Early last year, a client who was a month away from retiring walked into Matthew Jackson’s office and asked him to manage his money. Then the client started pulling financial statements out of a folder and slid them across the desk.
“I’m excited for you,” Jackson recalled was his first reaction. “But let’s talk more about what you want to do with your money, rather than want you want to do for your money.”
The client “looked at me and then past me. In 4 or 5 seconds he said, ‘Matt I have no idea.’”
To prod others into weighing this critical question for themselves, Jackson wrote a book, “The Retirement Dreammaker: Master the Art of Retirement Abundance.”
And the dream maker is not Jackson – it’s you.
People facing impending retirement are about to hop on a wild ride that will take them from the emotional high of having the freedom to do whatever they like to an unfamiliar low: no job to give them purpose. Because of that, Jackson is on a mission to warn baby boomers they need to really prepare emotionally for retirement, just as they should prepare financially. (A financial planner turned financial coach, Jackson’s new book also includes a financial chapter.)
“The ultimate freedom is the freedom to follow your purpose,” he said in an interview.
Jackson’s goal in trying to help people who don’t prepare emotionally is not simple but boils down to this: he does not “pump people up – rah-rah.” He prefers to warn of the six retirement pitfalls: …Learn More
Tami Fincher dives into projects head first. Two years into a 5-year plan to retire early in Central America, her short list – so far – is Boca Chica and El Valle de Antón, in Panama, and Guanacaste Province, in northern Costa Rica.
She and husband Stephen Fincher are making their plans to join the growing number of Americans-turned-expatriate retirees. In 2016, more than 603,200 Social Security checks were mailed to retirees, their spouses and widows living abroad. They are moving as much for the adventure as for the lower cost many countries offer.
An exotic retirement isn’t for everyone. Even if they could save on living costs, people who’ve never been keen on international travel might prefer to remain close to home and grandchildren. But the baby boomer wave is pushing up the number of U.S. retirees living abroad – by 11 percent in five years, according to the U.S. Social Security Administration, which tracks its pension checks sent overseas. Ex-pat’s favorite countries include Japan, Mexico, France, Thailand, and Colombia. (More are listed on the next page.)
To assess the pros and cons of Costa Rica vs. Panama, the Finchers made their first exploratory trips, to Costa Rica last June for their 20th anniversary and to Panama over the New Year’s holiday. If Tami, age 53, has her way, they’ll retire in about three years and sell their Houston home to relocate. …Learn More
This milestone must be noted: about half of baby boomers are now over 62 and can claim their Social Security benefits.
The year 1955 was the midpoint for the post-World War II population explosion – and those boomers born in 1955 will turn 63 sometime this year.
This marks the time to take stock of differences between the old boomers (born 1946-1955) and young boomers (1956-1964). Of course, Social Security eligibility doesn’t automatically mean retirement, and boomers of all ages are retiring later than their parents. Today, only around a third of 62-year-olds file immediately for Social Security benefits – it was closer to half for the oldest boomers. The downward trend should continue.
But a yawning difference between the two boomer groups is their vastly different stages of life. Those born in the late 1950s and early 1960s are still working full-time. Entrenched in work, they have several years to go to retirement – their big challenge is having enough time to prepare financially.
The oldest boomers, now in their late 60s and early 70s, are already retired. They can take great joy in their grandchildren, which most have. That’s a comforting antidote to sobering thoughts like whether my financial affairs are in order (just in case), who will take care of me when I no longer can, and how do I want to spend my final years or days?
The good news is that baby boomers are healthier than any previous generation and will live longer. Old and young boomers still have lots to enjoy.Learn More
Around age 58, people start getting happier. That’s what the research shows, and this blogger can attest to it.
In the new video displayed below, Rocio Calvo, a Boston College professor of social work, offers up theories for the happiness phenomenon – financial security is one. She also has some particularly striking “happiness statistics” on Hispanics and immigrants.
All over Boston College, academics are studying aging issues, which complement the financial and economic research turned out by the Center for Retirement Research, which sponsors this blog. Calvo’s video is part of a series of videos by the multidisciplinary Institute on Aging at Boston College.
It’s interesting viewing for older people and their families, with apologies for the regression table (the significance of which quickly becomes clear if you stick with it).
Hilarious examples of “instant garbage” are offered up in this Portlandia clip by the show’s characters, Bryce Shivers and Lisa Eversman (played by Fred Armisen and Carrie Brownstein).
The price point for an unwanted consumer product that becomes instant garbage is $4.99. “We found the exact point between price and hassle that guarantees you won’t bother returning” the product, Eversman explains in the video below.
Is the following theory a stretch? There seems to be a direct line between Americans’ relentless buying of stuff we do not need and our inadequate attempts at saving money.
Try walking into a craft superstore or browsing Target’s $1 shelf and suddenly imagining the stuff all piled up at its ultimate destination, the local landfill.
Then walk back out and save the money for retirement.
Behavioral economist Richard Thaler, winner of the 2017 Nobel Prize for economics, regards his field’s greatest contribution as showing that people are more likely to save if the saving happens automatically.
“I’m all for empowerment and education, but the empirical evidence is that it doesn’t work,” he said in a 2015 Wall Street Journal interview. “That’s why I say make it easy.”
To make saving for retirement easier, employers have increasingly turned to automated 401(k)s. Automation has taken two basic forms. The first, automatically enrolling each employee, is pervasive and has had notable success in increasing participation in retirement savings plans. The second form, automatically increasing the amount employees save – a concept originated by Thaler and economist Shlomo Benartzi – is catching on. It’s hoped that the second will correct a problem created by the first.
Last year, 45 percent of Vanguard’s client base used auto-enrollment plans, according to its “How America Saves 2017” report. Historically, employees were asked to enroll in their employer’s 401(k). Today, more employers are – as Thaler would say – “nudging” workers by automatic enrolling them, usually when they are hired. Although they then have the freedom to opt out, inertia tends to keep them in the plans.
Participation in all types of 401(k)s has roughly increased in lock-step with the spread of auto-enrollment. Last year, 79 percent of workers participated in Vanguard-administered plans, up from 68 percent a decade ago, when a new federal pension law made auto-enrollment more appealing to employers.
The irony, however, is that while auto-enrollment encourages more people to save, Vanguard partly blamed a 2016 drop in employee contributions on their popularity. The average employee contribution in all types of 401(k) plans declined from 6.9 percent in 2015 of pay to 6.2 last year, well below the 7.3 percent rate prior to the Great Recession, according to Vanguard. … Learn More
Older workers face fewer headwinds and better working conditions than their younger co-workers, according to the first analysis of a new survey of 3,900 blue- and white-collar workers between ages 25 and 71.
The U.S. workplace overall is “very physically and emotionally taxing,” according to the study – that’s why they call it “work.” Two out of three workers of all ages reported in the 2015 survey that they are often required to move at high speeds under tight deadlines, feeling intense pressure to accomplish too much in too little time.
But after people pass the age of 50, things get a little easier. Older workers report having more flexible work schedules, more predictable hours, fewer scheduling changes, less stress, and greater ease in arranging time off to take care of personal matters, the analysis found.
Their workplace situation isn’t all rosy. Larger shares of older workers feel under-employed or have unsupportive bosses – this held true whether they had college degrees or not.
The analysis of the new American Working Conditions Survey (AWCS), by researchers led by Nicole Maestas at Harvard Medical School and recently published in an e-book, is an introduction to what will inevitably be more research using this new, publicly available data. The AWCS might, for example, provide new fodder for studying the factors that influence older Americans to continue working or to retire.
The new study found some striking differences between older and younger workers – and among different groups of older workers: …Learn More