7 Reasons You May Never Retire

If you ran out of money at age 80 what would you do? Sobering but true, below are only 7 reasons you may never retire. These items should alarm you but it won’t. That’s because unless you study this stuff, and I do, you won’t see the problem or what it means to you.

I’m not a doomsday sayer. I’m just a guy watching this story unfold, and watch it get bigger. I do like the image of politicians, “kicking the can down the road.” But, really, aren’t we all kicking it down the road?

So, listen up, here’s the list of 7.

1) 10,000 Americans reach age 65 every day.
2) Companies offering Pensions has dropped from 112,000 to 23,000
3) 45% of workers cannot access employer-sponsored 401k or pensions.
4) Medicare and Social Security will run out of money by 2028 and 2034.
5) $300 Trillion dollars are owed for unfunded public pensions
6) Americans don’t save, in fact, Americans have a negative savings rate.
7) Politicians have too many competing interests, so they kick the can.

The earlier one starts to save, the easier it is to accumulate sufficient wealth at retirement. The corollary to this is that the longer a country (or an individual) waits to address these issues, the fewer options there will be for solutions, and the options that remain will become more and more difficult to successfully implement (source noted below).

The authors of the article I quote grade our current 401k system as a letter grade of “D+.” I’m not sure what the plus sign means, but I can tell you many individuals are not prepared to retire because so few have pensions (that’s what your Grandpa or Grandma had), and those with a 401k have put too little in it.

Work for a City or other governmental unit?

There is a combined $300 Trillion in unfunded liabilities for employees of these places of work. And, these employees are going to look for their retirement check and receive something like what Detroit retirees received, which was pennies on the dollar.

Your parents and grandparents retired with a pension. They received a check each month for as long as they lived, that, plus social security, made a very comfortable retirement for many people. With the list of 7, you can hopefully see you’re unlikely to retire the way you might be thinking.

You can save now, try closing your Amazon account. Or, find any other way to save. Whether you’re by yourself or at a company or government, the time to do something is now. Make saving and asking questions to protect retirement important to you. After all, I have a friend who says;

“What gets attention, gets done.”

I love these conversations, either to help you as an individual, or your employer. I am happy to help or steer you to better resources.

Building a Strong Retirement Program: One for the AGES, Benefits Quarterly, International Society of Certified Employee Benefit Specialists, Brookfield, Wisconsin; www.iscebs.org.

SSI – Claiming age 62 or later, What Does It Cost You?

Maybe a minute now will give you an 8% return per year in retirement?

Life and Economics are full of choices. Here’s one, “when should you claim Social Security?” As early as age 62, or as late as age 70? The research article reviewed here has many detailed tips but here are the basics.

The optimal claiming decision in the research “minimizes the risk that the individual will exhaust his or her retirement savings and be forced at some point to limit consumption to what is provided by Social Security.”

When to Claim?

  1. Claiming late can add as much as 10 years to the life of the retirement
    nest egg. (Meyer and Reichenstein, 2012)
  2. Claiming early (age 62) was optimal for those with low incomes and retirement savings of less than $300,000.
  3. Claiming later, or delaying the start of Social Security benefits, was better for wealthier households with retirement savings greater than $700,000.

Basic Research Assumptions:

Assumed the Maximum Social Security Income possible, retiree paid into the system for 35 years, has a life expectancy with a 50% chance for men to obtain age 85, and age 88 for women and income earnings before retirement (2016) was the maximum of $118,500. Plus, savings at retirement was between a $100,000 and $3,000,000; the 90th percentile was reported as $718,000. In case you’re wondering this range represents 95% of Americans with retirement savings. It does not include those with pensions or those without savings at all.

Monthly Income Assumed To Be:

In this study, monthly income works out to be the amount social security pays you plus equal payments from your retirement savings over your expected lifetime. There’s no negative spending available in retirement.

Let’s Try a Scenario:

Let’s use a made-up scenario. If you’re married, and you and your spouse claim SS at age 62 and you earned the average household income of $70,000 your SSI should be about $3500/month combined, plus $1,700 from savings. That means you would live on $5,200/month for the remainder of your life and you would expect your savings to last to age 85 for men, and age 88 for women. If returns are better than 4% over all and inflation remains at under 3% then your retirement savings will provide income beyond Social Security beyond the average age of death for men 85, women 88.

This assumes you have at retirement $500,000 in retirement, and you take 1/25th each year, the math looks like this ($500,000/25 years / 12 months = $1700/ month).

Don’t know How SSI works?

Social Security Basics, The dollar amount of the retirement benefit available from Social Security is a function of career earning history and the age at which benefits are claimed. The current full retirement age is 66 ($2,639/month) and benefits may be claimed as early as age 62 ($2,102). A benefit reduction is assessed in relation to the full retirement age amount for each month that benefits are claimed prior to attainment of age 66.

Deferred claiming credits increase the benefit for each month that claiming occurs after age 66. An individual claiming at the earliest possible time (age 62) will receive an annual benefit that is 25 percent lower than the full retirement age (66) amount. Claiming at age 70 ($3,576) when the deferred credit stops accruing results in a benefit increase of 32 percent. The authors show how this represents an 8% return for waiting from age 62 to 70 for married couples.

Married individuals are eligible for the greater of the spousal benefit or the
benefit attributable to their own career earnings. Upon the death of a spouse, a married individual is entitled to the entire benefit earned by the spouse, if it is higher. Delayed claiming is therefore equivalent to purchasing a deferred joint and survivor life annuity, with the higher deferred benefit purchased by relinquishing near-term benefits.

Reference the Research here:

Much of the reference for this post comes from this research article, “Does the Benefit of Deferring Social Security Offset the Opportunity Cost to Do So?” by Michael J. Alderson, Ph.D.; and Brian L. Betker, Ph.D., Journal of Financial Planning, September 2017; This article found in the 2018 ISCEBS Fellowship Study Materials, here.

Annuities, also labeled personal pension, longevity insurance, or retirement risk transfer, should be considered in specific circumstances to guarantee income. They also propose other techniques to preserve assets for the remainder of life. The research is detailed, but it comes up short describing more about the value of annuities to protect from living beyond average age. I’ll see if I can find an article on that topic.

As a Benefits Specialist, I follow retirement topics in order to help you with choices you have while you’re planning for retirement or are in retirement.

NEW – AHP, Catholic Business Owners Healthcare Relief

Catholic Business Owners

The NEW AHP regulations created to fit President Trump’s Executive Order make it possible to create a Catholic Buying Trust. This provides owners a way to control what they pay for in healthcare.

This is the biggest news in benefits since ERISA. Small business owners can keep their firmly held beliefs (respect for all Human life), follow their conscience, offer the Dignity of the Human Person in their Healthcare plan, and own the ability to choose how to lower cost. Perfect! Continue reading “NEW – AHP, Catholic Business Owners Healthcare Relief”

Trump’s Talk; A Message Unemployed Students Should Have Heard

What College Is

This short video is worth watching and passing onto others, especially students.

He’s speaking to students and his  message is timeless. It’s a simple, but important message about the opportunity to do something great, to find careers they love that make them economically viable, that requires hard work, and a never quit attitude.

This current generation never heard these words, or if they had, we wouldn’t have so many unemployed college students. He states the truth about finding what you love, but doing so in a way that makes you economically viable. In only a few minutes, he talks about never quiting, he talks about smart, great people who did quit. The one’s who should have seen dreams come true, but had quit. President Trump is real, he’s not the orator one might want, but his message is heart felt and real.

I was glad I found this today.

What College Is Not

I like Trump’s talk because it is 180 degrees opposite the messages this latest generation has received from their advisors. They listened to teachers, pop-culture, and others who said, follow your dreams. Trump says, find a career your passionate about, and is economically viable, and don’t quit!

The alternative message students have been getting in the last generation results in this pathetic commentary and excuse making. It’s not my fault. That sounds like, I quit. This article quote, and the article, in Forbes sounds like a student who is lost. The author in explaining his position provides excuses for students. He argues on behalf of the students who made bad choices by saying, “Again, they did nothing wrong.”

No, I suppose they did nothing wrong, like sheep, they didn’t think at all about what going to college meant, going to college is part of getting a job, period.

Excuse Making Never Leads To Improvement

The first rule of LEAN manufacturing is to get to the truth in order to make improvements to get better. Excuse making in this article means the next generation of students will be as dumb (intensity intended) as this generation.

“The education system encouraged them to do so and their parents likely followed along. Upon graduating they realized that this economic promise didn’t come to fruition so easily. Again, they did nothing wrong. The problem is in theframework and in the way our economic model incentivizes people.” Forbes, requotes Quora, January 8th, 2018  https://www.forbes.com/sites/quora/2018/01/08/why-are-so-many-college-graduates-unemployed/#40239e837fef

The person who wrote this, and Forbes who promoted it, are promoting more stupid students, this is crazy. Forbes should be promoting the Presidents talk, but they won’t. This article perpetuates stupid. It gives students more excuses, they will have learned nothing from this current in debt generation. LEAN would say, they will repeat the same poor college choices.

Education System Is To Blame

A simple root-cause-analysis points to the truth that the entire college message is owned by Universities who desire that all people become its subjects.

Someone needs to tell the truth about college education and the institutions promoting college education. Education is a system and it encourages its own survival over the survival, and life, of the students.

Colleges own and control both the message about college, and living life in general (atheism is promoted by colleges, that’s by design).

Class-Action

For parents and students, maybe a class-action lawsuit asking that colleges waive all debt if their graduates are unemployable. Just a thought. After all, colleges are the smart people, they’re the ones who teach economics, they knew that degrees they were charging hundreds of thousands of dollars for were useless. That little fact didn’t stop them from charging and promoting their degrees.

Compare Trump’s Message To the Forbes Article

Look at the Forbes article, compare that message to the Trump video and his message. Tell me which one promotes the best quality of life for students? Which one is honest with students, which one will help students be happy in a lifetime? The message of hard work, don’t quit, pick a degree field that makes you economically viable should be taught in every grade from middle school on up.

Thank you, President Trump, for speaking the truth, hopefully, teachers, universities, students and parents will pick up on the message.

Don’t forget, not everyone should go to college, now that’s a shocker! Yes, other countries understand that vocations are just as valuable, as degreed people. America needs more promotion of vocational training for skilled workers.

Sign-up Below

Be the first to sign up below, I’m sure there’s an attorney who would take your case, I keep hearing about hundreds of thousands of dollars in debt for students and parents, maybe this way you can get money back, and save the next generation from the same pitfall, how else will we learn? Forbes won’t tell students about old fashion values, neither will teachers or Universities.

Who Leads You To Christ?

Friends

For over 10 years, Don and I have laughed our way closer to Jesus.

We can start off by reading scripture, and before we know it, we are poking fun at each other about how unworthy we are to have Jesus love us. Then we begin to laugh. I want to believe Jesus is laughing as well, not with us, but
at the two goofballs calling themselves good Catholic boys.

Leading Each Other to Christ

Don leads me closer to Christ. I have had people who I thought were my friends in the past who did not practice their faith. As I moved closer to Christ, those people pushed back from our friendship. Maybe I made them feel uncomfortable, or guilty. While I did not push my new found spirituality on them, I began to change. I did not want to spend as much time with these old friends since I found friends like Don.

Real Life

We could talk about our life and our journey with Christ. Where we turned away from Christ, and how we knew we had to find our way back to His path. Of course within this mix were our careers, our problems with our careers, and our families. Real life.

Laugh at This Life

My wife Patrice knows that when I tell her Don and I are having lunch or a beer after work, that I’m in good company and that I’ll come through the door with a big fat smile on my mug because Don makes me laugh at myself and at life.

Don is the call I will always take when my “do not disturb” feature is on. Don is the one who will volunteer to drive hours with me to an appointment just so we can spend time together.

Find Your Friend In Christ

My advice to anyone who cares to hear it, go find a Don of your own, someone who will lead you to heaven, and help keep you away from the other place.

Dave T.