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I'll post a link to an article I found on Yahoo news this morning about people delaying retirement and why. The comments, as is often the case, are actually more informative than the article, and are probably more often correct as far as getting to the truth.
IMHO, people have been forced to delay retirement because of the 1.)bad economy.
2. The Fed constant printing of money forcing interest rates to Zero, so that savers get no return on investment and no income retirement, and in fact are losing money every year because of not keeping up with the rate of inflation.
3. Under reporting of inflation by the govt. keeping SS payment increases down to zilch.
Yes, in many cases people haven't saved much, but we are constantly getting screwed, little by little on SS. Another example: If you make over 34,000 in retirement, you get taxed on SS. That amount has never been adjusted for inflation since the law was first passed, pressing more and more retirees into that bracket. As many polls are showing, the middle class is constantly getting squeezed.
I read the article and the first 10 comments. The comments were pretty similar to our discussions here in this Retirement Forum. An interesting statistical tidbit from the article:
"The average age at which U.S. retirees report retiring is 62, the highest Gallup has found since first asking Americans this question in 1991."
I didn't realize so many people retired so early. Lots of City-Data posters talk about very early retirement, of course, but this Gallup poll is a scientifically valid sampling across the United States.
This is a really basic summary and I agree with some of it. I take an issue with the following pieces.
1) "The first is that Americans have not been aggressive in putting aside savings. Even many middle-class Americans have little money in the bank, and many live from paycheck to paycheck."
I'll agree that many people do live paycheck to paycheck when they could do better, but at least where I am from, quality manufacturing jobs and other fields which DID pay a living wage have been hollowed out and have been replaced with mostly retail, restaurant, and call center work.
It's one thing for a truly middle income person to simply save nothing (that's a personal flaw), but many people simply don't make enough to have much left after basic subsistence.
2) "Another reason is the housing price collapse. For decades, Americans relied on the equity in their homes as a critical means to fund retirement."
If you were relying on home equity in your primary residence to fund your retirement, you were planning poorly. While housing prices remain depressed in some (largely overbuilt) markets, other areas have met or exceeded the previous peak. This doesn't hold a lot of water.
3) "The final reason is that more and more Americans are living past 80, and even 90. The sum of money needed to support these extra years of retirement has grown with the median age at which people die."
Well, yeah - if you live longer, you will need more money. Modern retirement planning hasn't considered living into your 80s and 90s as a "standard," because it was abnormal for people to live this long. Most people retired in their 60s and had maybe ten or fifteen years of life left. This is something many people could plan for and afford.
A thirty year or longer retirement is a completely different ballgame. If someone retires at 55 and dies at 85, they were in retirement nearly as long as they were in the workforce. You'll always have outliers, but IMO, when thirty year retirements get discussed of as becoming a new normal, this is going to place untenable stress on the system and finances.
Great post Emig. I do think that some people have lived beyond their means, and been irresponsible in planning for their retirement. Others have ruined their health and become unable to work because of it, meaing they end up on SS disability roles. What gets to be still about the system though is the early retirement, pension and health benefits that are given to govt. employees. Workers in the private sector do not get these things, so in essence you have the private employees working longer to pay for govt. employees better benefits. They way the game is being run is unsustainable. Changes will have to be made or the whole thing will collapse. Fortunately, some governments are cutting these generous benefits. Some are being forced into them, like Detroit.
Great post Emig. I do think that some people have lived beyond their means, and been irresponsible in planning for their retirement. Others have ruined their health and become unable to work because of it, meaing they end up on SS disability roles. What gets to be still about the system though is the early retirement, pension and health benefits that are given to govt. employees. Workers in the private sector do not get these things, so in essence you have the private employees working longer to pay for govt. employees better benefits. They way the game is being run is unsustainable. Changes will have to be made or the whole thing will collapse. Fortunately, some governments are cutting these generous benefits. Some are being forced into them, like Detroit.
Yeah, well, most government employees have earned, and continue to earn, less doing their jobs than people doing similar jobs in the private sector. The disparity between pay between a computer programmer with 10 years experience working in the public sector and working in the private sector is ginormous. The same with engineers, psychologists, and so many other technical positions. The only way that governments compete for highly skilled technical workers is through better benefits packages, and that includes pension plans.
Then we've got another side of the coin, which is that government employees do jobs that most people wouldn't want to do. Want to compare how many LEOs/corrections officers/firemen are killed/injured on the job compared to how many stockbrokers or mortgage bankers? Nearly 400 NYC firemen were killed in just the 9/11 attacks -- and they rushed into the towers to help people.
Yes, there are people who do government work that's not particularly challenging or dangerous and that people in the private sector do for less pay and benies, but they are a relatively small percentage of government workers. Most government workers today have college educations and/or technical skill sets, and many work in dangerous situations.
Furthermore, some states exempt public employees from SS taxes in order to raise their pay, which, of course, means that these employees tend to have small SS benefits in addition to their pensions.
Great post Emig. I do think that some people have lived beyond their means, and been irresponsible in planning for their retirement. Others have ruined their health and become unable to work because of it, meaing they end up on SS disability roles. What gets to be still about the system though is the early retirement, pension and health benefits that are given to govt. employees. Workers in the private sector do not get these things, so in essence you have the private employees working longer to pay for govt. employees better benefits. They way the game is being run is unsustainable. Changes will have to be made or the whole thing will collapse. Fortunately, some governments are cutting these generous benefits. Some are being forced into them, like Detroit.
Simply cutting government pensions is really a drop in the bucket compared to the overall "retirement mess." It would reduce stress on public finances, but it doesn't "move the needle" for the vast majority of workers who work in the private sector.
The biggest no-no I've seen many people I know make (including my own parents who are in their mid 50s) is withdrawing from retirement plans after an income cut to maintain something - whether that's their home, car payment, lifestyle, or some combination thereof.
For a few years running, my parents were raiding their 401k ($150-$200k) to keep up with medical bills, house payment, etc, after my dad's income declined by a third (not including increased commuting costs, wear/tear, and a state income tax that wasn't there before) once he was laid off in 2007. He'd end up owing taxes from the distribution (instead of having the taxes taken out - if he never saw the "tax money," he wouldn't have missed it), would spend the whole distribution, then have to withdraw again come next tax season to pay the last year's taxes. Dad went from about $45k down to $30k, commuting fifty miles a day each for this.
Five years or so later, that retirement money is gone and there's really nothing to show for it. Neither the mortgage nor the car is paid off.
He would have been better off to drastically scale-down his lifestyle, and if it came to it, file bankruptcy and have the retirement money protected, than be here several years later with almost no retirement savings nor any significant debt reduction. Lots of people he worked with did the same thing when the factory closed. Sadly, many people are not competent in personal finance and make these kinds of errors.
Like I said, lots of people waste tons of money, but many are so low income they can't contribute much. All of the Dave Ramsey and Investopedia in the world isn't going to help someone making $10/hr. You have to be ability to meet your own immediate needs before you can consider future needs - many people struggle with maintaining basic needs.
I went home over the weekend and met my uncle (dad's brother) at the marina. He's a 1%er or very close to it (made $365k last year) and he's worried about having enough for retirement, but he has now two ex-wives he's paying alimony to and supporting, as well as a 19 year old in college and a 14 year old staying with him part-time. He's probably lost a quarter million in poor real estate decisions over the past five years. He divorced his wife in early 2012, remarried, then divorced the latest wife on April 9. He's probably had at least a half dozen cars costing $50k+ since 2008.
My dad and uncle are two vastly different people with vastly different sets of problems, but neither are adequately prepared for retirement. Dad has always kept his personal life clean and been ethical, but never was able to make money. My uncle can make lots of money, but just throws it away in cars, yachts, women, bad real estate, expensive and unusual home customizations, etc.
I know very few people who would be adequately prepared for retirement by most financial planning measurements, but the older people I know aren't hungry, have shelter, at least a basic car, etc.
Yeah, well, most government employees have earned, and continue to earn, less doing their jobs than people doing similar jobs in the private sector. The disparity between pay between a computer programmer with 10 years experience working in the public sector and working in the private sector is ginormous. The same with engineers, psychologists, and so many other technical positions. The only way that governments compete for highly skilled technical workers is through better benefits packages, and that includes pension plans.
Then we've got another side of the coin, which is that government employees do jobs that most people wouldn't want to do. Want to compare how many LEOs/corrections officers/firemen are killed/injured on the job compared to how many stockbrokers or mortgage bankers? Nearly 400 NYC firemen were killed in just the 9/11 attacks -- and they rushed into the towers to help people.
Yes, there are people who do government work that's not particularly challenging or dangerous and that people in the private sector do for less pay and benies, but they are a relatively small percentage of government workers. Most government workers today have college educations and/or technical skill sets, and many work in dangerous situations.
Furthermore, some states exempt public employees from SS taxes in order to raise their pay, which, of course, means that these employees tend to have small SS benefits in addition to their pensions.
When I lived in Iowa, government work was nowhere nearly as desirable as it was in Tennessee because comparable positions in the private sector usually did pay more. Employers tended to provide better benefits than employers back home. I was earning right around the median income there in my role and was making as much as one of my friends, who was a first year teacher in TN with an MEd. I was FTE and had benefits.
When I moved back to TN, the same role paid barely half as much (two Fortune 500s) as it did in Iowa. In addition, I went from having insurance and vacation, to having none. I have worked multiple jobs in TN since college, and none of those jobs offered benefits of any kind.
Every day I woke up was stressful. I didn't know if I would lose my job because of the whim of the client contacting the contracting firm and telling me not to come back. I got bronchitis and pneumonia and was out $700 uninsured on a $12/hr salary. I got the same junk two weeks ago - and was out for $42 between two prescriptions and two office visits on more than double the prior salary. One of my cousins is a LEO and the buddy of mine is a teacher - neither had to worry about things like this.
While it's true that many government jobs are dangerous, so are private sector jobs like coal mining, electrical pole workers, commercial fishing, etc. Neither sector has a monopoly on dangerous work.
That's where government work becomes attractive. I don't know much about the economy of NY, but it's not uncommon, at least in the South, for private sector workers to have less job security, less salary, and fewer benefits than a government worker. In those cases, there really is no upside to working in the private sector.
Emmigrations wrote:
That's where government work becomes attractive. I don't know much about the economy of NY, but it's not uncommon, at least in the South, for private sector workers to have less job security, less salary, and fewer benefits than a government worker. In those cases, there really is no upside to working in the private sector.
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Linda wrote:
Quote:
"" Govt. workers do jobs others don't want to do, and are more dangerous? ""
I don't know what color the sky is in Linda's world, but she needs to get out of her cubicle more.. Yes there are a few dangerous govt. jobs, like police and firemen, but they are the exception. As Emmig. wrote, private sector jobs are actually more dangerous. Just look up the category. They are primarily private sector jobs, oil field workers, truck drivers, miners, and construction workers have a much higher death rate than the typical govt. bureaucrat. Govt' bureaucrats tend to work day shift, no weekends, and get every holiday known to mankind off paid. Not only that, but your typical govt. employee gets health care and other benefits. Many private sectors get none.
Emm. Interesting story on your dad and uncle. However, considering your youth, you might want to learn to be not quite so judgmental of your dad and mom. Trust me, life and priorities change when you get older. Many people in my generation don't believe in bankruptcy to get out of the bills they owe, and not shoving their problems on someone else. Its called personal responsibility.
Yeah, well, most government employees have earned, and continue to earn, less doing their jobs than people doing similar jobs in the private sector. The disparity between pay between a computer programmer with 10 years experience working in the public sector and working in the private sector is ginormous. The same with engineers, psychologists, and so many other technical positions. The only way that governments compete for highly skilled technical workers is through better benefits packages, and that includes pension plans.
Then we've got another side of the coin, which is that government employees do jobs that most people wouldn't want to do. Want to compare how many LEOs/corrections officers/firemen are killed/injured on the job compared to how many stockbrokers or mortgage bankers? Nearly 400 NYC firemen were killed in just the 9/11 attacks -- and they rushed into the towers to help people.
Yes, there are people who do government work that's not particularly challenging or dangerous and that people in the private sector do for less pay and benies, but they are a relatively small percentage of government workers. Most government workers today have college educations and/or technical skill sets, and many work in dangerous situations.
Furthermore, some states exempt public employees from SS taxes in order to raise their pay, which, of course, means that these employees tend to have small SS benefits in addition to their pensions.
Linda, my advice to you is to just move on and not bother responding to the latest in a never-ending series of diatribes against government employees posted on this and other fora by various people. There is a certain faction who believe that all government workers are overpaid lazy slackers with overly-generous benefits and undeserved pensions and nothing you write will ever change their minds. Stay silent as they pound their keyboards and express their jealousy and hatred of government employees (and all things government-related for that matter). Let them have their moment in the limelight as it were.
They say that living well is the best revenge. Thursday marks the first day of another month and another overly generous and undeserved pension payment hits my bank account. I shall smile to myself as I write down the deposit in my ledger, contemplate how I might spend all of that money, and think of all the bitter anti-government types going about their day trying to ascribe all their failings to us government retirees.
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