Observations on life

Retirement in the future

I’m sitting in my favorite Starbucks observing the struggling middle class shell out four bucks for a cup of coffee. It’s Saturday morning so there are only eleven people waiting in line. πŸ™„

One women with a toddler holding her hand was having a conversation and mentioned to a friend she had the child who was about four, when she was 42. That made me think how much things have changed.

That's the last of it.

That’s the last of it.

When I was 45 we took our oldest son off to college which began ten years in a row of one, two or three children in college. When it was over I was 55 and had some time to recover financially.

Today my oldest child is 45 and the youngest of four is 40  We have eleven grandchildren; the oldest is 11 and the youngest is 8 months. When my oldest son’s twins are ready for college he will be 61. Even my youngest son who has the oldest grandchild will be 48 when his son heads off to college. What should be prime saving years will be the prime college expense years.

From what I can observe, the above is a common scenario today. It would appear the headwinds for retirement planning are more than just saving.

Will the very concept of retirement as I know it be a thing of the past?

 

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Categories: Observations on life

9 replies »

  1. One of the many things that have been suggested to get Social Security back in better shape is the idea to eliminate the Social Security payroll tax for those within 5 years (give or take) of full retirement age. That would give those people an extra incentive to stay in the work force instead of drawing from Social Security. Along with some other changes that have been suggested over the years (google “Bowles-Simpson”) there is no good reason Social Security cannot be salvaged from the dead end it is now headed toward.

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  2. Sorry. Baby Boomers are better prepared for retirement than their parents. Just look at the poverty rate – it has fallen substantially for those over age 65.

    Long ago, I listened to a knowledgeable academic who noted that with the increased life expectancy, up 5+ years at age 65 since 1970, that retirement will become much more diverse than it was in the 1970’s, the 1990’s and the early 21st century – that retirement would be redefined by successor generations, and that such transitions would continue for the foreseeable future.

    The change is no less dramatic than the changes in work (less physical), family composition, priorities, etc. it will be different for your children, and again for their children. The iterative changes are to be enjoyed, not feared.

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  3. I think here are some other things that are affecting retirement planning compared to how things were when I started working in 1980. College takes more than 4 years to complete, many have 5 year programs with required internships often unpaid. College debt is forcing people to delay their lives such as marriage and buying homes. Even people who did not go to college are finding it difficult to get a career started. My son did not get into apprenticeship program until he was 28 and his working career was interrupted twice to go to the Middle East. There are very few careers where you can expect to stay at the same company for 30 to 40 years and every time you change jobs or companies it is starting over again.

    I work with several people that have several pensions plans and 401Ks from several different employers. Like most plans they are what I call back loaded that is the larger matches are made at the end of their career or for longevity reasons which they can never reach therefore they lose out on years of compounding. The sum of their funds do not equal one good plan if they worked steady for one employer. It also makes it very difficult to see the big saving picture and to predict the future not to mention the higher fees incurred by having smaller amounts with several funds. You are just guessing at how taxes will affect you decades later which makes it even harder and there is a real fear that politicians will find a way to take your money or old BS promises you that you will be taken care of forever by the government so you do not put the effort to learn about what you don’t understand.

    When I started working, retirement was targeted between 55 to 65. For my age group, social security 100% retirement was raised to 67 after I started working and there is always talk of pushing everybody’s retirement back even more. There was a time when retirement was only a year or two before you died. That is not the case anymore so maybe people starting families in their 30s & 40s will still be okay.

    I also think that a lot of young people think that social security and medicare is enough. Face it, I do not think any 20 year old has had a detail conversation with someone who is retired about their various retirement income streams and medical healthcare cost. I know I didn’t and all my relatives end up on NJ State pensions or military pensions in the 1980’s and even those are a thing of the past.

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    • The problem is that this generation will not have time to recover from college costs before they retire. Of course, I assume parents pay for all or most of college. Not the norm apparently today. This is why it is critical for young people to save for retirement from the first day they get a job.

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      • It is hard for parents to take on $100K in college debt for their kids at such a late age in life, not to mention many move and started over on 30 year mortgages thinking that they could down size. Now many are stuck trying to find buyers for their houses. Common wisdom to day is pay off your house and get set up for retirement and the kids are on their own since they have longer to earn money.

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      • With the high cost of living, most new workers making $7.25 to $10 per hour do not have anything left to save. Unless they are still living at home. After taxes, income, and sales, they have even less. That is why we need a tax code that exempts the first $25,000 that every worker makes from Federal income tax.

        I have always wondered why the standard deduction is higher for married couples than single workers. The single worker still has about the same housing, utilities and transportation costs.

        Many married couples have dual income and could pay a higher tax. But they get the break, if they have kids they get even more from the earned income tax credit.

        A single person with $20 K in taxable income pays a tax rate of 12.865%, $2,543.

        A married couple with $20 K in taxable income pays a tax rate of 10.405%, $2,081. This needs to be fixed, same income same tax owed.

        A flat tax would be even better, but that will never happen, too many people make money with the tax system we have.

        I am married and have been all but 7 years of my adult life, I will pay what ever the law says in taxes, but it is not fair to the single worker. But the tax code is not fair to the single worker, it is all about control of the masses and votes for the political class.

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      • I know plenty of people in their 50s making $10 per hour working in retail jobs. No other jobs are available for many.
        This economy is just not paying much at retail.
        It has very little to do with what the minimum wage rate is, the profit margins are being affected by high cost of rents, goods, utilities and government regulations. Most recently the passage of the Affordable Care Act that has moved many to part time hours.

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