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Working in Retirement: Motivating Boomers to Stay on the Job
Tweet Share on Facebook July 10, 2008 Comment (3)Working past the traditional retirement age can give you essential extra income, provide something productive to do, and offer opportunities to interact with peers. Unsurprisingly, 85 percent of baby boomers plan to work in retirement, primarily for financial reasons, according to a McKinsey & Co. survey.
Work at older ages has some pretty good perks for society, too. If early boomers between the ages of 54 and 63 delayed retirement from age 65 to age 70, the McKinsey analysis found, the share of households prepared for retirement (and not draining public resources) would nearly double from 31 to 60 percent. Plus, working longer would boost economic growth, enabling the economy to generate an extra $12.9 trillion in GDP between now and 2025, McKinsey calculated.
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Surprise Expenses in Retirement
Tweet Share on Facebook July 9, 2008 Comment (1)Mike Pride, a Concord Monitor columnist in New Hampshire, was looking forward to retirement until he actually got there. He expected normal monthly bills, property taxes, and a visit to his wife's parent's home in Belgium. But he didn't foresee record high oil prices and a 401(k) that rapidly hemorrhaged in value. He also didn't budget for home repairs, like a broken dishwasher and garbage disposal, a refrigerator and freezer that gave up cooling, cold showers when his hot water tank started leaking, and squirrel damage to his home, which all hit him seemingly at once.
"It is not so pleasant to start retirement with so many ill omens, with the national economy quaking, with our 401(k) bleeding. In the shadow of these things, it is a struggle to embrace—or even feel—our new freedom," he says in a Concord Monitor column.
Tell us, what unexpected expenses crept up on you in retirement?
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How Rising Fuel Costs Affect the Elderly
Tweet Share on Facebook July 8, 2008 CommentMany seniors rely on local aging services like rides to the doctor, home-delivered meals, and home healthcare to keep them living independently. But rising gas costs are forcing cutbacks. Over half (56 percent) of Area Agencies on Aging have already reduced services in 2008 to keep up with climbing fuel costs, according to a survey by the National Association of Area Agencies on Aging, and 90 percent expect to do so in 2009. Gas prices are also making it more difficult for over 70 percent of agencies to recruit and retain volunteers.
"Increased costs, all tied to the rising price of oil, are making it harder and harder to keep families together and maintain these patients at home where they prefer to be," says Tim Rogers, executive director of the Association for Home Care and Hospice of North Carolina and the South Carolina Home Care Association.
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A Spending Target
Tweet Share on Facebook July 7, 2008 CommentAfter you've amassed a nest egg, you need to develop a plan for sustaining it. But workers aren't sure how much they can spend in a given year and still make their savings last a lifetime. A recent MetLife Mature Market Institute and GfK North America survey found that 43 percent of workers between the ages of 56 and 65 who plan to retire in the next five years say they can withdraw 10 percent or more of their savings each year while still preserving their principal. But most retirement experts suggest a withdrawal rate of 4 percent or less annually. Here's how long MetLife calculated your savings will last for a given withdrawal rate.
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A Taxing Decision
Tweet Share on Facebook July 3, 2008 CommentWant to save money on taxes in retirement? Give Alaska a try. It's the only state in the country without a state income or sales tax. But before you grab your parka, here's a look at other states with low tax rates.
Income tax. Seven states have no income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. And two states, New Hampshire and Tennessee, tax dividend and interest income only. Other states tax as much as 9.5 percent of your income, although certain types of retirement income are shielded from income tax in some states. To find out which types of retirement income are exempt in your state, contact the state department of revenue.
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Updating Your House for Old Age
Tweet Share on Facebook July 3, 2008 CommentMy 89-year-old grandmother recently had a new washer and dryer installed on the ground floor of her house so that she will no longer have to navigate the stairs to do her laundry in the basement. And several years ago she had grab bars installed in the shower to prevent her from slipping, which is one of the most common home alterations for older homeowners, according to the National Association of Home Builders.
Like my grandmother, 89 percent of people over age 50 wish to remain in their own homes indefinitely, AARP found. But sometimes seniors need to make minor remodels so they can stay in their home longer. The most common (and affordable) remodels for older homeowners are:
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Are Your Retirement Savings on Target?
Tweet Share on Facebook July 1, 2008 Comment (21)Employees aren't sure how much of their salary they should replace in retirement. As part of an online test on retirement income, MetLife Mature Market Institute and GfK North America asked, "What percent of preretirement income do experts think retirees need to use as a benchmark for determining the amount of annual income needed in retirement?" The chart below shows the responses of workers between the ages of 56 and 65 who plan to retire in the next five years.
They're right to be confused. There is no correct income replacement rate for everyone. An adequate level of income depends on retirement expenditures, retirement age, gender, asset allocation, and the percentage of savings that is annuitized, according to the Employee Benefit Research Institute.
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Can You Afford Long-Term-Care Insurance?
Tweet Share on Facebook June 30, 2008 Comment (33)Long-term care is likely to be most Americans' greatest expense of all in retirement. A private room in a nursing home costs $76,460 annually on average, or $209 a day, and Medicare typically won't cover it.
Long-term-care insurance can help protect you from some of these unpredictable costs. It can be used to pay for nursing home expenses, adult day care, and in-home help for seniors with chronic conditions or who need extra help recovering from an illness.
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8 More Ways to Save in Retirement
Tweet Share on Facebook June 27, 2008 Comment (4)While researching this article about how to be frugal in retirement, I asked Rich Gray, author of The Frugal Senior: Hundreds of Creative Ways to Stretch a Dollar and the editor of FrugalWorld.com, to share his favorite money-saving tips for retirees. Here are some that Gray E-mailed to me:
Keep a spending diary. Write down everything that you buy, no matter how small. At the end of the month, go through it and add up all like items to get a good picture of where your money goes. If you do this for several months, modifying your spending as you go, you'll be pleasantly surprised at how much your spending shrinks over time.
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Finding a New Job After 50
Tweet Share on Facebook June 26, 2008 Comment (13)Hard work and being a team player may not be the qualities that get you your next job, according to Jack Heyden, a partner at the aptly named Gray Hair Management, a networking firm for older workers. The key to getting a new job after middle age is to explain how your past job performance improved the bottom line of the company, says Heyden, who was president of a banking association for 13 years until he was laid off in 1999 as part of a merger at age 53. He is the coauthor of Winning the Job Race: Pathways Through Transition with his equally gray-haired partner, Scott Kane. I called Heyden at his Deerfield, Ill., office to ask him what advice he has for older workers who find themselves suddenly jobless in a slow economy. Excerpts:
If you find yourself unexpectedly laid off after age 50, what should you do?
You have to take a quick step back and evaluate yourself in terms of professional strengths and weaknesses as a person. Articulate your value by putting together the paperwork necessary to go out and get a job—a résumé. Most people, they don't do a very good job of articulating their value. In order to do that, you have to look back at the jobs you've had and figure out what you did that added value to the business you worked for. Too often people [give] their job description rather than the end results they were able to deliver.
