Sunday, December 8, 2019

Affordable Retirement Is A Glaring Issue For Many People

Retiring Poor Can Be A Problem!
Retirement has a way of sneaking up on people. Finding a gentle way to retire and afford a comfortable lifestyle has become a pressing issue for the baby boomers that have postponed planning. It will also become a much bigger problem for our government down the road. Many Americans have cranked up their efforts to find answers as to how to handle the challenges they will face in retirement. This article is not a how-to piece or thrown out to state the obvious but a reminder of the stark reality we face and so many of us try to ignore. The only way to avoid growing older is to die and many people prefer when given the choice not to exercise this option.

While glaring can imply painful, or obtrusive in this case it is about how when faced with the economics of retirement many people find something is conspicuously wrong. Those retirees that have accumulated some savings need to understand the day when they could supplement their income by simply living off the interest on their savings is gone. Another problem is a great number of people have little in the way of savings. It is difficult enough to save but by the time they are hit up by life's problems such as helping out their children many people find it almost impossible. Unless they are fortunate enough to have made the decision to have some money placed in a lock-box before taking their paycheck it often simply gets spent.

We Simply Assume Our Savings Will Survive!
This leads us to another myth and that is a person can get rich or build a substantial sum of money or other assets by becoming an investor. Trying to become an investor is far easier said than done. Investing today requires caution. It usually involves a harsh learning curve and leaves those taking the journey vulnerable to losing their capital. This is especially true in the current complex economic environment where the temptation to increase profits through leverage runs rampant. Whether a person pursues a strategy of buy and hold or trades constantly even a diversified portfolio can fail to protect their nest-egg.

The rising cost of living is another issue. Even if a person is fortunate enough to own their home it is becoming more expensive to maintain. Property taxes, utilities, and replacing major components such as a roof or having a HAVC (heating, ventilating, and air conditioning) system have all surged in recent years as wages and materials push ever skyward. Those renting a place to live are witnessing the same thing. Rents are going up even in our low interest rate environment because the cost of services, fees, insurance, and things like real estate taxes continue upward almost in lockstep. This one of the main reasons some adventurous older Americans have moved to foreign counties after they retire. The global inequality gap is one of the big factors allowing Americans to live well on social security in ex-pat communities throughout the world.

Saving Are Often Sorely Lacking click to enlarge
While retirement is something more people should discuss with family and friends it is a subject we shy away from because of financial shame or privacy concerns. A couple of factors that may help a person decide whether it is time to retire and ride into the sunset are their job situation and social security. Sometimes a job simply vanishes, this can be an unwanted surprise. Another is the Social Security lottery. By this I mean, will it be enough and do they feel lucky. If a person expects to enjoy a long retirement, then waiting often makes sense because by working longer they securing a larger monthly. Today with the system working its way towards bankruptcy the government has to cringe each time a person not knowing if they will live to 65 or 105 decides to take Social Security early.

Another problem we cannot avoid is healthcare. Anyone that has had even a simple test done recently knows prices are soaring. As people grow older many see their health deteriorate. This results in more visits to doctors, dentists, and specialists of all types. Most people are under the impression that once they turn 65 and they go onto Medicare it is free. The idea that the government will pick up and pay for your healthcare and that expense will vanish from your budget turns out to be a big disappointment for most Americans. The fact is that care in a nursing home is expensive. Staying there for a long time is a situation that can drive many retirees into bankruptcy or an early grave.

Not How To Spend Time On A Cruise Ship
 Ironically, the older Americans who find it easiest to keep working tend to be the healthy, well-educated, and highly skilled people who enjoy their jobs These are the people that tend not to need the money. Other older Americans with less options and few good job choices, often just decide to retire and live frugally off Social Security and savings. Live below your means and try to stay out of debt is the path forward for these retirees. Others choose to or allow themselves to stray from this pathway and go out in an orgy of debt throwing themselves on the mercy of society and at the feet of the government.

This means the only way some retirees would be able to spend part of their golden years on a cruise ship would be if they got a job on one. Sadly, the cruise industry tends to work its employees like dogs and most older folks would never qualify. On top of no longer qualifying for many types of work comes the issues of adjusting to new social circumstances which may be out of your control. One thing is abundantly clear and that is most people would rather face these trials and tribulations while sitting on a big pile of cash.

Not everyone retires happy. Instead, the ugly reality for those finding they are financially between a rock and a hard place life can rapidly become very difficult. This is why any government policies that discourage savings have disaster written all over them. All the factors above, are and will, continue to nibble away at our ability to shape a comfortable lifestyle during what we have been told should be our "Golden Years." These years of life are supposed to be filled with love and joy, a time to relax and smell the roses. This is easier to do when you have planned and positioned yourself so money problems do not haunt your every step.

Footnote; A couple of posts relating to this subject can be found below. The first deals with the conflicts between the generations that are set to explode. The myth that funds have been set aside to provide for the social security payments and the medical needs of older Americans will soon be laid bare and the bill for such things is about to be laid at the feet of today's youth. The second explores the current sorry state of pension funds that so many people are depending upon.
https://Generational Conflict Is Posed To Dramatically Increase.html
http://Pensions Are A Financial Time Bomb.html


  1. enough to make a person damn angry.

  2. at 60 I was always interested in "financial advisers" strategy to retirement. I now know everything everyone said is BS. It seems the worst your advice the more you make. Plan of living with 1/4 of what you make at your top earning, be out of debt when you retire. Live a simple life

  3. I'm a 70 year old software developer. Nice home on a lake - all paid for. Have $500,000 in IRA's. But as the article states the ever increasing cost of living is threatening. Between property taxes, insurance, utilities: it costs me $1,600 a month to live in a paid for home. And all the things you bought when you were 50 - 55 begin to need replacement. Just think about buying a new car.

    The punishment for continuing to work: Both the Feds and MN tax our social security.

    I think retirement is a fantasy, ceated by 'financial advisers' to make money.