what retirement?

Scary Charts 12.26.23 Revised

/ SupremeCmdr / 2 Comments

A very astute reader asked a very simple question: Why is this scary? So I went back and looked at my post. I thought I had completed the post but obviously not. The chart lacked context. So here’s the rest of the post I thought I posted. Welcome to my Senior Moment.

The relatively high labor force participation of Boomers may be beneficial both to them and the wider economy. Some retirement experts emphasize working longer as the key to a secure retirement, in part because the generosity of monthly Social Security benefits increases with each year claiming is postponed. For the economy as a whole, economic growth in part depends on labor force growth, and the Boomers staying in the work force bolsters the latter.

Baby Boomers are staying in the labor force at rates not seen in generations for people their age — https://www.pewresearch.org/short-reads/2019/07/24/baby-boomers-us-labor-force/

What I forgot to include in the post now follows.

After finishing and posting Even More Random Thoughts on Retirement – November 2023 something kept bugging me. So I thought about this for a while and uncovered what was bugging me. The following quote bugged me:

To ease the anxiety of retirement, consider delaying Social Security to get a larger monthly check and perhaps also purchasing immediate fixed annuities. I plan to do both.

What We Lose — https://humbledollar.com/2023/08/what-we-lose

Specifically the part of the quote in bold bugged me. I thought to myself, nice plan. But how many people can afford to buy an immediate fixed annuity? I can’t. How many people actually defer Social Security until age 70 to maximize their monthly payments?

Well, get ready for the ugly. It’s Scary Chart time.

Answer: 4%

Why just 4%?

Answer: 97% of people who retired sooner than planned did so due to health and employment issues.

Source: https://www.transamericacenter.org/retirement-research/23rd-annual-retirement-survey

Some retirees get fabulous bull markets right when they leave the working world while some retire into the teeth of a bear market.

How The Market Shapes Your Portfolio — https://awealthofcommonsense.com/2023/11/how-your-market-shapes-your-portfolio/

And some retirees will leave the working world straight into a world of high inflation.

Just beyond the guests and beyond the hornbeam trees where I’ve strung fairy lights for the party, I think I can see my future. The grind of work is finally over, my retirement dream cued up. April in Paris! Reading by the sea! Spanish lessons in Antigua so I can better speak to my grandson. I’ll be playing with him, too, in the open-ended days my children rarely knew with me. I’m not saying I deserve a life of ease. But I worked hard to earn my retirement, dropping giant chunks of my salary into company and government pension plans throughout those forty years. It’s time for the famous social contract to hold up its end of the bargain and take care of me, the way it did my father before me, to deliver on the idea that retirement is my right after a life of work and the promise that I will have the time and means to enjoy it.

Except none of that happened. The year since my retirement party has not been a dreamy passage to a welcoming future but a nerve-shattering trip into the unknown. My debt is swelling like a broken ankle; my hard-won savings may or may not be sucked into the vortex of an international market collapse. Can I keep my house? Who knows? The macro-economy is messing with my micro-economy. The future keeps shape-shifting. And none of the careful planning I put into my retirement is going to change that.

The End of Retirement — https://thewalrus.ca/the-end-of-retirement/

So beware of statistics. The reason why more Baby Boomers are working is because they have to.

Thank you Ol Red Hair.

More Random Thoughts on Retirement – June 2023

/ SupremeCmdr / 2 Comments

Another quiet Sunday and I’m thinking about retirement (again). Writers read a lot. I’ll typically have quite a number of books started in various stages of completion. Recently I started reading the first in a series of books titled The Write Quotes: The Writing Life. The quotes paint similarities of thoughts and experiences and are amazing. You realize you are never alone in any of life’s adventures.

Since 2021, more than 1.5 million seniors have reentered the workforce. There were about 10.6 million people ages 65 to 74 employed in 2020, according to 2021 data from the U.S. Labor Department.

That number is expected to increase.

Retiring from retirement: Whether for financial reasons or boredom, a growing number of older adults are rejoining the workforce — https://triblive.com/local/valley-news-dispatch/back-to-work-whether-for-financial-reasons-or-boredom-a-growing-number-of-older-adults-are-rejoining-the-workforce/

Just last month I came to the realization that (I am) Flunking Retirement. When 65 rolled around I started collecting a small corporate defined benefit pension. Years ago the monthly amount had a lot more purchasing power than it does now. Still, I feel fortunate to have this income stream.

In yesteryear, the pension was a staple of the American working class experience—reach retirement age and you could expect to live out your years modestly, yet comfortably, off of monthly payments from your former employer. However, since the 1980s, companies offering pensions are a dwindling breed. Instead, most employers offer defined contribution programs such as 401(k) plans. Only a handful of industries (such as the military, public works and education) still offer pension plans to their retirees.

Why Pensions Are Dying And How You Can Create Your Own —https://www.forbes.com/sites/forbesfinancecouncil/2023/06/05/why-pensions-are-dying-and-how-you-can-create-your-own/?sh=4970c87ec9d4

When I reached my US Social Security FRA (full retirement age) I didn’t retire nor start collecting benefits. Delaying social security payments until age 70 translates into about an 8% increase in benefits annually. If you’re healthy and you don’t need the income for necessities, it’s worth the wait.

Working longer is a powerful lever. Social Security benefits claimed at 70 instead of at 62 are at least 76 percent higher, and the additional years of work allow 401(k) assets to increase and reduce the period of time that the assets need to cover. In fact, my research shows that the vast majority of millennials will be fine if they work to age 70. And although that might sound old, it’s historically normal in another sense: Retiring at 70 leaves the ratio of retirement to working years the same as when Social Security was originally introduced.

Millennials and retirement: How bad is it? — https://www.politico.com/agenda/story/2018/06/07/millennials-preparing-for-retirement-000670/

Millennials are not the only generation ill-prepared for retirement.

America’s 65 million Generation Xers (born between 1965 and 1980) are confronted with a new set of financial challenges that are redefining their plans for retirement, just as they enter their final working years, according to Prudential Financial, Inc.’s latest Pulse research survey, “Gen X: Retirement Revised.”

Generation X confronts harsh new reality of retirement: unreadiness — https://news.prudential.com/generation-x-confronts-harsh-new-reality-retirement-unreadiness.htm

Remember A Plan is Not a Strategy – Update 08.03.22? Having a plan for retirement is great but not all plans turn out as planned. My last executive position ended up being my last executive position and trust me, that was not what I planned. It’s a good thing that my strategy worked a lot better than my plans.

Stay tuned for the next installment of my random thoughts on retirement where I will document (finally) the integrative choices I’ve made that comprise my retirement strategy.

Quotes for Today – 05.19.23

/ SupremeCmdr / Leave a comment

“A master in the art of living draws no sharp distinction between his work and his play; his labor and his leisure; his mind and his body; his education and his recreation. He hardly knows which is which. He simply pursues his vision of excellence through whatever he is doing, and leaves others to determine whether he is working or playing. To himself, he always appears to be doing both.”

Lawrence Pearsall Jacks, educator and Unitarian minister.

“I love playing, it’s just part of me now, and it was then, at 13. I had the dream to play drums, and I ended up being that person, and I’m still that person.

Ringo Starr – 82 years young

Like I said, I think (I am) Flunking Retirement

What Middle Class?

/ SupremeCmdr / 8 Comments

Hat tip to Mike Shedlock, a registered investment advisor at SitkaPacific Capital Management for highlighting the following video for his blog readers.

This is the portion of the blog post where I typically add a snarky comment.

Nope. Not going to joke about this.