Joel recently ran across an article –‘I’ll Never Retire’: Americans Break Record for Working Past 65. There are more retirement age people (over 65) working now than ever, the most since the 1960’s, before there was medicare. Is this a good thing?
There are good things about working such as the money, the social interaction with others, and the satisfaction of a job well done. I think if you choose to work it can be good for you. But, if you would rather retire but must keep working, then you have lost your option to choose.
According to the article, almost half of the seniors said they were working because they needed the money. About 60% of people have no retirement savings. (see another article – the-rich-have-you-beat-in-retirement-too) 42% of workers don’t have access to a work sponsored retirement plan and even those who do don’t always use it. As you would expect, lower income workers save less. It’s hard to put money aside for retirement when you are struggling to make ends meet today. Even those who did manage to save often were hard hit by the recent recession, losing much of their savings and much of the equity in their homes.
So, in real numbers, how much money should you have for retirement? According to this article from Forbes, “you need enough saved to be able to meet your annual expenses in year one of retirement by withdrawing 4 percent of your nest egg. We can reverse the math. Being able to withdraw 4 percent in year one means having 25 times your annual spending invested for retirement. Assuming $100,000 in annual spending, you’ll need a cool $2.5 million stashed away. But if you can slash your retirement spending in half, and live on $50,000, you’ll only need $1.25 million.”
Only $1.25 million! Of course social security and pensions will decrease the numbers further, as will a cheaper lifestyle but it still sounds daunting. How much do you have to put away for how many years to get to your recommended number, and how many of us have actually been able to do that? Not me, for sure.
So, if the money isn’t there, what is the other option? Decrease spending! Unfortunately for us, if we stayed in the US, that would have meant moving to a place we would not prefer, and seriously cutting back on everything. Or, working longer, or most likely both of the above. I was so burned out I don’t think I would have been worth much if I had worked another 10 years. I doubt I would have the health and stamina to do a fraction of the things I’m enjoying now.
I know, many of the world’s people would love to have only these problems. We are not starving, being shot at, or fleeing for our lives in an overcrowded boat. Still though, this is a real problem for many in their later years adding worry, stress, and unhappiness to their lives. I don’t think it’s going to get better in the near future either as more and more baby boomers reach retirement age without savings, or with inadequate savings. Add to this the possibility of another downturn in the economy, major health expenses, or other unforeseen problems, and the picture gets even darker. It’s hard times for too many of our bothers and sisters up there.