In new and upcoming articles, I’ll be focusing on baby boomer news and discussing our retirement future. Boo. Hiss. I know… But consistent reminders to this fact is just the retirement reality check we need. Seriously… do we have enough money to live comfortably throughout our retirement? Or do we have our heads in the sand. Do you know how much money you have (or don’t have)? If you don’t have enough… how much do you need and where will you get it?
Most of us are not prepared. I’m one of them. But you see… it’s not because I didn’t want to, it was because I thought I didn’t make enough to invest. Oh, I saved a few bucks here and there… just enough to be eaten up by major car repairs, catastrophic home repairs or payment of back taxes. Just when I thought I was catching up with bills, another one would crop up. I lived my life paycheck-to-paycheck, just barely getting by. I talked myself into the fact that I needed the money now and thought if it was socked away in investments, what would I do if I needed cash for emergencies?
As a single parent, I put all my little bit of money into raising my kid – childcare, medical bills, food and clothing… the basics. Then I had to struggle to pay for my college education, which has been quadrupled because of interest. I can barely afford the high ticket payments. Noble of me to go to college? I used to think so, but noble is not the right word – I’d say it was a necessity.
Don’t get me wrong. I’m grateful for my college education. Without it, I wouldn’t have the management jobs I’ve had. Why? Because to get something called “decent” pay (above minimum wage), if you don’t have a degree you’re pretty much screwed. I love my degree. I just can’t pay for it. I long for a do-over. I’d pay as I go!
Wait…
That was my original plan. But, I could barely afford the text books, much less tuition! So, I took out loans and grants. BIG. HUGE. SIGH. But I’m not whining. Not really. Back then “they” were giving out money like water to everyone! So I hopped on the money train – totally unaware of my future demise.
Retirement reality check
In my older years, I finally have a decent income, and I’m socking away as much as I can.
I’m feeling anxious that it’s too late to invest enough money for retirement. I wonder… can I recover from such a severe shortfall of retirement income. What I do know is this… it will take more than just my job and a 401(k) to dig me out of this mess. I’ve forced myself to think outside-the-box and am digging up options that will bulk up my financial nest egg.
I knew I couldn’t be the only one feeling the suffocation of retirement beating down. You’re out there too, I know it. And… you’re probably afraid to admit to yourself that you might be screwed. Don’t be afraid or anxious – just do your research.
Let me get you started. Here are some facts I found. The numbers are pretty terrifying, but knowing that I’m not lone is oddly comforting.
How confident are you?
I’m going to outline some statistics I stumbled across during my personal research. I like stats because they give you a snapshot of what’s happening. I also hate stats because they are not really TRUE numbers, but rather a measurement of personal answers based on an estimation of what the respondents believe. So stats can be skewed. They are merely a measurement and analysis on a collection of answers. Just as we stereotype, categorize and label, science also must put numbers to theory.
Below are stats from two well known institutes; the Employee Benefit Research Institute and the Insured Retirement Institute.
In *2015 the Employee Benefit Research Institute (EBRI) conducted a Retirement Confidence Survey. 1,000 workers surveyed were aged 55 and older (who responded) and this is what they had to say about their retirement savings:
How large is their financial nest egg?
- 35% have less than $100,000 in retirement savings… of that;
- 60% have saved less than $25,000… of this
- 36% have less and $1,000 – or nothing at all ~ YIKES ~
Frightening. Even more frightening…? Take a look at the two following surveys outlining worker confidence about their impending retirement. Look. I’m not trying to get technical here, I’m no expert. I also pulled these numbers together from the EBRI report and I feel I should share what I learned. Is that cool? Yes? Okay, here you go.
Worker confidence in having enough money to live COMFORTABLY throughout their retirement years:
- 22% are VERY confident
- 36% are SOMEWHAT confident
- 17% are NOT confident
- 24% are NOT AT ALL confident
- 1% didn’t know or didn’t answer
- THAT’S 41% OF BOOMERS NOT CONFIDENT! YIKES!!
Retiree confidence in having enough money to live COMFORTABLY throughout their retirement years:
- 37% are VERY confident
- 33% are SOMEWHAT confident
- 14% are NOT confident
- 14% are NOT AT ALL confident
- 2% didn’t know or didn’t answer
- 28% OF CURRENT RETIRED FOLKS ARE NOT CONFIDENT – Scary since they’re already retired. I hope they have a backup plan.
Just having enough to live comfortably is only half the battle. We all want to pay the bills and maybe travel or whatever. But… included in these numbers, I wonder if these folks considered the high cost of increasing medical expenses, the possibilities of long term care, inflation… and (gasp) DEBT?
They did. And here are the findings:
BASIC EXPENSES
- 37% are VERY confident they will have enough money to take care of basic expenses during retirement
- 35% are SOMEWHAT confident they will have enough money to take care of basic expenses during retirement
- 28% (that’s what is left on the table unanswered). Does that mean they are NOT CONFIDENT at all? Scary.
MEDICAL EXPENSES
- 39% are VERY confident they will have enough money to take care of medical expenses during retirement
- 39% are SOMEWHAT confident they will have enough money to take care of basic expenses during retirement
- 22% (unanswered percentage – NOT CONFIDENT)?
LONG TERM CARE
- 25% are VERY confident they will have enough money to pay for long‐term care should they need it during your retirement
- 34% are SOMEWHAT confident they will have enough money to pay for long‐term care should they need it during your retirement
- 41% (a whopping percentage unanswered). 🙁
We actually faired a bit better with debt then I thought! That’s good!
PERCEPTION OF DEBT
- 67% felt debt was not a problem (cool)
- 22% felt it was a minor problem, and
- 9% are screwed and feel their debt is a major problem
- 2% left unanswered
These are great numbers to study – but don’t forget… these numbers are based on a small group of respondents and is only an effort to give us a “base line” of what going on. What’s “minor” for one person, could be another’s “major” problem. It’s all perspective.
Let’s take a look from a different angle and different source. Source: (Insured Retirement Institute’s latest report)
*Despite the lack of decent savings, 70% of all workers surveyed said they believed they were “doing a good job of preparing and saving for retirement”. 70% sounds pretty good, doesn’t it? But here’s the thing about stats… they can be deceiving, and some of those people have their heads deep, deep in the sand.
Why do I say this? Because the survey also stated that 44% (of that 70%) of workers surveyed DON’T have a retirement plan! Oh Boy. So, in my estimation I see some big trouble for some folks on the horizon. This tells me that the majority of these respondents think living on Social Security will be sufficient.
I hope this is not you! But, read on.
Let’s look at the overall totals from this survey. Source: (Insured Retirement Institute’s latest report)
- 59% are relying totally on Social Security income. Big mistake! This means you probably have saved little or nothing toward your retirement.
- 45% have no retirement plan at all. You already know that social security won’t support you. Question to ask yourself? What’s your backup plan?30% have postponed their retirement plans.
- Why? They can’t afford to retire at the dream age of 65. Many are waiting until their mid 70’s and above to retire because they just can’t afford it. If you’re part of this statistic, you need a plan. You have two choices. Either keep on working… and/or think about starting your own on-line business now as a way to build up your financial nest egg.
- 30% stopped contributing to retirement accounts.
- Again, why? Many boomers took their money and ran when the 2007 recession crisis hit – and many became leery investing their money in the stock market because of it. The market has improved, but has remained somewhat mushy for our tastes.
- Also, cost of living and day-to-day expenses were another reason why workers don’t save (or save more) for retirement. This would be MY category. But some respondents also said they could probably afford to save an additional $25/per week forward retirement.
- 44% of us have “baggage”. Or more bluntly put… DEBT! Whatever you do, DON’T take your social security at 65 to compensate for and pay down your debt. If you do, you’re locking in your social security at lower wages if you take this money before reaching 70 years of age. You’re screwing yourself out of approximately 25% of what you could be earning.
- Read my article on 6 Biggest Retirement Mistakes (here) and focus on Mistake #3… Applying Early for Social Security. That article explains it in more detail. In a nutshell, don’t do it if you can wait. Instead, tighten your belt and keep working a few more years.
Evidently, there is still a huge disconnect between perception and reality when it comes to how much we will need to spend in retirement and how best to fund that spending. What I know is this… a big portion of baby boomers are heading for the crapper. We need a plan.
So, just how much do we need?
Let’s pretend a moment. Remember above I mentioned that 35% have less than $100,000 in retirement savings? Here’s what that looks like. (Source) Money CNN Retirement Calculator. I love this calculator. It’s what I used below. Pretty groovy, ain’t it? 🙂
Mrs. Baby Boomer – You make $60,000/annual and have $100,000 socked away… let’s take a look at continuing to sock away 10% of your income towards savings . Respectable, yes? But it won’t get you where you need to be. You’re just a bit short of that “comfortable” lifestyle.
Social Security is taken into consideration, but other sources of income, (pensions and annuities) are not. These are pre-tax calculations.
Mrs. Baby Boomer – can you sock away an extra 9% and put away 19%? If you can, you should. That’s roughly $12,000 grand to put away each year and if you have an employer who matches a portion with a 401(k) it could be possible.
(NOTE) For these estimates, I picked the retirement age of 72 (my personal goal) because after age 70 you get the maximum benefit from your social security. If you’re in good health and/or have a long life expectancy, go ahead and wait. It’s worth it.
Social Security is taken into consideration, but other sources of income, (pensions and annuities) are not. These are pre-tax calculations.
These retirement figures can be attainable (IF you’ve saved $100,000 so far), and like I’ve mentioned… don’t forget about inflation (cost of living at roughly 2.5% per year), high medical bills, long term care and any debt you might have.
So, basically. I’m. Kinda. SCREWED. I don’t have any where near $100,000 saved. I mean, I’ll be fine. I’ll just have to live WELL UNDER MY MEANS and continue to live a frugal lifestyle – I’m used to living frugal, so I’m okay with that. 🙂
So, what happened? Are boomers truly to blame for their demise?
Why are us baby boomers at such a disadvantage, retiremently speaking? There are literally TONS of books and research about this very topic… and you know what? Everyone certainly has an opinion, but no one has a viable answer. Here’s my answer: I believe we are all a product of our environment and no one generation is responsible for that. We as humans are responsible for that. And think about this… this topic is huge right now because the boomer population is huge. All of the generations behind us will be facing the same issues – and will probably blame the generation ahead of them for mucking things up.
I was a military brat, so I remember the days of my dad talking about his future retirement and his big fat pension. He used to brag how much money he’d have. I was young. I had no idea what a pension was, but I wanted me one of those! But, times have changed. According to sources at AFL-CIO a total of 84,350 pension plans have vanished since 1985.
Declining pensions
And let’s not forget the vanishing of unions. That word built a middle class where there was only rich or dirt poor. The downturn of industry and globalization and the moving of more and more jobs to third world countries, leaves a lot of us with less options for unions here in the U.S. Don’t misread me… I’m neither for or against unions. They are what they are. Unions had a great purpose initially… they governed laws about employment, safety, discrimination, and overtime. Unions were also there to provide a fair and equitable grievance process free from favoritism and discrimination.
Unions are a strange animal. I’ll not speak of them often, because to me, this seems to be a process that should be for EVERYONE. I, for one, don’t understand why managers are allowed to work 60, 70 and upwards of 80 hours a week and only get paid for 40 hours. Who came up with that crappy idea? Something stinks here. Is equality only for the hourly worker? If yes, then everyone should be hourly. And if there were true equality, would we need unions? Or is it true that unions protect us from greedy corporations trying to suck free work out of people? Don’t get me started! 🙂 This is a subject for another time, if ever.
But mostly, don’t forget about the impact of technological advances and automation. New technologies will continue to reduce the number of manufacturing jobs across the entire world. As technology advances, problems faced by the current and future middle class will get even worse. Really, I’m not trying to be bleak… I’m jus-sayin’. Pay is decreasing, hours are being cut, positions are being eliminated and more jobs continue moving out of our country. The question? Will this trend continue? Probably.
So you see… It’s not just about our retirement… it’s bigger than that. This is a story of industry, globalization, and technology. You can’t blame one generation for that.
If you don’t have this book , get it. This is a decent read written by Pulitzer Prize-winning authors Donald L. Barlett and James W. Steele. It speaks to rise and fall of the American Dream. Those of us who fell for the bright shiny object of middle-classdom are now left standing there with our pants down. The younger boomer in me says… shame on us for putting all our eggs in one basket, especially when that basket is run by government and corporate America. I get it – unions, coupled with pensions, tried to level the playing field by building a middle class. Unions and pensions were/are the gap-closer between the “haves” and “have nots”. Good things come and go (subjective), but did anyone ever consider the downside when things broke down?
What this book doesn’t do? It provides no creative thoughtful answers. Probably because there are no real answers. Read it with a grain of salt.
Are we, as a society, betrayed… or are we a product of our own demise? You be the judge.
How did us boomers arrive at “No Money Town”? Simple as 1-2-3
- Retirement used to be a sturdy 3-sided triangle.
- Social Security
- Good ole fashioned pension, and
- Personal savings (that nest egg/tin can money). I still remember that old coffee can fondly. 🙂
On a different note… here’s what I know now.
- Retirement is no longer balanced like in the good old days.
- Pensions (the traditional pension) is a dead horse
- Now this new animal, the 401(k) is the “new” kid on the block in the 1980’s. You put in the bulk of the cash then hope the market stays strong so your money grows and rather than shrink.
- Social Security? Good luck. You can no longer live on this alone; especially if you have no “pension” and no savings.
What’s all this mean? It means our parents were practically the last man standing on getting a true pension. It also means that us boomers must be more proactive and take matters into our own hands when it comes to our financial stability.
So, what’s the plan?
Get money, keep money. Let’s discuss how to make some extra money.
Here’s what I see. There are tons of books that tell us how and why our lives are getting worse… but there is NOT A SINGLE BOOK that tells us WHAT TO DO to take our lives back. Want to know why? Because they are no easy answers. It’s like approaching the subject of gun control and trying to figure out how to stop runaway killing and murder in America. Everyone rally’s and wants change, but “how do you do that”?
So what about us and our retirement dilema? I think it’s pretty evident. We need to find a way to get money (more of it), and keep money (save for our retirement). Sounds easy, but it isn’t. If you read enough books and do enough research, you’ll find the same redundant answer time and time again. There is no easy fix at this point, but there are ways to lessen the pain.
- Maximize your contributions. Put away more of your income into a retirement or investment vehicle.
- Wait to cash in on Social Security. The issue here? It’s not a viable option for everyone due to unexpected job loss or disability that might prevent you from working.
- Keep on working. Yep. Delay your retirement and while you’re at it – increase your investment portfolio. Queasy about the stock market? Diversity and it’s okay to be conservative! We’re too old to put our money into aggressive stock plans. Also, put your nose to the grindstone and keep on keepin’ on; if you have debt, pay it down. Get rid of your credit card balances. TIGHTEN THAT BELT. Stop purchasing high ticket items you don’t need.
- Research work from home opportunities (I’ll have many upcoming articles on this topic). There are some good ones out there – and there are a ton of scams. Do your research. There are companies that actually have pretty good opportunities… check out FlexJobs. FlexJobs is an online service that lists telecommuting opportunities, flexible schedules, part-time and freelance work opportunities. Take a look and see what you think. I’m checking them out too.
- Start your own online blog or affiliate website and own your destiny. (If you’re younger and still working, I certainly suggest you keep your job). Starting an online business is NOT a get rich quick scam and it’s not for everyone. (It takes some hard work, dedication, time and patience.) 🙂 Now. If you’ve read my other blogs/articles you know after literally tons of time and months of research, I landed at Wealthy Affiliate – and for damn good reason. Read my review (here) of Wealthy Affiliate and find out why this is the place to be for building your own web-based business.
Retirement Reality. Check!
I know I probably overwhelmed you. I overwhelmed myself. My reality check feels pretty damn heavy, but… I have a better idea of what I need to do to improve my situation, and I hope I got you thinking as well.
When I lost my job a while back, it was then that made me determined to put processes in place to help protect my future. I’ll still keep on working – but I have a backup plan now. This website is my answer. Here, I get to help others who have always wanted their own business. I’m here for those who have always wanted to take control and own their own destiny.
I cater to those who have always had a passion, hobby or dream that needs fulfilled. I’m here, along with Wealthy Affiliate, to give you the education and support you need.
I’m also here to tell you that nothing is easy. It’s all hard and there are no true answers to combat the disease of no retirement income (or regular income for that matter).
This is OUR reality check boomers. Look that retirement in the eye, stand up and be confident. Take your life back.
What’s MY plan?
- I’ve started my own online website (I’m glad you found me) 🙂
- I plan to work until I’m 72 (barring any health issues)
- I have a plan to put away 15% of income into a 401(k) (my current company has an awesome match)
- I’ll continue to live frugal and cut expenses (next year I’m plan to cut the cord on cable and move to streaming 100%)
What’s YOUR plan? Please share it the comment section. We’d love to hear what you have planned. Tell us… how will you build your financial nest egg?
Until next time…
*(Source): Employee Benefit Research Institute & Greenwalk & Associates; 1993 – 2015 Retirement Confidence Survey.
** (Source): Insured Retired Institute (click here) to download their reports & fact sheets.