Posts Tagged "retirement"
June 15, 2017
Pre-Retirement Financial Review is a Must
My husband has taught high school biology for 30 years in Boston and works hard for his students. But he’s nearly 64 and it’s time to think about retiring.
Can we afford it? When we retire, will we eventually run through our savings? Is retirement scary – or what?
Questions like these are also probably haunting millions of baby boomers in the middle of the night. One out of three boomers in a recent Transamerica survey said they are not confident they will have enough income to retire “comfortably” and another third concede that they are only “somewhat confident.”
To find the answer for ourselves, my husband and I hired a financial adviser. It was the best thing we could’ve done. The point of this blog is to encourage other boomers to take stock of their imminent retirement, whether it’s around the corner or still a decade away.
We’d been kicking around retirement scenarios inside our marriage bubble. My husband has not fixed a retirement date in his head but is talking about the next one to three years. To be conservative, we posed this simple question to our adviser: can Garret retire in 2018?
Her answer was in the half-inch packet, which she delivered to our front door. We sat around our dining room table as she walked us through her quantitative analysis of our financial profile.
Many financial advisers like to talk about how they’ll manage a baby boomer client’s investments. In truth, simple index funds do the trick for us. Our adviser, Wendy Weiss of Weiss Financial Advisors in Cambridge, Mass., used to be an investment adviser for large financial firms, but spent very little time on our investments. The most important thing for baby boomers who, like us, are not wealthy is knowing how much income will come in the door every single month to pay the bills in retirement.
“It’s more important for my clients to find out how to use that 401(k) in retirement than it is for me to try to manage the investments for you,” she said. …Learn More
June 13, 2017
Social Security’s Legacy to Ex-Wives, Kids
Many women are fuzzy on how Social Security benefits for widows work and even more unclear about the program’s spousal benefits.
I know two of these women. Their situations nicely illustrate how this federal program promotes the well-being of older women and families.
One is my divorced aunt. She was surprised to learn, after my uncle died a few years ago, that her widow’s – or survivor’s – benefit, based on his decades of work as a housing developer, would be double the spousal benefit she’d received while he was alive. Divorced spouses are eligible for the same spousal and survivor’s benefits as still-married spouses, though only if the marriage lasted more than 10 years.
For a more complex experience involving Social Security’s child, spousal and survivor benefits, consider a friend of mine, who married an older man with whom she adopted two baby girls from China.
The couple divorced after 12 years, but John remained a loving older father. He showered his little girls with attention and, as they grew up, spoiled them with shopping excursions to the mall. But one of his best gifts came after he retired: Social Security benefits that provided financial security to his daughters and their mother.
John, like many older men, had difficulty finding steady work, but earlier in his career, he’d been a well-paid executive. On the strength of this earnings history, John signed up for his Social Security pension when he reached his full retirement age. His initial benefit was $2,209. In addition to this benefit, $828 per month went to each of his daughters, who were in elementary and middle school at the time.
Under Social Security’s rules, benefits go to children under age 16 when a parent is collecting a Social Security pension. This continues until the child reaches age 18 (or 19, if they’re still in high school). Each child’s benefit is precisely half of the parent’s pension, but John’s daughters received less than half because they bumped up against Social Security’s family maximum.
When John died a year ago, at age 73, his Social Security legacy continued. …Learn More
June 6, 2017
Slightly More Seniors Living With Family
In the 19th and early 20th centuries, it was not unusual for older Americans to live with their adult children and grandchildren. But more seniors could afford to live on their own after passage of Social Security and then Medicare.
By the 1990s, fewer than 10 percent of people over age 65 lived with relatives, usually offspring. This number has crept back up to around 12 percent in recent years, according to an analysis by the Center for Retirement Research.
Economic disadvantage is the common thread among older people living in these multigenerational households, a new study finds. This held true whether the seniors moved in with their adult children and grandchildren or the offspring moved into their parents’ homes.
“Experiencing economic distress increased the odds of a senior forming a multigenerational household,” concluded researchers from Arizona State University and George Mason University.
June 1, 2017
At 62, You’re a ‘Senior’ at National Parks
No better time than retirement to take in our national parks at the leisurely pace they deserve.
At age 62, Americans can purchase a $10 park pass that is a life-time ticket to the magnificence of Glacier National Park, bison calves grazing with their mothers at Yellowstone, or peregrine falcons nesting at Acadia. But get the pass soon, though, because AARP reports the price will increase to $80.
Many people don’t learn the pass exists until they visit a national park where a ranger might or might not offer one. The passes, which are issued by the National Park Service, include free access to the holder, a spouse and others riding in their car. The pass sometimes includes discounts of 50 percent at camping facilities.
It’s possible to purchase the life passes online for $20. The Park Service advises travelers planning a trip to contact a park in advance to make sure the $10 passes are available for purchase at that specific location.
While it’s generally not wise to claim your Social Security at 62, it’d be silly not to take advantage of this federal benefit.Learn More
May 30, 2017
Young Workers’ Hopes Confront Reality
As the post-recession job market continues to improve, so has young adults’ optimism about their future opportunities, a Federal Reserve Board survey shows.
What’s poignant about this youthful optimism is that a changing labor market is making it increasingly difficult for young adults to get their careers off to the right start.
Surely, they sense this. Nearly two-thirds of adults between ages 18 and 30 told the Federal Reserve in a 2015 survey featured in a recent webinar that their schedules in “permanent” jobs were changing daily, weekly, or monthly. They strongly prefer future job stability over higher pay, despite the trendy flexibility of the “gig” economy, Uber driving, and freelancing.
“Permanent employment is not the same as stable employment,” Amy Blair, the Aspen Institute research director for the economic opportunities program, said during the webinar. “Without a stable floor, it’s difficult for a person to invest in himself or herself to build a career.”
The U.S. Bureau of Labor Statistics (BLS) has identified 30 jobs it predicts will have the fastest growth, generating 5 million jobs by 2024. Most of the top 10 are characterized by part-time, low-paying, or seasonal work that can make it difficult to put together a full-time schedule, Blair said. Many are the types of jobs that also lack health benefits, 401(k)s, and paid-time off.
The BLS’ top 10 are: …Learn More
May 25, 2017
Fewer Older Americans Work Part-time
It’s now a given that more people in their 60s and 70s are choosing to keep working.
But a related trend rumbling beneath the surface isn’t so well-known: the share of working older people with full-time jobs has increased sharply – to almost 61 percent in 2016 from 40 percent in 1995 – as part-time work has become less popular.
The majority of older Americans are retired. But among those who do work, the move from part-time to full-time is “a major shift” in work schedules, concluded the Brookings Institution’s Barry Bosworth and Gary Burtless and George Washington University’s Ken Zhang in a report last year. This is one aspect of the broader trend of rising labor force participation for the nation’s older workers.
Burtless said in an email that the likely reason for the shift toward full-time employment is that more of the growing number of people who are working in their 60s and 70s are simply staying put in full-time career jobs.
Not surprisingly, much more income for the entire U.S. population over 65 comes from work. In 1990, employment earnings made up just 18 percent of their income from all sources. By 2012, that had almost doubled to 33 percent, according to the Brookings report.
Fueling the increase in full-time work are changes to the U.S. retirement system, as well as an increasingly healthy older population: …Learn More
May 18, 2017
Women Get a Bigger Social Security Bump
The magic number is 35.
That’s how many years of earnings the U.S. Social Security Administration (SSA) uses to calculate every worker’s pension benefit. But 35 years can be a tall order for the many boomer women who took time off or cut back on their hours to raise their children. Nearly half of 62-year-old working women today didn’t make any money for at least one year in their earnings history on record with SSA.
But this also means they have more to gain financially than men from working longer, because each additional year of work substitutes for a zero- or low-earning year during motherhood in the benefit calculation, according to research by Matt Rutledge and John Lindner at the Center for Retirement Research, which sponsors this blog.
Beefing up one’s earnings record is actually one of the two ways that working longer raises monthly benefits. The other, more familiar way is a benefit increase from delaying collecting Social Security.
Delaying claiming compresses the time period over which workers will receive benefits. The resulting increase when they finally do start is known as Social Security’s “actuarial adjustment.” Take the most extreme example: both men and women who begin their Social Security at age 70 receive 76 percent more per month from this adjustment than they would’ve gotten had they started at 62.
But it is women who generally gain much more from additional years in the labor force.
By working to 70, rather than retiring at 62, the average woman can increase her monthly Social Security check by 12 percent, the researchers found. Adding this to the standard actuarial adjustment produces an 88-percent increase, from roughly $1,112 per month at 62 to $2,090 at age 70.
The earnings bump that 62-year-old men get from working to 70 is half as big – about 6 percent – because men typically already have had more years of higher earnings during their working lives.
A woman doesn’t have to work all the way to 70 either to benefit. Any period of delay will increase monthly benefits – and that will help. …Learn More