Retired with an antique car—1927 Flint Roadster
When I ask people why they retired, or if still working, when they will retire, I often hear one or two reasons. Almost no one tells a complex story. The particular experiences vary among people, but not the degree of complexity. Continue reading
Learning some new procedures from a young staff member at Meals on Wheels
For retirees volunteering usually beats work. Volunteers are not usually competing against co-workers, are not facing pressure to make economical use of time, are not usually micro-managed or given impossible deadlines and are not ordinarily forced to accommodate oversized workplace egos. Instead, volunteers can focus on the work experience itself. Continue reading
Last week we said that leaving work makes us temporarily smaller. Even if it is welcome and voluntary, leaving work involves loss. Retirees will serve themselves well if they think through the loss and review some foundations of life, thereby preparing for new ventures. Continue reading
The first job of retirement is to leave work behind—to let it go. Leaving it can’t be done well unless we recognize work’s importance in our lives. Work identifies us, especially men—but now increasingly for women. Continue reading
One of the best parts about being retired is that Monday is just another day of the week. Yet data suggest that many retirees continue to work in some manner.
Today’s Wall Street Journal includes a Smart Money Magazine highlighting two themes related to Later Living. Continue reading
The future looks a little less than bright for members of the younger generations. Research shows that the majority of Americans believe it is unlikely members of Generations X and Y will have a better life than their parents. At the same time, some members of these generations seem disillusioned with the current state of affairs and express pessimism that they will have a traditional retirement. Adding insult to injury are several popular myths that tend to blame these falling standard on the members of Generations X and Y.
The last post related how emergencies can put a retiree’s living standards at risk. Now the discussion turns to thinking and working through emergencies in ways that manage the risk appropriately.
If retirees pay regular living expenses from their investment portfolios, and then spend some of those investments to resolve emergencies, they put future withdrawals at risk. It’s different in middle life when living expenses are paid from salaries or wages, and savings are commonly used for emergencies.
Some Financial Approaches
One solution is to set aside a portion of a retirement portfolio for emergencies. A retiree with a $500,000 portfolio could set aside $100,000 for emergencies, using only $400,000 for ordinary living. If the withdrawal rate is 4 percent, the retiree would withdraw $16,000 annually for ordinary expenses. The $100,000 emergency fund would be left alone.
In addition, retirees have other options:
An idealized retirement story might sound like this: Saving for years, retiring from work, then taking planned withdrawals on through retirement. It sounds orderly and easy, yet many retirees know it is anything but.
Emergencies arise, not only in a retiree’s life, but also in the lives of loved ones. Ordinary life includes a leaky roof, a needy middle-aged son or daughter, or a troubled grandchild. If retirees have savings, even if they rely on them for monthly living, there is the ever-present urge to liquidate savings and put some money on the problem.
There is an ugly trick with the urge to be generous, and it’s subtle.
Last time we introduced a Census Bureau report that describes some characteristics of the oldest segment of our population—those 90 years old or older (90+). The group is small, mostly women, and mostly widowed. Still, about three-quarters of them live in households. Less than one quarter are institutionalized.
The median income in the group was $14,760 (2008 dollars)—that’s annual, per person, personal income. For men, it was $20,133, and for women, it was $13,580. Social Security has become nearly universal among this group: 92.3% of them receive it, and it is about 48%, or almost half, of the median personal income. The rest comes from investments, public assistance, other retirement income, or other sources.
During the same time, the median annual per person income in the US was about $27,500. The 90+ group has a per person income of about half the overall population.