I wrote in our last retirement post about my father Leo’s decades of retirement that were secured by his pension from General Motors and his earned benefits from Social Security. As we approach our retirement, I see that for us, and for many of my friends in their 50s and 60s, retirement will be a very different experience.
My friends and I have diverse careers–including retail, publishing, pharmaceutical sales, finance, and marketing. But we are all sharing common experiences now in what traditionally have been the final ten or so years of careers: our job roles are changing, our work opportunities are shrinking, and many of us are working more for less pay. Some of us are even having to cover two jobs for the same pay we used to get for one job.
This change is hitting people at all economic levels. The breaking point for many was the 2008 recession from which millions of people never recovered. This was the case for Elizabeth White, profiled below by Paul Solman for The PBS Newshour when she self-published her book, “Fifty-Five, Unemployed, and Faking Normal.” White once held a position with the World Bank, but after a mid-career investment in a retail business faltered, she found herself in dire financial straits.
As she writes in her book, “We grew up thinking that retirement meant Florida and golf, not that most of us really wanted that. It definitely did not mean living in our brother’s basement or in some modest one-bedroom rental. We never thought that in our fifties and sixties, we’d be scrimping and scraping or borrowing money from our adult children or eighty-four-year-old mother.”
My friends and I are more comfortable than most. It was reported in early 2017 that half of all Americans have nothing put away for retirement and 34 percent have no savings at all. Even those with substantial savings, however, worry that we are one health crisis away from having our savings wiped out. (This is one reason why we suggest long-term care insurance, which preserves the rest of your retirement money for other living expenses.)
It’s no wonder that a large segment of the population is feeling the stresses of what Solman calls “financial fragility.” In the face of rising health insurance costs, it is challenging to navigate the time before we can qualify for Medicare and Social Security. It’s hard enough to keep the bills paid and preserve the money already set aside for retirement, let alone save more.
Many of us won’t enjoy the security our parents did in their retirement. That change is a big reason that, unlike our parents, we won’t be able to simply retire, and stop working. Many of us will have to keep working in some way, reinventing ourselves in new roles to continue to generate income.
What changed? In the 1980s and 1990s, the American retirement template switched from employers providing pensions for most workers to workers having to assume responsibility for their own retirement planning. Our parents generation did not have to manage their own retirement preparation in the way that we have to do. This was a huge fundamental shift that created more instability, especially for those who experienced a major downturn in the stock market just before retiring.
There has always been a need for some people to develop second careers in retirement. Now, even more of us have no choice but to try to reinvent ourselves. Many of my friends are planning to become consultants in their golden years, or downsizing their homes to free money for income. Some are buying properties to produce rental income.
Many in my father’s generation sent their kids to college because they wanted us to be able to have an even more secure future than they did. They never imagined that we would be facing increasing uncertainty in our retirement years, and the need for late-career reinvention.
Suze Orman now recommends that people work until age 70, noting that if you start spending down your retirement funds in your 60s, it will be difficult to make your money last if you end up living into your 90s. A major question for much of the population is will you be healthy enough to work to age 70?
Paul Solman went back to visit Elizabeth White again, in late 2017. She was on a sounder financial footing. Elizabeth White learned from her experiences and wrote a book about them. She has given a TED Talk drawing attention to the financial plight of our generation. Like many of us, she has a ‘side hustle’ — or two— to keep the bills paid.
What about the generation coming after us? Our children are in their 20s and 30s and 40s. They are often well educated, bright people who are willing to work hard. But they are navigating in the “gig economy” and receiving an hourly wage for what used to be salaried career work. Their job security is no more certain than our job security.
The retirement of our parents’ generation, funded by pensions and post-retirement health coverage that replaced or supplemented Medicare, is truly a thing of the past. Like many of our friends, Jim and I plan to work in retirement. We are lucky because we find satisfaction in what we do, and because—as a sole-proprietor insurance specialist with a private practice—no one can fire Jim. We can work as long as we are willing and able to work. At the same time, we are ever cognizant of the changing retirement environment. We are taking care to plan as well as we can.
There are lots of questions. Will people who need to continue working find jobs? Will they be healthy enough to work? Will employers value their skills?
We will come back to these questions many times in future posts as we explore the changing landscape of retirement in America.
Below are a few links to explore:
Suze Orman now recommends working until 70:
This feature has several interesting links exploring employers and opportunities for older workers:
Here’s a link to Elizabeth White’s excellent book on Amazon: