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The prevailing line of thought among many retirement planners is that one's income generally increases with age, hitting a peak, then maybe a slight decline for a few years immediately before retirement. However, with the impact of the last recession, many workers were laid off from reasonably well-paying positions and still have not recovered nearly ten years on.
I've seen this play out frequently here in northeast Tennessee and southwest Virginia. Many mining and manufacturing workers were laid off in the previous recession. This area skews older than average, so many of those workers were in their 40s and 50s then. The older batch of those is nearing retirement today and I would say most haven't hit their previous salaries.
Many of these people were easily making $50,000 or more - while low by this forum's standards, is actually pretty good money here in Appalachia. My father was making in the mid $40k range and was up to the mid $50k range with overtime in manufacturing before being laid off. After the layoff, he got hired in at a call center, starting around between $30k-$35k, and is barely up to $40k now. Many are commuting much longer distances to work, so you also have that overhead.
It seems like these issues have gotten short shrift in the retirement press. What would your strategy be if you faced a long term, consistent income decline?
work longer .. or live in a mobile home or cost share with others like the golden girls . i mean you are asking others for answers to a question only you can answer . it is all about what you are willing to do .
I was in this situation. I worked for a company that had been having a wage freeze for four years but in the meantime the COL was raising at an outrageous rate in my city. My salary was not keeping up, I had reached the "wage ceiling," and was not allowed to transfer to a higher paying job within the company because I was needed badly in the one where I worked. No chance of earning even what I was earning elsewhere outside the company even at my low wage.
Then, I had to leave this job because of health issues. What I did was relocate to another city where I would be able to live on SS and a small pension.
Now I know You are referring to people still working but I wonder if for them, the answer would also be relocating to where they could find better paying jobs. I'm in no way saying it's an easy thing to do but people do it all the time.
While the ups and downs of one's income level may ultimately reduce one's projected retirement picture, in the long run, it may be like 'dollar-cost averaging in the stock market.'
As long as one continues to save and invest for retirement (albeit at a lower level), one will still be moving positively toward the constant, inevitability of retirement. Even at a sustained lower investment/savings level, an improving stock market could partly compensate for a declining income.
With retirement saving, the thing that gets people into trouble (particularly in their later years), is that they stop saving altogether and/or even withdraw funds from their retirement savings ... to get by today. Doing that permanently reduces one's retirement level and also eliminates the potential benefit accruing from a market recovery.
I was in this situation. I worked for a company that had been having a wage freeze for four years but in the meantime the COL was raising at an outrageous rate in my city. My salary was not keeping up, I had reached the "wage ceiling," and was not allowed to transfer to a higher paying job within the company because I was needed badly in the one where I worked. No chance of earning even what I was earning elsewhere outside the company even at my low wage.
Then, I had to leave this job because of health issues. What I did was relocate to another city where I would be able to live on SS and a small pension.
Now I know You are referring to people still working but I wonder if for them, the answer would also be relocating to where they could find better paying jobs. I'm in no way saying it's an easy thing to do but people do it all the time.
No it's not. Many are basically locked in for life here - ten years ago, many had small kids, and today, many have aging parents. Many simply don't have the skills to be employed in healthier areas.
Save and invest, live frugally, plan to work at something as long as possible. A traditional, full retirement may not be an option.
One's home and vehicle need to be paid off and in excellent condition. Alternatively, look into subsidized housing, renting a room or even an rv. I have done some preliminary research in the southwestern states and some rv parks have fairly inexpensive year round rental fees. A willingness to be flexible is key.
It is important to do all one can to stay healthy. There aren't any guarantees, but maintaining a healthy weight, plenty of exercise, etc may cut down on medical expenses and maintain the ability to work longer.
The sooner one realizes the situation, starts planning and thinking outside the box, the better.
One's home and vehicle need to be paid off and in excellent condition. Alternatively, look into subsidized housing, renting a room or even an rv..[/QUOTE
I did not mean to imply renting an rv in the above quote. Purchasing a used rv might be an option.
No it's not. Many are basically locked in for life here - ten years ago, many had small kids, and today, many have aging parents. Many simply don't have the skills to be employed in healthier areas.
I understand your question and it is playing out in many pockets in the country. Incomes for many have declined with a changing job market and the needed for a labor force that their skill set doesn't match up with. It is one thing to start out making 30k and over time progressing to 50k. It is entirely different going in the opposite direction. As you correctly note much retirement planning and advice assumes a peak income being reached in your low to mid 50's or later. For these folks peak earning are well in the rear view mirror and retirement is approaching. Not much thinking that I have seen on the topic and what folks should do. There is a discussion on there today and tomorrow is thrown in with folks who have been lower middle class or less all of their life.
I understand your question and it is playing out in many pockets in the country. Incomes for many have declined with a changing job market and the needed for a labor force that their skill set doesn't match up with. It is one thing to start out making 30k and over time progressing to 50k. It is entirely different going in the opposite direction. As you correctly note much retirement planning and advice assumes a peak income being reached in your low to mid 50's or later. For these folks peak earning are well in the rear view mirror and retirement is approaching. Not much thinking that I have seen on the topic and what folks should do. There is a discussion on there today and tomorrow is thrown in with folks who have been lower middle class or less all of their life.
One of dad's coworkers and fishing buddies is mid-50s. He was making a decent living until the plant shutdown in 2008. Several years later, a foreign drug outfit bought the plant and ran it for a couple of years, then that outfit folded. Pay was less than the original company and there were no benefits. His wife died unexpectedly in the last year or so, so whatever income she had is now gone.
The guy is now working the firearms counter at the southwest Virginia Cabela's. I can't imagine that paying much. Fortunately the kids are out of the house and he lives cheap (hunts and fishes a lot which helps with the grocery bills), but you have to wonder how many of these folks will make it, and why there is so little thought in the media about their plight.
I had this happened to my husband and me. What I made in the last few years were laughable because I worked mostly part time. I think you learn to make do, I really enjoyed my part time status. It eased me into retirement.
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