More than ever Senior Citizens need to make detailed plans, regarding their retirement. It wasn’t that way for previous generations. When our parents reached their
retirement age, they received their shiny new gold watch, and their secure pensions. Wa la they were retired. They didn’t have to be concerned with such things as, living longer than anyone ever expected them to. The inflated cost of health care. Or the fact that pensions are pretty much a thing of the past for the private sector.
The challenges that we face, which our parents didn’t have to be concerned with, and how to overcome these retirement problems, is the subject of this blog.
Congratulations boomers, somebody has discovered the elusive fountain of youth, and we are the recipients of this good fortune. This is also proof that every silver lining, has a cloud attached to it. Sure living longer has to be considered a good thing. We have more time to spend with our loved ones. We have more time to complete our bucket list. In my case, I’m able to spend more time on the golf course. If only I could play well enough to shoot my age.
Now about that cloud. The longer our retirement last, the more expensive it becomes. We may decide to budget our retirement spending, so we don’t run out of money before we kick the bucket. Another alternative is to go into retirement with a larger retirement fund. How about if we delay our retirement. That will work, since we won’t be dependent on our retirement savings for as long. Also if we delay drawing on our Social Security (SSI), until we become 70 years old, our SSI benefit will be at its maximum, after factoring in our earnings for our last 35 working years. For sure, just living longer represents a significant challenge.
The truth of the matter is that every time the rate of inflation goes up, so does the cost of health care. Also a basic fact is that the time in our lives that we become the most dependent on the health care system is during our retirement years. As we age we are more and more susceptible to illnesses which require long term care. By the way long term care is very expensive. Long term health care will devastate our retirement savings in short order. It is estimated that the average boomer couple is going to need $260,000.00 of out of the pocket money to cover the health care cost, that they are going to incur during their retirement.
What to do to get past this challenge. Once again working longer is an option. That way we will have a employment funded health care plan to fall back on. For a while at least. We will still need to obtain, sooner or later, a insurance plan which will cover these occurrences of long term care.
The lose of defined pension funds
It is true, defined pension funds are pretty much history in the private sector. That’s a shame to, because our parents counted on their pensions to make their retirement enjoyable. And their pensions did exactly that. All our parents had to do, to build a significant retirement fund was to show up for work, and do the job when then got their.
My oh my, how things have changed, and many of us didn’t even see the change coming. We are still expected to show up for work each day, and work our butts off when we get there. But that doesn’t mean that our retirement is going to be secure, because of our dedication. Not without a pension plan in force.
What have we got instead of a pension plan? Establishing a retirement savings plan has been pretty much been put in the control of us. Another thing that many of us didn’t see coming. Or maybe, like myself, I heard about it but I didn’t pay any attention.
So what took the place of pension funds? 401(K)s, and IRA funds. During the course of my research I found the origins of 401(K)s, and IRAs. Back in the 70’s some corporate executives figured out a way to pigeon hole away funds, on a tax-deferred basis. Hence 401(K), and IRA. Companies liked these individual retirement accounts, because they were less costly to fund and manage. The only thing is that the benefit of 401(K)s, and IRAs didn’t even come close to the benefit paid out in a pension fund. Consequently boomers have been taking it in the shorts ever since the transition from pension funds to individual retirement accounts.
Now what is the prime source for retirement funding? Social security turned out to be the prime source of retirement income, and to supplement SSI, we’ve got 401(K), and IRA accounts. My how the wheels of progress have turned. So how do we recover from this setback.
Well we probably can’t afford to retire at age 62. No we can’t do that because we have to maximize our SSI benefit. We are eligible to file for SSI at the age of 62. But if we file when we reach 62, our benefit will be the rock bottom minimum. If we wait until we reach 65, our benefit will increase. If we further postpone filing for SSI until we reach 70, we can draw the maximum that SSI has to offer.
Now of course that maximum SSI benefit is based on what we made while we were working for the past 35 years. In 2016 the max monthly benefit was $2,639. As I understand the SSI directives, in order to receive that benefit our average taxable income for the past 35 years has to be in the area of $118,500.00.
Based on that method of figuring what a person’s SSI benefit will be. The people who will receive the highest possible benefit, will be the people who least needs it. If I’m making $118,500, taxable income, I am going to be more likely prepared for retirement, than I would be if my taxable income is $50,000.
At any rate, working longer will allow us to receive a higher SSI benefit. It will also give us some additional time to build up the amount of money we have in our individual retirement accounts. If we are still paying on a mortgage, we may need the additional time to pay down our mortgage, so we can get into a position of positive equity. That will mean that we can qualify for a reverse mortgage. Many boomers are doing that to make their retirement comfortable.
Continuing to work, Does that represent a problem.
As you can imagine, the need for us boomers to continue working after the normal retirement age is common. Our ability to continue working is contingent on two factors. One is are we healthy enough to continue working? Likewise the answer to that question depends on the type of work we are involved in. The less physically demanding our occupation is, the more likely we will be able to continue working.
The other factor is, whether or not our employer is going to want us to continue working for him. If we are performing a task that requires a specific ability, training, or experience, our employer is more likely to want us to stick around. If however our job involves doing something that any millennial, or gen X er can do just as well as
we can, the younger person may win out. Without a doubt the best situation for us is to continue working for our present employer.
There are some things we can do to make our continued employment more attractive for our current employer. They are;
- Most important, we need to stay healthy, and mentally alert. To insure this, we need to stay physically fit. It is a proven fact that fit people are healthier people. Also it goes without saying that fit, healthy people are better employees.
- We need to stay on top of our current jobs. Not only does that include performing our work at the best of our ability, it means to stay current with any changes in technology.
- By doing this we can demonstrate our value as an employee, and showcase our talents.
- It doesn’t hurt to get additional education. That doesn’t mean that we necessarily have to go back to a college, or university. Very often just taking some key courses at a community college will be sufficient. The fact that we are willing to do this, will impress our employer. Also going back to school is a great way to exercise our brains.
Throughout our lives lives we boomers have learned about the advantage in having a Plan B. In this case plan B involves the alternative to not being able to continue working, after our retirement date, for our current employer. Even if we can’t continue working for our current employer, we still need to work, in some capacity, during our retirement years.
Not working at the same old job can actually be a blessing. Remember the saying, “a change can be as good as a rest”. Even if we have to get additional training, to qualify for a different type of employment, in the end that can turnout to be a good thing.
Please let me use myself as an example. My last employment before I retired, was in building maintenance. Because of the physical demand upon my tired body, I could no longer perform that type of work. It was time for Plan B.
I thought about doing some kind of work on line. Surely I should be able to handle that type of work. The first training I was exposed to was learning how to identify, and avoid a scam. I learned that if anyone stated online that they can show me how to make a boatload of money, in a short period of time, without any serious effort, that person was lying. I learned that succeeding online always requires training, which leads to expert knowledge. And dedication of time, and effort.
After trying some different stuff online, I ended up looking into Affiliate Marketing. I immediately found that I knew nothing about developing a Affiliate Marketing business on line. I looked at a couple of platforms online, that made the claim that they could teach me how to become a successful Affiliate Marketer. On platform turned out to be a scam, while the other was just a poor website.
I finally came across a website called “Wealthy Affiliate”. That is where I received the considerable training to become a Affiliate Marketer. And at a reasonable cost. If anyone is interested in looking at the training that I received online, here is link to my website.
As we travel down the road of after retirement employment, here is a saying that I keep in mind, “never say never”. Leave your options open when looking for a way to supplement your retirement income. A second thought is “don’t give up”. Just because we may swing and miss, we need to keep on swinging the bat.
That’s all I got for now. This post is way longer that most of the blogs that I post. In closing, I do want to hear from you if you have anything that you would like to add. Or if if you disagree with any of my thoughts. You can leave your comments below.