Issues that delay retirement and the effect on work

In My Humble Opinion
1

My wife and I both hope to retire about age 62-64. We are paying off debt and saving/investing.

However I work with many people who because of some bad luck or bad choices, they are at or over that age and simply cannot afford to retire.

Common “bad luck” would be a dealing with the expenses of relatives. For example having a spouse with poor health who cannot work or requires expensive medical bills. Having to support elderly parents. Having to support children or even grandchildren who cannot support themselves. Having to pay for their grand childrens college.

Common “bad choices” I am seeing are taking on debt in their later years. For example buying an expensive home or buying a expensive vehicle. Another would be an expensive lifestyle and not saving their money.

Now many people in this situation are still good workers however for many others they cannot stand their jobs and this leaves them to be very bitter about things.

What have you all seen?

2

I am 65 years old and plan (hope) to work until age 70. There are a number of reasons for this.

First, around the lowest point of the housing crisis, my wife and I bought a cheap single-family house as a rental property. We borrowed money to do so, financing 80% of the price. We rehabbed it ourselves. Since then, over the course of 9 years, we have bought 5 more properties. All were financed, all rehabbed by us, and all were cash-flow positive as soon as we got them rented. We just paid off the first of those mortgages, we still owe money on the other 5. I don’t know if we are done buying houses, but my income makes borrowing money easier in case we decide to buy another house. It also makes me feel more secure about the debt we already have, despite the fact that we are cash-flow positive while everything is rented.

The main reasons I’m still working relate to my job, the nature of it and the benefits that come from it.

I’m a computer programmer at a Fortune 500 fintech company. I’ve been at the company for almost 20 years. My work, given my 30+ years experience at my trade, and the fact that I’ve been working on the same software for almost 20 years, is relatively easy for me. What I do is not a source of stress or fatigue. I have a remarkable amount of autonomy regarding how I go about my work. I work at home most of the time. I get 33 days paid vacation and 8 paid holidays. I am currently saving, through 401-K contributions and an employee stock purchase plan, nearly 40% of my gross pay.

The vacation time gives me time to do the things I want to do, and the job gives me the money to do those things. I view the next 4+ years as an opportunity to eliminate our real estate debt, to continue to increase our retirement savings, and to increase the monthly amount I will get from Social Security to the maximum possible given my earnings.

I could retire right now without diminishing our standard of living, but every additional month I work increases our long-term security. At age 70, nothing I contribute to Social Security will increase my payout, and at 70.5 I must begin to withdraw 401-K money, so it makes no sense to work any longer.

I have co-workers who span the spectrum. Some retired or plan to retire must younger than I plan to, and others, due to insufficient savings, too much debt, or extravagance, can’t see retirement from where they sit.

3

Being forced into an early retirement package. They are supposed to be voluntary but from what I’ve seen most employers use them to force out older workers in order keep them from acquiring more pension or lower the drain on benefits (vacation time, health care match, 401K match). They tend to tell employees in a round about way that they face cutbacks if they don’t take the offer.

The affect is that then older workers are left to a job market that effectively discriminates against older workers. While they may get a job it often time comes without meaningful insurance or no insurance at all. Many of the jobs they are offered come from contract places that pay a less dollar amount than they had before and no benefits. Many people are left with no job offers at all and live off of their assets and see them dwindle down to nothing until they have to take a minimum wage job to make ends meet.

They don’t count as unemployed since they technically took an early retirement. If they are drawing a pension (usually a smaller one than if they had stayed) they find themselves ineligible for unemployment when they find another one and then get “laid off”. It can be a kiss of death to someone without marketable skills.

4

I am in my 50’s. If I absolutely had to I could (at this point) retire in my mid-60’s but I want to keep working longer for a number of reasons.

I had a spouse with health problems that could not work for much of the last two decades of his life which impacted our income and savings (although at 60 I might start collecting on HIS social security and if I can sock that money away for my own retirement. It’s only about 1/8 of what my max benefit would be, which I plan to switch to when I’m old enough, but meanwhile I’d appreciate the “extra”)

I have almost NO family left, and might not have any by the time I retire. I will NOT have relatives to fall back on for help so I damn well better have my financial house in order

As I seem to have escaped the genetic issues that have killed people young in my family I stand a good chance of living into my 90’s - I better be able to afford that, because having to go back to work at, say, 85 because I’m out of money would really, really suck.

I think people who continue working as long as possible tend to have healthier and happier old ages. (Note the “as possible” - if you have health problems or whatever that’s a different story.)

Also, as I tell people I have notions of working until 70 or later - I plan to be working. That doesn’t mean I’ll be working at this particular] job until then, I’d love to be doing something I enjoy more. More money would also be nice.

I sort of leaning towards easing into retirement. Once I can get Medicare I will no longer have to work full time to keep medical insurance so I could cut back on the hours as my spouse’s SS and my own pension come on line, holding off on my own SS until I’m older, then cutting back more and more on work and relying more and more on savings/pension/SS as I age.

Of course, plans subject to change with changing conditions.

5

I am eligible for retirement at 58. I’m not quite there, but I can definitely see the light at the end of the tunnel. If I stay until I am 60, I get a fairly significant bump in my pension, so I am probably going to do that for sure. I can’t draw Social Security until I am 67 though, but I think I have my financial life in order enough that I won’t really need it to survive.
No matter when I retire, I would like to do ‘something’ with my days, but more on a part time basis. My thinking right now though is if I have to get a job to survive after retirement, I would rather just stay on at my current job until I don’t need that money. The nice thing is that I love my job more days than not and it wouldn’t be too much of a pain to stay on past my intended retirement. The idea of getting a part time job is just to keep myself occupied and out of trouble with the Mrs.
I have a couple of co workers that have stayed on due to having kids later in life and having to stay working to make sure they have insurance on the family.

6

Hopefully this is not considered a shitpost, but I’ll give it a try.

I am not near retirement age, but I am trying to keep it in an historical perspective.

For the vast majority of history (and for much of the world today), there was not an expectation that once you reached your sixties you could “retire” and live off of savings and SS for another decade or two.

I think that is a pretty recent and/or wealthy phenomenon and it is not guaranteed to anyone. In my opinion, no one should think it is “their right.”

Historically, many people didn’t make it to mid-sixties. For those that did and were not disabled, I am sure they were working.

I will make appropriate financial decisions so that I can provide for myself and my family in my later years*, but I try to operate on a base assumption that I will need to work until I am incapable of doing so. If I get to retire earlier and spend the golden years not working, well, that is icing on the cake.

–BREAK BREAK–

*I am saving 15% of my income for retirement and I am lucky that I live in a prosperous and (mostly) stable first-world nation that means I have a good chance that that wealth will be there when I get older. However, I also expect that because I saved much of my income instead of spending it (on big houses and new cars like everyone else), I will be comparatively well-off and therefore “means-tested” out of my SS income.

7

You do realize saying something isn’t meant to be something at the beginning of the thread doesn’t negate it when you do. From a historical perspective we have this thing called progress, things are supposed to get better compared to historical times and we should be concerned when they don’t.

One of the key comments in just about every other post is how health care affects retirement and you insinuate that some things should not be considered “their right” and that the vast majority of the world has always gotten squat so it’s OK. Then you brag about how prepared you will be. That is thread shitting in this instance IMHO.

Get off of my lawn! (shakes cane at Hermitian). :smiley:

8

I plan to retire in phases:

I retire from teaching at 52 or 53 years old. That will be 30 years of teaching and qualify for the state pension. I believe that will give me about 38% of my top salary years for life(and increases every year 3%).

I have also invested heavily, at least heavily to me. I gain access to some of my investment at 52 and the rest at 58.

So the plan is:

52-58: retire from teaching, but work part time in another job
58: Potentially retire entirely or wait a bit if I want
62-65: Take the social security

This does not include my wife’s investments, payouts for sick days at work, or any potential inheritance that could occur.

I have no mortgage, no debt of any kind, and also invest monthly in my kids college education, which we will pay as much of as we can(but may not be able to do 100% up front).

Or I could die tomorrow. What do I know?

9

I’m only 46, so I’m not seeing my peers really, as much as I’m seeing their parents’ situations now that they’re in their early-mid 70s.

In large part, my peers’ parents really fell into two categories- those who lived below their means and saved a significant portion of their income for retirement, and those who lived at/above their means and didn’t save enough for a comfortable retirement.

Most of the first category are enjoying a comfortable retirement at about the same lifestyle that they had at retirement- their houses are paid off, they don’t have significant debt, etc…

The second category have enough to get by, but some are still working to either make ends meet or to live the lifestyles they want. None are retired AND living the lifestyles they’d have chosen.

As for my peers in my neighborhood… I don’t know. Some of them are in lucrative jobs and make a lot of money- it’s entirely possible for them to live their lifestyles and have plenty left over for retirement savings. But others make me wonder how they make ends meet at all, considering their jobs, houses, cars and number of children. I sort of doubt they save at all.

As for me, I’m fairly paranoid about getting old and not having enough cash, so I put away something like 18% annually into my 401k and pay into the municipal worker pension fund as well. And I paid into SS for 20 years as well. It still may be tight to have enough.

10

I can retire with a full pension at 60. My house will be paid off and I can’t see myself indulging an expensive wish list of toys and experiences. And I think I would be able to maintain a frugal, simple lifestyle for a long time. So I think retiring at 60 would certainly be doable and wouldn’t be the worst thing in the world.

But I really don’t want to spend my last days/weeks/months stuck in a crappy nursing home. That’s a horrible prospect. I want to have options that don’t involve being a burden on family once I become too frail to take care of myself. I’m not thinking I will have enough of a comfortable cushion by the time I’m 60 to ensure bedsores are never in my future. But maybe I will get to that point by the time I’m 67 or 68.

I don’t plan to work after the age of 70. I have a couple of coworkers who are in their 70s. Perhaps in the prime of their careers they were rockstars. But now they are sources of frustration and irritation. I don’t want to be like them.

11

I’m surprised you didn’t mention the role of bad health on retirement planning. There are lots of people who planned to retire, but then in their 50s their health went to shit and they lost their jobs as well as their ability to work full time. Now they spend their 50s spending down their nest egg rather than building it up, so they are in a terrible place by the time they hit their 60s. Instead of dumping 20k a year into retirement accounts between the ages of 53-65, a person may be pulling 10-20k from their accounts due to being disabled. It adds up quick.

That seems to be a major risk. Issues like the ones you describe (a family member needing financial assistance) is a role, but so is your health falling apart before you planned to retire which causes you to drain your nest egg rather than build it up.

Also as was mentioned by other people, a lot of older workers are forced out of the workforce with retirement packages backed up with implied threats that ‘next round we will just lay you off’. Then nobody wants to hire you because you’re too old.

Another big issue is health insurance. With the ACA it isn’t as bad because you can get a subsidized plan. But if your spouse still works and they aren’t eligible for a plan, then you may have to delay retirement until you both get medicare.

12

They aren’t going to means test social security, especially not for people who are only able to save 15% of their income. A savings rate of 15% implies you are making in the low/mid 5 figures. Even with medicare B premiums which are means tested, you have to be earning into the mid 6 figures annually in retirement before your premiums jump a few hundred dollars a month. With medicare B means testing, they don’t even start increasing the premium unless your joint tax returns have at least an income of $170,000 a year.

Also historically domestic violence was also common. So was torture of political opponents. So was autocracy. So was leaving the elderly to die in the woods, or to live in chicken coops, or to be a burden to their children. So was child labor. So were jobs that left you crippled and in pain by middle age. Society progresses forward because we all want our children to grow up in a better world than we had. I want the next generation to have universal health care, cheap/everpresent renewables, a sustainable economy, more advanced medicine, better science, more safeguards for democracy, more civility, etc. than we had. Hopefully they will do the same for their kids.

13

Mostly what I’ve seen are either people who retire when they want to or who continue working when they would rather not for reasons in between “bad luck” and “bad choices”. They are still working because they are helping their children - but not because their child can’t support him/herself. Instead, it’s because the child can have a better lifestyle because she can live in her parents’ paid off Brooklyn condo while paying only the maintenance but the parents can’t retire because with her living there , they can’t sell their Long Island house, live in the condo and have the money from selling the house like they planned. Or they are helping their 40-something year old son pay the mortgage on the house he can no longer afford since he lost a high paying job and couldn’t find a comparable one- but he could probably sell that house and afford a more modest one. Or they are still paying the loans they took out to finance undergrad and graduate education at expensive private colleges. Which is not the same as buying expensive vehicles or taking expensive vacations- but it’s also not the same as supporting orphaned grandchildren.

14

Hermitian’s post has got me thinking.

Sure, back in the day (however we want to define that), a lot of people worked till they died. But a lot of people didn’t. When you dig ditches or shovel coal for a living, the boss man is the one who decides whether your body is up to the task. Once you start slowing down and becoming a liability, you’re out of the game. You don’t have any say.

Thing is, there wasn’t an expectation that old people would be self-reliant. You depended on your children to take care of you once you became unemployable. That’s what everyone did. I think that’s the biggest difference between “back in the day” and "now. Back in the day, your kids weren’t scattered to the four winds as soon as they turned 18, only to return home for Christmas and Thanksgiving. No, back in the day you could rely on at least one or two them to live within arms reach of you, if not under the same roof as you, thus making it possible for you to stretch your meager resources until you died.

15

I had a co-worker who could not afford to retire because of her divorce settlement. In a community property state, half of her retirement went to her ex-husband during the divorce. He had remarried and so chose to retire on his half of the pension. She had 40 years in, was 65+ but could not afford to retire on her half of the pension. Her attitude was quite poor.

16

Right. If you make too much, some of you SS might be taxed, but your savings is not a factor.
However I wouldn’t assume an income based on savings rate. Plenty of people with very high incomes save nothing, and some people with relatively low incomes save a lot. It depends on how you choose to live. (Really low incomes are a different story.)

17

:dubious: By that rationale, nobody should consider they have a “right” to a vaccination against polio, since the polio vaccine is a very recent invention.

More realistically, the institution of retirement, like the polio vaccine, is good for public health and well-being, so governments absolutely should encourage the view of a decent retirement as a “right” for all working people. (I have nothing against individuals continuing to work past the typical retirement age if they personally prefer to, of course.)

In any case, retirement as an institution really isn’t as recent as all that, although most large-scale government programs to ensure some kind of universal retirement plan for superannuated workers only emerged within the past century. However, Imperial Germany, for example, introduced a universal pension system in the late 1800s:

18

My husband’s parents went into retirement with nothing but their Social Security, and a nest egg inherited from a recently deceased parent. This was after a lifetime of FIL making some poor career choices and thus under-earning.

In retirement, they were doing OK. MIL worked a bit part time as a consultant which gave them some fun money. Their home was paid for.

Then a combination of bad luck and bad decisions left them broke and homeless. Illness wiped out the remainder of the inheritance.

We bought a small condo for them to live in; the carrying costs of that are absolutely going to impact our retirement timeline. As is the support for our two special needs young adult kids.

FIL keeps chasing the dream. He’s actually managed to snag a couple of short-term teaching jobs, though those are some years in the past, and he’s convinced that his ideas are gonna break big any day now. We smile and nod.

I’m tired. I’m just 2 years younger than MIL when they retired, and I wanna retire too. Hell, we have a paid-for condo in Florida (though 1: they still need it and b: I’d actually prefer someone shoot me if the only other choice is to move there).

19

Curious what state you live in. In Kansas teachers can retire at any age after 35 years of teaching and I think 57 after 30 years. Your retirement percentage sounds like 1.27% per year. In Kansas on KPERS 2 its 1.85%. In Colorado it’s 2.3%. For the feds under FERS its 1%.

Now all that is under the assumption your state has a fully funded pension fund. Often politicians make promises to state worker unions for generous retirements but dont fund them enough.

Some teachers retire early like you plan to but then double dip by going back in and working until age 65 and then get a second pension.

20

If it’s really a community property issue, half of his pension should have gone to her as well.

That’s exactly how community property works- if you’re married, and you co-mingle your finances, they are split down the middle. You have to be pretty hard-nosed about how you segregate them, etc… or else they get tossed into the community property pot and get split down the middle in case of a divorce or something.

What did she think was going to happen?