucky.
Persistence can and often does win the day. There is some truth to the observation that “Those who know better don’t always do better”. Like Woody Allen remarked: “Eighty percent of success is showing up”. Just don’t abandon the hunt.
Loads of great discussion and diverse viewpoints. I enjoyed all of them. Thank you.
Best Wishes.
The goverment pension plan that has been set up for bankrupt corperations is a farce at best!!!
It will behove all of us that are able to remain working as long as we can. I have always tried to save as much as I can even to the extent of teaching financial management lessons to my childrin......... (You're much younger - get a Job).
Will turn 65 soon you should see all of the mail I get on medicaid!!!!!!!! Funny thing they all want MONEY!!!
End of My rant!!!!!!
Gary
A couple of follow-ups. I'm hard pressed to try to encapsulate all of this, but here goes: Experience, you would think, does indeed count for something and stand you in good stead. But we live in a world that is upside-down and seriously screwed up. It is screwed up to the point that no one can even admit to being a generalist. What used to make sense simply does not make sense anymore: there are no bank "tellers" anymore. Now there are only "customer service associates" or "customer attention specialists." The title, needless to say, is no guarantee that these so-called "specialists" actually know anything about anything; they were hired because they were willing to settle for a job that truly has no meaning or purpose. Like 99.9% of jobs, they are simply renting their time for money from the employer. They were hired because they know which buttons to push in order to make a computer generate a receipt.
***************
I'm an oddity in here. Many of you are aware of my "profession." A great deal of OUTWARD "success" in my profession depends upon whether you are young and good-looking, because congregations want to USE the pastor's position to attract young people. Without getting into the actual particulars of my convictions, we are all aware that although it would seem that clergy and people in Denomination X would share a set of convictions, it is often not the case, just under the surface. All concerned might agree to this or that, but resting upon very different interpretations. If one in my position is not wishy-washy about his or her convictions, it will inevitably put you outside the circle. But here in this case, I am throwing into the conversation the consideration which Big Money never wants to even acknowledge: it is called Ethics. Mostly, conversations about the economy and money in general are deliberately kept apart from ethical considerations.
My professional experience counts for nothing, since I'm too politically incorrect and have been locked out of functioning in a way that I am good at. And given that background, I am singularly ill-suited in employers' minds for anything else. Welcome to my world...
The unfortunate fact is that those "misguided souls", by circumstance of education, genetics, environment or just plain luck are by far the huge majority of people on this earth. I am an agnostic by choice based on (possibly faulty) logic, but I do believe that Christ was "a good man", and recall that his admonitions were to take care of "the least of these", as opposed to "the better of these".
A good example of this divorce from reality is the expectation that the great majority of persons should be able to fruitfully extend their professional careers past 65, when they didn't have a professional career to start with, most likely because of poor decisions on their part. These careers are, after all, extremely easy to come by and abundantly available to the average person. If they fail to find extended employment despite their "experience", then obviously theirs is not the appropriate type of "experience", and yet again, simply reflects more poor decision-making on their part. The concept of "luck of the draw" has no place in our evaluations of the human race, because it is not a mathematically quantifiable variable and thus cannot be a factor in our analytical formulae.
Alternative smug universes.
Far, far, far to many cases of oil+water don't mix. (see Bain Capital)
MJG, with all due respect, you need to come down off your lofty perch along with your data sets and mingle with regular folks once and awhile because you are obviously oblivious to their existance. You show it in your disdain for their education and employment, doctors, scientists and engineers are ok but the rest of you are of little value, to your seemingly pinched nose toward the Spanish speaking population of your state. Ever heard "There but for the grace of god go I"?
If I told you that I was a carpenter there's no doubt in my mind that we would have little to talk about and most certainly wouldn't socialize. If I told you that I have a PhD in the biological sciences from UC Berkeley at California and was a well respected expert trial witness I might have a slightly better chance although neither approaches being an 'engineer'. Truth is that I am both. the former because it is what I love to do and the latter because I wanted to know all that I could about what I do. I don't view my choices as being either better or worse than you and yours. They are just different. For all we know that greeter at Walmart might just enjoy smiling at people and saying "Hi".
However, I wanted to address your challange to "identify a legitimate business endeavor where experience is not crucial to success." Without defining, or at least knowing your definition of success I give you the latest MN (2005-2011) data on a select group of experienced workers who are not seeing that success reflected in their economic positions as it relates to average hourly wages.
Assemblers & fabricators up 0.88%
Computer controlled machine tool operators down 9.69%
Cutting, punching and machine setters up 11.36%
Machinsts up 0.36%
Welders down 2.26%
Near as I can tell the extra six years of experience did little to improve their financial positions. Many on the higher end of the scale were let go to be replaced by younger (read: cheaper) workers. Employers reported for the most part that experience wasn't what mattered in hiring or maintaining a labor force any more but the adaptability of the worker to think and learn new ways of doing things. I'm no fan of labor unions but how many have been busted because the wages for experienced workers were cutting into the ridiculous profit margins (read: paychecks) of the company CEO.
These are not isolated cases, I've even dealt with it myself. I still get calls from other contractors to service the picky or prone to anger customer but otherwise they are content to use younger workers for the most part. Each readily admits that they get two or three of them for one of me so they make more money faster.
I apologize for my lack of statistical data sets. I just live it, day in and day out. Since I know a little bit about them maybe I should write a paper, peer reviewed of course.
I don't think "MJB" has it all wrong -or- all correct. In my opinion, many people are products of their environment. If you're raised saving for retirement ( my grandmother always told us kids to save 10% ) then that saving bug becomes firmly planted. However, if you're raised thinking the lotto is a retirement plan - need i say more? This is not always the case.
Case in point - My employer matches are 401k 100% up to 5%. Then they add another 5% of our gross income every year for profit sharing. Very good deal. You would be shocked by how many don't take advantage of this. One day this fella told me that he buys gold because he believes that 401k's will crash. Not that the mutual funds would crash - but the 401k plan. L.O.L I'll keep on saving
I don't think "MJB" has it all wrong -or- all correct. In my opinion, many people are products of their environment. If you're raised saving for retirement ( my grandmother always told us kids to save 10% ) then that saving bug becomes firmly planted. However, if you're raised thinking the lotto is a retirement plan - need i say more? This is not always the case.
Case in point - My employer matches are 401k 100% up to 5%. Then they add another 5% of our gross income every year for profit sharing. Very good deal. You would be shocked by how many don't take advantage of this. One day this fella told me that he buys gold because he believes that 401k's will crash. Not that the mutual funds would crash - but the 401k plan. L.O.L I'll keep on saving
MJG said: "Even in the best of times, many folks are procrastinators; others are lazy; still others just want the good times to roll."
I am an BS/MSEE working as Software Engineer in a major multi-national technology company. I am in my 40s and right now we do not have anyone as far as I can see older than 55 still doing real engineering work and believe me 50+ is rare. Last year, the older ones were offered early retirement packages and many took as if they did not, they were likely to be laid off. I spend a lot of time trying to keep up to date in technology in my field which is very rapidly changing and increasingly outsourced to overseas but I am afraid time will catch up some time.
Hopefully, by that time I have either had enough saved/invested or at least have transformed into some other post that the company still needs but I do not see a lot of 60+ in other business units in this company or similar companies that I have worked. It is probably the curse of being involved in such a dynamic field. I cannot blame the company much on that either. I do not have the energy of 20-30 year olds anymore. I used to sit down one night and finish major projects. Not any more. If you consider that laziness, I guess I am becoming lazier as I get older.
I understand you are retired now. From earlier posts, I understand you have spent some time in government/military related posts where job security is/was higher. The times and corporate culture has changed. There is no loyalty from employers towards employees anymore and we do not have any pensions and the only thing that is pension like, Social Security, may or may not survive my retirement. Tell me about stress and stress related illnesses which can potentially be another reason why I might not be able to work. Aging related disability is real.
In short, just because human life is extended by the use of modern medicine does not mean everything is OK now. I might be living longer but unable to do meaningful gainful work. Perhaps lifespan extension made things worse because the working life might not have extended enough to compensate for the financial implications of longer life span. Then there is the problem of finding jobs for younger generations. If the older generations somehow could stick around, then as a nation we would have to address the problem of unemployment for newer college graduates etc.
In short, I am a bit disturbed with your categorization of many folks as procrastinators and lazy or just wishing for good times to roll. At some point, it is the reality of life and being alive that kicks in even if we are not procrastinators, lazy or day dreaming.
Hi Mark,
So, you have been reduced to calling me a slut. As a minimum, it is gender inaccurate. If you wish to slander me, perhaps a pimp would be more appropriate. Of course, I reject either description.
Over 250 years ago, Samuel Johnson reportedly stated that patriotism is the last refuge of a scoundrel. A more modern version of that famous proclamation is that name-calling is the last refuge of a scoundrel.
I had no idea that my innocent posting would provoke such charged emotions or tense replies. My simple observation is that a senior citizen can find useful employment. I took an especially positive perspective to encourage some folks who might be in that stressful position. I believe it is true.
The Internet is a great resource, but it does have a few shortcomings. One of those shortcomings is the reliability and the trustworthiness of the sources themselves. That is one of the major reasons why I try to include references from credible sources that support my assertions. The bottom-line is that statistics help establish credibility and a baseline for differing interpretations and honest debate. I would hope that you seek and use economic and financial statistics when making investment decisions. I do.
The statistics I referenced dealt with employment levels for three worker age groupings. They directly addressed your original posting that questioned employment possibilities for senior citizens. The statistics you elected to cite dealt with recent class wage rate levels of change, some positive, some negative. These more clearly illustrate the stagnant nature of our present economy than the employment problems that a senior citizen currently faces. Your data set more properly reflects the recent supply-demand tradeoffs of our capitalistic economic structure.
Your fine anecdotal story about being consulted to assuage the complaints of a few angry customers reinforces my position that experience matters greatly. Sure businesses work to keep costs down to improve their bottom-line. But smart businesses hire experienced task leaders to direct and control the efforts of lower salaried and less experienced workers. That’s a win-win-win scenario for the boss, for the seasoned high priced problem solver, and even for the lowest man on that totem-pole who gets an opportunity to improve his skill set and move up the compensation ladder.
I am always amazed by the presumptive assumptions that an irate forum member documents with unsubstantiated hypothesis. Somehow you perceive me as unconnected to worldly events, unfamiliar with life’s common struggles, and unsympathetic to the unwashed lower classes. I suppose the basis for that very personal assessment is my writings. You certainly are free to disagree with my judgments. I do change them myself as new information is revealed. But you have no insights into my personal relationships with any class or group of people. You make an ad hoc, uniformed, and incorrect judgment.
I am from the lowest of the lower classes. I worked every single day that I was in college. I served in the military and experienced, cold, mud, and fear. My wife worked her way through college, and did not eat on Sundays to make her restricted budget work. Early in their careers, two of my sons worked in the home construction industry, one as a carpenter and the other as an electrician. I respect the work that every man and woman does; I do not respect those slackers who are on the public dole by design.
So, I totally reject and dismiss your misguided missile. It is wrongheaded and wrongly targeted.
By the way, have a grand time in the Florida Keys. The sport fishing is superb and the folks are friendly, especially if you have a little money to spend. That’s the nature of our capitalistic system. The conch is great too. Give it a try.
Best Wishes.
however, I would not be shocked. Sen it too many times. Darn near had to beat one of my kids in order to get her to participate in just such a plan despite her pleas of not having enough spare money. I might be shocked to see a 401k plan crash though. That is funny; or maybe not. Sad.
My upbringing and life history is oddly similar to yours but I would not dismiss greeters as less than meaningful, or assert that many others are procrastinators or lazy because we play on different ball fields or have achieved different standings. Sometimes **** just happens. Tell me what one medical catastrophe might have meant to you and yours for example.
Furthermore I have never felt that there were 'elite' and 'mundane' working classes. That comment alone reeks of elitism or an "I'm better than you" attitude. Forgive me if I took that wrong. We're different, not better. There is no doubt in my mind that you could do your own plumbing, carpentry or electrical work if you chose to put your mind to it but there is also the high probability that you might suck at it because your heart wasn't in it. My doctor(s) and painters get the same degree of respect and admiration from me and I wouldn't think of labeling one or the other or their tasks as elite or mundane. There can be an art, science and truly satisfying joy in building something with your hands just as there may be in conceiving, formulating and designing it on paper using the laws of physics and mathematics. Different strokes.
You asked for an example of where experience didn't matter. I gave you some in the form of wage stagnation and also referenced to what todays employers are looking for. Your referenced data set does not define or discriminate between those older workers finding employment at their former wage and benefit level or as fast food clerks. I tend to agree with tgeno's thoughts that while the older worker may find a job, it will be rare to find it at previous levels and their experience may not be relevant.
By the way, no where did I reference that I pulled my information off the internet if that's what you were implying. Almost without exception for each point backed by some study's statistical data there is an equal and opposite set of data from another. You yourself asked us to read it for ourselves and come to our own conclusions. Seems to me that the reading of a valid data set would generate the same conclusion no matter who the reader might be. Just sayin'. Trust but verify. It's always more important to me what is left out of the data.