Stern Advice - Getting real about retirement

[FarCenter]

Workers should plan and prepare for retirement. But they're more likely to succeed if they plan for what actually lies ahead. Here are a few things we know to be true about retirement now.

- Reality: You'll spend less than you think. But only after you spend more than you think.

- Reality: You won't work until you are 70. Now, workers are regularly told that they will benefit greatly if they work until they are 70, and hold off until that age before collecting Social Security benefits. That's true - but not very realistic.

- Reality: Your spending won't be stable and you may not want your income to be. Retirees spend much of their money in chunks. They buy a car one year, take a trip in another, reach into their savings to help grandchildren go to college. Sometimes they have lean years, where they stay home and concentrate on their gardens and reading. As their health falters, they spend large sums of money in short amounts of time paying for care.

- You probably won't run out of money. Most retirees don't spend blithely at a pre-conceived rate until their larders are empty and the money's all gone. They constrain their spending more gradually to match their resources. Those people who do literally run out of money tend to be older, sicker people who depend upon Medicaid funding to pay for costly nursing home care.

- Reality: You'll have fun. It doesn't take huge amounts of money to build a successful retirement, and in fact, happiness doesn't always build along with individual retirement account balances.

http://www.reuters.com/article/2014/03/12/us-column-stern-advice-idUSBREA2B1R020140312

[Hoyt]

1. Good timing on an excellent post. Needed such encouragement as I look ahead. Thanks.

[deek]

2. ha ha ha

[PowerToThePeople]

4. DURec

[Squinch]

5. My thoughts exactly.

[Autumn]

6. I think that just about covers it.

[1000words]

15. There was never more a thread win than this ...

[femmocrat]

3. It is totally unrealistic to expect people to work until age 70.

Somehow, Mother Nature has other plans for us as we age!!

[truedelphi]

7. In this society, saving for retirement is a crap shoot.

Do not have a major illness, or medical bankruptcy might wipe it out.

Pray that your investment adviser is not passing off the monies to the "best game out there," that turns out to be a future version of Bernie Maddoff.

Hope and pray that at some point soon we no longer have puppets in Congress but instead real people, doing what is right for voters, who help middle incomed people avoid some of the outrageous fees that "saving for retirement" now steer away from the future retirees' accounts.

Also pray you escape the predicament of those who were in Katrina's path, or the path of Major Storm Sandy, so that you don't have to fight your home insurance company while you' re trying to figure out where you' re going to live. (Losing your primary residence to a big storm, earthquake or catastrophic "whatever" can make ever getting to retire an impossibility.)

[Curmudgeoness]

8. That makes me feel better.

I am close to retirement, and worry all the time about whether to continue working because I have to, or dying so early that I don't have any time in my life to just enjoy it.

[Nay]

17. It is definitely a challenge to find the correct time to retire. I had intended to

work until age 64 or 65, but when I was 60 I got breast cancer. I worked through my successful surgery and radiation treatments, but I wavered back and forth as I worked, imagining how awful it would be to work until I basically died at my desk....I am not one of those people who loves work, finds meaning in it, etc. -- it's always just been something I had to do to pay the bills.

I ended up retiring at 61. Mr Nay was still working, so income was still coming in. Two years after diagnosis I am still cancer-free, but I am well aware that one never is 'free' of cancer, and that you can't tell if you have been cured until you die of something else.

I was lucky that I worked for a place that offered retirees a health plan, and of course I took it. If I hadn't had that, I would still be working.

Like you, I was very aware that I truly need a few years (at least) to simply be. To not have to do, do, do all the time. Obviously, I still do daily chores and such, but my time is no longer bought up by a workplace. It is a sort of a freedom that I feel privileged to enjoy. I hope I have many years ahead, but you just never know, do you?

Just to add a comment about the article -- I'm dumbfounded that it didn't mention trying your best to pay off your dwelling and cars, etc., before retirement, if you possibly can. Of course, it doesn't make sense to take money out of savings to pay off the house, but anyone out there who has 10 or 15 years before retirement should make extra effort to pay off a place, esp. if they plan to retire in that place.

[Curmudgeoness]

20. How wonderful for you!

Both in being able to retire and beating the cancer. I cannot imagine what you went through working and going through the treatments. I am glad that you retired, and were able to do so. I have a feeling that a close call with mortality will put a different perspective on life. It is short enough already.

I am in a situation that is not as easy as some. I have no Mr. Curmudgeoness, it is just me. And I have no pension. So again, it is just me. The only thing that has been holding me back is health insurance, which I would have to cover from the time that I retire until Medicare takes over. Beyond that, I was lucky to go through a time when I was dirt poor and didn't know if I would have enough to eat from day to day. That gave me a fierce desire to save money, and when I got back on my feet, I have lived well below my means. I will not need a lot of money in retirement unless I have major health problems. (There we are again...the only fear I have is not having money for health care.)

Your point about paying off home and car before retiring is an excellent point. Having bills like that hanging over you when you don't have the income coming in would be terrifying.

[SheilaT]

9. Nice. And thank you for posting.

Until maybe three months ago I figured I'd work until at least age 68, maybe 70. I'm 65 now, in excellent health and I actually only work part time but in a job that has benefits. Then I got to thinking about some of the things I really want to do, including take the train to Portland, OR, to visit the son I haven't seen in 4 years. It's a three day trip, I'd get a roomette and just enjoy the journey. I also want to visit friends in other parts of the country, and I'm getting serious about writing a novel.

So I took a closer look at my finances and decided yes, I can retire. I'm planning on working five more weeks. Will give my notice in two weeks. I may well do seasonal or temp work, but probably not until next year. Maybe I'll take a job for six months and save that paycheck so I can go on a luxury cruise. I'm just ready to cut loose from being tied to a regular job.

And yes, all that stuff about how one's spending will vary is also true of people well before retirement. Not all of our expenses are fixed.

[sammytko]

13. Good luck. Sounds exciting!

[geckosfeet]

10. Not everyone lives to 62.

I'll probably never see a cent of the ssi money I have paid into. And i have no family that can collect it.

[Curmudgeoness]

21. I am not sure why you think you will not live to see it,

but when I was younger, I never expected to make it as far as I have. I am 60 now, and surprised to still be here.

I also have no family to collect anything from SS if I don't make it to retirement, but I still think it is the greatest program we have in this country. I have never used my homeowner's insurance either, but I am not wanting to either. If I die before I can collect SS, what do I care.....I'm dead. But it sure did make my parents' lives better than they would have been, as well as my life, since without SS, I surely would have had to help support them. So my SS payments have already paid off even if I don't collect a dime.

[geckosfeet]

22. I have matatasized cancer. I will be 59 in Sept. Might make 59. Won't make 62.

I just think that there should be provisions for people in my situation.

[Curmudgeoness]

24. I am sorry to hear that.

It does suck that you will get nothing out of the money you have invested in the system. Rest easy knowing that others have.

I do not know how it must feel to know that your time is limited. Enjoy the time you have.

I am also a September baby. I hope you see your birthday.

[geckosfeet]

25. Thanks. I hope I see my birthday too.

Not sure what kind of shape i will be in at that point though.

[dem in texas]

11. I am 74 and still working and rockin' retirement

I now work at home, I have two websites and I sell on Ebay. I enjoy working and can't image not doing some type of work. If I wasn't working for myself, I would be doing some type of volunteer work. The money I bring in from my web business gives me money to help the kids and grandkids. My advice is to get your mortgage paid off; what a load off your shoulders if you don't have to pay rent or a mortgage payment each month. We bought a new car a few years back and it will probably be our last as we don't put a lot miles on a car anymore. At some point we will have to shell out for a new roof or something like that, but we'll cross that bridge when we come it.

[Incitatus]

12. YES!

So can I stop putting away 20% and spend more on beer and travel money?

[Morning Dew]

16. and many experiences!

Don't forget the experiences.

[NBachers]

14. I'm 65 in a few weeks, and I'm still going strong- I think I can make it 'till 70.

It sure would provide a nicer cushion of money for the rest of the ride.

[reformist2]

18. Telling us to plan for retirement is sounding like "let them eat cake" to me - they have no clue!

[Nay]

19. This is true for many people, of course. They never made enough money to save

much, moved around a lot to chase jobs that disappeared, etc. The advice in the article is really for professional and semi-professional people in stable jobs. That describes so few people nowadays, but there are still some boomers who are yet to retire to whom this advice might apply.

There should be a concerted effort to build small, efficient cohousing apartment units for all the people who are going to retire with very little money, but this country couldn't give a SHIT about the people they have used and abused. A new war in Fuckistan is the only thing they'll find money for, not something to help its own citizens.

[KentuckyWoman]

23. The 2 Americas.

Yeah, John Edwards is a scumbag but he was right on this.

America #1 is who all the articles talk about. The 20-30% of Americans lucky enough to have had good union jobs or college degree jobs for a lifetime and managed OK most years. Could afford to put money away and somehow the crash in 2007 didn't bleed them dry.

America #2 is people who think they are middle class but life is getting tighter and tighter. They are busy just hoping to God they don't get sick enough to get fired from the job they have now. Being too used up and old to work anymore is too frightening a thought since putting anything aside for that is next to impossible... and what does get put aside seems to vanish every time the next financial crash comes along.

I'm in my early 50's. A thrifty sort too. Saved 10% or more of my income no matter what 2/3 of it vanished with the Great Recession. A little bit is left but most is being used to start up a business - because no one else in my little part of Kentucky sees any value in taking on a middle aged half grey woman. And a big chunk to keep my sister cared for at end of life.

I'm in America #2 in spite of the fact I did everything I'm supposed to do. The articles don't talk to me. And yes it does feel a little bit like "let them eat cake".

[enlightenment]

26. Exactly.

I'm happy for those who can take something from that article, but it certainly doesn't apply to me.