I know some economists hold the pension system in Chile in high regard. Might something similar work in the U.S.?
Nitpick. I suspect retirement is less often outlived ability to contribute to the economy than continuing desire to.
Low birth rates aren’t going to do anything substantial to impact climate change in the foreseeable future. The nations with the most greenhouse gases per capita are also largely those with birthrates already below replacement, but even with that, barring some global cataclysm, population levels aren’t going to drop to sustainable levels. And resource management is a largely a problem of accounting for detrimental externalities and foreseeable consequences, then actually applying real costs to goods and services, which is something Corporate America (and pretty much Corporate Anywhere) doesn’t want to do, especially when it comes to environmental impacts of all kinds.
Housing costs are not high because there is no capacity for supply, and in fact, much of the developed world is seriously oversupplied with housing already. The problem is that affordable and low impact housing as been deprioritized in favor of pseudo-luxury construction and massive development of suburban sprawl which is some of the least sustainable housing. Boomers dying off and selling or transferring their assets to children will make this property more available than it is now but it won’t make it more sustainable or built where people actually need to live, nor is a 3,000 sq ft ‘McMansion’ built in a suburb with privately-funded infrastructure and intended for car commuters affordable for someone on a more limited or ‘basic assistance’ income and reliant upon public transit because liquid hydrocarbon fuels become expensive and the automotive and materials industries can’t extract resources and build battery electric vehicles fast enough to replace petrofuel cars.
Low birth rates are inevitable in any case but it doesn’t mean that there will be a sudden expansion of effective wealth; between the contraction of an economy in negative growth (and all of the implications that brings) and the fact that much of the real estate and physical infrastructure is not built or well suited to a post-degrowth population, standards of living will decline, perhaps precipitously in many regions.
“Retirement” into the life of leisure enjoyed by the rapidly disappearing middle class is a very modern phenomena. Pensions as they existed were designed as an inducement to pull mostly workers into moderately paying jobs and retain them after they were trained and developed experience, while creating a pool of reserve money that could be invested or used as collateral, and then pay out a modest portion for the few years that a worker survived post-retirement. The shift away from pensions into IRAs, 401(k) and 403(c) plans, and similar vehicles were intended to get the general public to invest in the stock and bond market instead of holding money in less accessible assets, and reduce any liability on the part of companies who were finding maintaining fully funded pension plans to be a serious liability.
In the case of substantial degrowth, ‘retirement’ will be a novel concept that just won’t apply to most people, who will continue to work or subsist at a marginal level well past the peak of their career (or whatever remains once we start handing over ‘work’ to mostly nonsense-generating LLMs and other generative AI).
Stranger
It’s both for me. I’m a programmer and I feel I’m losing my ‘edge’. That though is probably because I’ve lost interest in developing new skills and following new tech. That’s pretty much a career ender for a programmer. I just need to hang in there for 18 more months.
Just to add my tiny data point (and I’ve mentioned some of this in my past thread about retirement investing):
I’m coming up on a year since retiring. While working, my net paycheck was about $7,000 a month, and we lived comfortably on that. My goal, then, was to keep that same level of income in retirement.
My IRA total at retirement was roughly $800K.
Between my spouse and I our Social Security is $4,000/month. I get an automated monthly withdrawal from my IRA of $3,000/month. Our lifestyle has not changed (in fact, we’re traveling more and doing more home improvement stuff than before).
A key part of my plan, and the execution is thus far going according to plan, is this:
my total annual withdrawals from my IRA do not exceed the $ generated within my IRA by dividends from stocks and interest from bonds and CDs. I do not sell anything in my IRA (I will almost certainly do re-balancing at times, of course, but not to generate cash to withdraw).
Our key stats:
- mortgage PITI all-in less than $1,300/month (2.87% mtg rate, no school property tax)
- two great vehicles, bought used, paid cash
- Medicare Supplement plans put a low cap on out-of-pocket medical
- due to all the above, inflation doesn’t affect us much; energy and insurance are about the only things we have little control over
- we live in the Atlanta metro area; lots of amenities, lots of healthcare options
My investment equity choices are less-volatile than, say, the S&P 500. I won’t beat the S&P 500 in “up” years, but back-testing and research convinces me I’ll beat it in bad years (with the usual caveats of past performance is not a guarantee of future results etc.)
A lot of it might be contributing in nontraditional ways. Does unpaid volunteering count in the GDP? It often still contributes. It is much easier measuring contributions when you go into an office and get a salary.
Are you me??
I too am in IT. I’ve been lucky enough to evolve into database work, which is somewhat less volatile than all the new tools out there for developing applications. Coding is fun, but I just don’t have the mental bandwidth to learn a new tool.
My current plan (which I think I’ve mentioned a time or eighteen) is to keep at the current project as long as they’ll have me, or until my husband hits full retirement age, whichever comes first. If the project goes away, I won’t look for a new one - I’ll just call it quits then. If I get laid off, ditto. I’m roughly 2 years away from my “full retirement age” but I’ve been crunching the numbers, and I know we’d be fine if we both retired a year from now. Barring major disasters, of course.
Actually a layoff might be ideal - I’d presumably get a certain amount of severance pay. A friend was planning to retire, and managed to engineer being included in a wave of planned layoffs. She wound up “having” to work a few months longer than she had planned to for things to fall into place, but it was very, very worth it financially.
These days, that is definitely true, at least in some cases. I’m just TIRED. My job is not physically demanding.
Less able is also true. If you have a job that requires ANY kind of physical work - which could be as simple as standing at a cash register, ranging on up to hauling heavy loads, far too many people are literally not going to be able to do it. If you’ve got a job that requires sharp mental acuity, you may be slowing down a bit there too (that’s me!).
Before I retired I found that I didn’t have the time to learn new tools from scratch. The people I hired from universities took classes or had time in grad school to learn new things - I did. But I didn’t have even 10 hours a week for it. Much better to get interns and younger people on the team who learned this stuff in grad school.
In terms of retirement, I always thought I would program for fun, and I’ve done a little, but these days nearly anything I want I can get an app for for free or nearly nothing.
You know? Its 12:53. I mean f this., I can’t do it. I’m looking at the clock and it’s 1:53…
Oh yes. I do DB work as well. As well as manage critical updates on our teams most important server. And of course analyze data for special projects and created and manage our most important website. I write a lot of code to automate data creation and publishing. It’s f’n exhausting.
Luckily, we hired a new person about 8 years ago that will be able to manage some of my duties. She is creating a new website anyway. That site is nearly ready to roll out. Of course there will be many changes. Always are. And of course people will scream. Always do.
And here’s the thing - I like the people I work with. They are very sharp, but I don’t want to leave them in a lurch. I’m making training videos for them to refer to.
Don’t forget, you also get to supplement your retirement with Social Security income. (it may have already been mentioned above but I didn’t see it in the first 30 posts or so)
For a 2-career couple, this could be an additional $70k per year or more.
It’s been mentioned quite a few times. And yes, the Social Security component can increase the income quite a bit. It looks like roughly half (or a bit less) of our income if we take the MRDs from our retirement accounts.
The “million dollars” (or whatever) is to supplement Social Security - which is NOT enough to live on unless you move somewhere very, very cheap. And of course it’s an income stream that drops considerably when one partner dies.
You’ll lose up to half of your income (assuming the spouses have similar benefits) when that happens; similar changes with pensions depending on how you elect to take them. But many expenses (such as housing and transportation) will NOT drop.
I think some people doubt that Social Security will still be around when they retire, or they plan to delay receiving it until they reach the maximum payment. So they need to have enough other income to get by until then. (Ideally, I wouldn’t even draw down my 401(k) until I reach the age of required minimum distribution.)
Assuming you have two cars, you’d get rid of one which would eliminate insurance payments and repairs on it at least. Moving to a smaller place would reduce housing costs also.
In theory, yes, you’d save money by moving to a smaller house. But you might also need to downsize your possessions and you’d definitely need to pack everything up and then unpack it at the new location. And the rise in real estate prices might mean that the new place isn’t that much of a bargain. The whole process is a whole lot of stress, and this might be after losing your partner.
Given all of that, I can see why some people choose to live in their home, even if it’s too big for them.
That’s why a few of my friends and I are planning to pool our resources when we retire, essentially becoming roommates. If housing costs are 1200/month but we can split them 3 or 4 ways that is 300-400/month for housing each of us instead of each of us inhabiting a tiny $800/month apartment (adjust numbers for location and year of consideration). Also to look out for each other. We can share a kitchen and living room and have our own private space for when we want to excuse ourselves from company.
It will help keep down costs and extend our retirement money.
And if money gets tight, you can sell a reality show to Bravo: Real Golden Girls of [Insert your city here]!
Who gets to be Betty White?
Only 1 million? I’ve always read/heard at least $2. Or at least a perpetual income equivalent to what that would safely generate. I don’t plan on ever retiring in the sense I would find it completely impossible to not be doing something to produce income for myself. I’m fairly frugal and never have had a high income, maybe that makes it easier. And I don’t mean in the sense that I plan on being forced to be a Walmart greeter or something. I just mean that I do things to make money that don’t require me staying youthful (nevermind that my health has improved in almost every way into middle age and I can’t imagine not making more money well into my senior years).
The same price increase would make your current house worth more. Interest rates are up, but that doesn’t matter if your house is paid off and you’ll have enough to buy the new one for cash. And, after a while, not knocking around in the house that reminds you of your partner might be less stressful.
All I was saying is that it is not automatic that you can’t save money on housing. We know someone who is widowed and who can’t move because of capital gains. But she would if it were not for that.
Late to this post, but a nitpick.
They will both be getting Old Age Security (OAS)payments of $713 each, which they did NOT pay into while employed. IF they are low income, they might also be getting the Guaranteed Income Supplement (GIS) of up to $1000/month. Probably not if they also have a company pension.
They will also be getting Canada Pension Plan payments which they DID pay into while employed. Max of $1364/month, but they are likely getting less.
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