The data on this is fascinating:
Many people plan on supplementing their retirement funds by working past 65, but this plan may not be as sound as it seems. Bloomberg’s Suzanne Woolley breaks down the expectations and often unfortunate truths of working through retirement.
Source: Bloomberg May 18, 2015 7:32 AM EDT
BR – you need a new headline writer.
Retired by choice? Not in the post-2008 world!
After 6 years of ZIRP and, according to ZIRP’s chief architect Bernanke, the rates will stay at or near ZIRP for decades, people cannot retire unless they expect to win lottery or beat the house (that includes both Vegas and Wall St)
I simply won’t let my parents to buy 2% yielding US treasury bond (which is not enough to live off anyway, has limited upside and potential enormous downside) or a muni (will the Feds bail out municipalities or won’t they?) Perhaps I need to suggest that my father (68y.o., 1st gen immigrant, still working full time but when the CDs yielded 5% he expected to retire at 66 ) to buy Tesla, Netflix or the Chinese market?
Maybe you, Barry, will take some of my father’s savings to manage? All he wants is 5%, you can keep the rest. Oh, but there’s one condition: he also needs a guaranteed return OF principal.
The age 55+ demographic comes from an era where workers had pensions, stable employment, and growing salaries. One could have invested using the popular “indexing” format and would have come out ahead. Now, the working world’s situations is different. Right at a time when boomer aged workers need higher retirement asset growth trajectories in order to make up for the “shortfalls”, conventional market valuations are again at rich levels. An Employee Benefit Research Institute (EBRI) study polled workers age 55 and older who said the following about their retirement savings:
60% have less than $100,000 in retirement savings
43% have saved less than $25,000
36% have saved less than $10,000
Using forward returns as projected by substantive valuation matrix ( http://gestaltu.com/2014/01/valuation-based-equity-market-forecast-q3-2013-update.html ), an investor will most likely make 1 % a year over the next 10+ years through passive indexing. And within this returns reduction, the savings provided by the current use of “low fee” funds will only provide a miniscule boost to returns as this effect needs decades to provide an added benefit.
So what can be done? Many investors are going to need innovative approaches in order to make up the returns shortfall going forward. https://docs.google.com/presentation/d/1Ua-R53o7c588nUr705hY4YaBEcG1qOrNvtonQIwpVws/edit?usp=sharing
I would make that the 75+ demographic that had stable employment etc. I know very few people who did not change jobs at least once in their career and almost none of the people I know in the private sector have pensions. If you are under the age of 75 and worked in the public sector, odds are that your pension is non-existent or quite small due to job changes and plan terminations.
Social Security and Medicare are still the mainstay retirement pillars for the vast majority of the population. The right-wing conservative and Republican assault on these is quite baffling because as soon as their base understands that them is really us, then much of the electoral support will go away. A liberal will be a conservative who had his Social Security dramatically reduced.
i think with most of us, retirement will only happen after we have hit 70, if we are lucky., most wont make it to 62 or 65 even. and most wont ‘retire’ by choice either. and saving for retirement seems to be more of a crap shoot than any thing else. and usually out side of your control.
Yet another brick through Kent Thune’s rosey “dignity in retirement through continuing to work” picture window….