“Traditional Retirement” is Someone Else’s Reality
We’ve been having an extended conversation with Dot Hage, of Deeper Issues, on the subject of retirement. As in lack thereof, as in coming to grips with finances, as in realizing traditional retirement funded by investments and Social Security is someone else’s reality. If you’ve missed the previous installments, they are: Part 1 (PassingThru), Part 2 (Deeper Issues), Part 3 (PassingThru), and Part 4 (Deeper Issues).
Our lively discussion has revolved around the various activities Pete and I are working on to supplement our income. Our strategy evolved as we assessed our financial realities as part of being closer to accessing Social Security benefits (which we would like to defer as long as possible in order to net a higher monthly benefit). In her latest post, Dot visualized, “Since I’m making over $5K a month now, plus a good set of benefits, $5K a month from online work would at least cover some of that, and perhaps social security could cover some of the bennies I’d be giving up. . .“
Lots of “Retirees” Are Really Still at Work
Coincidentally, the September issue of AARP‘s Bulletin contained an article called “No Rest for the Weary”, citing a report from the Bureau of Labor Statistics: Social Security records show that the average age for Americans to claim benefits is 63.9. But they are working longer than that—many need the money. In fact, the percentage of workers over 65 is increasing faster than any other age group, according to the Bureau of Labor Statistics. The BLS reports that between 2000 and 2008, the number of workers 65 to 69 rose 25 percent. Even greater increases were cited for those ages 70 to 74 (32 percent), 75 to 79 (38 percent) and 80 and over (67 percent, to 500,000).
These data represent more than a transitional shift, but rather a monumental reset arising out of a cocktail of losses. Retirees and workers alike are joined by the inability to fund investment vehicles due to a variety of financial and employment-related factors, health care costs, as well as consumer debt. Now, just when we can foresee time freedom by approaching what we know as the traditional age to cease working, we don’t have the financial means to do so.
The AARP article quotes Steven Sass, who co-authored Working Longer: The Solution to the Retirement Income Challenge: “The financial underpinning of retirement as we know it is contracting. Workers have not saved enough to offset these contractions. The only two options, at this point, are to eat less or work longer. There’s no more coming to you.”
However, this isn’t exactly a new phenomenon born of the current recession. An article in the Mississippi Business Journal from 2004, cites the fact that many seniors are working, sometimes at multiple part-time jobs, to supplement their income. My own parents, who retired early for health reasons in the late 1970’s, were constrained at that time by additional income restrictions against their Social Security benefits. They had to keep track of every penny my dad earned doing handyman jobs to avoid exceeding the threshold that would have reduced their monthly allotment.
Financial Concerns are Prevalent
Demographics aren’t on the side of boomers, who are retiring at the rate of something like 20,000 per week. Political posturing and associated data on the pending insolvency (everyone agrees it’s pending, not everyone agrees exactly when it will be insolvent) of Social Security aren’t close to being reassuring. In a Scottrade survey quoted in St. Louis Today, “only 32 percent of respondents told pollsters that they expect to be able to retire — ever — compared with 39 percent in a similar survey last year. Sixty-seven percent of Baby Boomers, and 64 percent of the younger Generation X, said they’re concerned about having enough money for their golden years.”
“Concern” over money matters has led Pete and me to our online and travel business activities. Dot forthrightly shared her concerns about feasibility: I guess I was looking for reassurance that it was indeed possible to work online full-time. Whether *I* can pull it off is another story. I know it takes a lot of work in the beginning, but I don’t know how much I can do until I try it. If it feels like fun, I can do more than if it’s stressful. . .
Could There Be An Upside? Please!
There’s an additional benefit to the “fun” of continuing to work in your golden years. The Feeling Up in Down Times blog tells us, “Experts from King’s College London analyzed data from more than 1,300 people with dementia. They found that for people who delayed retirement, each extra year of work was associated with approximately a six-week delay in the onset of dementia. [Note to self: that means if I work twice as long as I expected, that means I won’t be a nutter by half. Or something. – Ed.] Simon Lovestone, one of the paper’s co-authors, suggested that “the intellectual stimulation that older people gain from the workplace may prevent a decline in mental abilities, thus keeping people above the threshold for dementia for longer.” Cool! 😀
What Needs Our Greatest Attention?
Gary North offers a harsh reality check: “Most working Americans will not be able to retire. They just don’t know this yet. They don’t want to think about it.” His 8-Point Check List is not only a good exercise, but a tool to determine where your vulnerabilities require the most urgent attention. Dot is realistic about some inevitable realities: I’m expecting my medical bills to only get worse as I get older. Not that I couldn’t live on less, but wouldn’t it be nice not to have to?
Simplification in retirement used to mean downsizing to the 55+ golf course community in Arizona, or maintaining a snowbird lifestyle (disappearing from northern climes at approximately this time of year). This reality often involves less simplification, especially with advancing age.
Consider Pete’s family. His parents keep their main residence in a Minneapolis suburb. They were in the habit of moving up to the sprawling lake cabin for most of the summer, and spent the coldest 8 weeks of the year either at their Florida timeshare on Sanibel Island or trading it for an alternate warm weather destination. Managing their affairs and ensuring things are “kept up” can be complicated, whether its ensuring there is a vehicle for Grandpa to use when he’s on his own up at the lake, or renting the Sanibel unit to cover its annual fees. Health issues currently tether them in Minneapolis, closer to their preferred providers at the Mayo Clinic. Adjusting to these more recent constraints has added insult to the injuries they’ve suffered in their investments.
Can We Simplify and Live More Frugally?
Pete and I have begun to assess our own simplifying with the above in mind. Our current lifestyle and financial profile is tied up in “feeding the beast.” This is my term for the expenses and activities associated with our house. For instance, when we decided to supplement our heat with wood, it meant signing on for more work: locating wood sources, setting up a staging area to properly age it, splitting it into appropriate size for cording, hauling and stacking two cords each year up closer to the house for convenience, etc.
The lawn and garden care is something we still enjoy, but only to a point. The property tax and city utilities expenses are very high in comparison with my former home in Deephaven, where my water came from a well and the village serviced residents on a different scale than our first-tier suburb does now.
Some boomers are dispensing with lifestyle in favor of frugality. This blogger downsized to an RV, reporting, “One of the first things I noticed was that monthly/long-term park fees were about a third of what I had been paying for rent in my house. And most times the park fees included water, sewage and electricity – all of which I’d paid separately when living in my house. The park folks also mow my lawn and trim my trees. Granted, many parks these days meter electricity – but even that monthly bill is far more reasonable than it was in my house. After all, how much power does can it take to live in a 33’ RV?”
Some Parts of This are Really Scary
Dot was forthright in her assessment of her feelings to me in a recent email: One of the biggest obstacles I’ve faced during this series is/are my feelings about business. I’ve never wanted to know anything about business until now when I have to. The word “corporation” brings up images of huge companies doing things that harm nature and the little guy. The few times I’ve tried to start a crafts business, it was clear that I was afraid of making the right decisions. So I’ve had to talk to myself repeatedly about doing things with my own values, not those of the “big, bad” corporations.
I also know that “working two jobs,” which is what this is when boiled down, will be very hard for me. It will take a long time. . .I think it would make most sense for me to start with Zazzle. . .
How Do We Plan and Set This Up?
I can set up an efficient eBay operation. I have a ton of things I’d like to get rid of – an entire spare closet full of clothes that don’t fit and four bookshelves full of books – I just haven’t wanted to bother. But why not make money from them if people will buy? I have lots of mailing envelopes, packing tape, etc., from selling a book here and there, but things are scattered all over the house. A more efficient operation will be essential to keep down the amount of time I spend on my “second business. . .
Once all the eBay stuff is sold, which may take a year or so, I’ll have that off my mind and hopefully have a lot more space. Along the way, I can create some more Zazzle stuff, and then to creating niches, linking them to all the social networks and adding advertising, including affiliate links. Whew, lots of work ahead.
Indeed, lots of work will evidently keep not only the wolf, but Alzheimer’s away from the door! 😀
I also plan to continue my education by finishing the ShoeMoney course and checking out the other links you sent. Keeping active and engaged, while learning new skills and information, is empowering. Pete is fond of saying, “As long as you’ve got a project going, you’ve got something to live for.” Those who are naturally curious and interested in learning can usually find ways to transform knowledge and build skills into a more self-sufficient lifestyle.
The more I learn, the less scary this will be. Dot closed her latest email to me with this courageous sentence. It is scary to face an uncertain future. We’ve been lulled, perhaps, into thinking our futures were more secure than they actually might have been, even with no recession or statistical woes. Self-reliant competence, we’re coming to find, is the best remedy against fear.
It’s been a lot of fun traveling with Dot over the past few weeks as she embarks upon this journey. We’ve gotten to know each other better, and I, especially, have enjoyed her perspectives. It’s been interesting to see how some of our ideas apply (or don’t) to her circumstances, and it’s heartening to know others are in a similar boat.
Since this series began, I have begun meeting with several women who are in our travel business, and together we will be exploring and developing strategic plans for online business endeavors using the Shoemoney weekly series. We have committed to using the checklists and will be working on our own niche website operations together. This process has elements of the blind leading the blind, but we’re optimistic about finding a path toward achieving our goals.
Dot, Pete and I would all love to hear your responses in the comments section, so we’re throwing it open for questions, anecdotes, whatever you’d like to share. With more and more folks coming to similar conclusions about what their futures hold, this topic is here to stay.
What say you?
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