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Imagining A World Without Retirement

Like most people, if you have been employed for 35 or 40 years, you’ll probably retire from your current position at 65 or 66 years of age. You might walk away with a 401(k), perhaps a profit sharing plan, and perhaps some company stock. And after saying “Sayonara!” you might also be breathing a sigh of melancholy relief. You’ve waited a long time for this day. 

Nevertheless, the difference between you and some retirees is they had a pension when they walked away from private industry. In fact, nearly 35 percent of workers had pensions before 2011, according to the Bureau of Labor Statistics. The figure has since dropped to 18 percent. Millions of retirees and workers are now at risk of losing their multiemployer pension benefits because their plans are forecasted to become insolvent. This would lead to these retirees receiving just a portion of their pensions.  

From Across the Pond 

Amelia Hill wrote an intriguing article in The Guardian, illustrating the social inequality from increasing the retirement age from 60 to 66, a move that has affected almost 4 million women born in the 1950s. Their pensions will not compensate them for the money they lost in the change. In 2010, British women received their state pension at 60 and men received theirs at 65. But by October 2020, both sexes would have to wait until they are 66. And by 2028, the age will rise to 76, and so on. Hill said by the early 2060s, people will be working into their 70s, and probably into their 80s ... if they are able to. 

“For those of pensionable age who cannot afford to retire but cannot continue working, this group is liable to suffer the sort of widespread poverty not seen in Britain for 30 to 40 years,” said Hill. “This is what the world without retirement looks like.”

Enough is Never Enough

“I’ll bet dollars to donuts he won’t have two nickels to rub together later on,” my Dad said, referring to his brother’s spending habits. In Dad’s day, those without pensions would face future retirement struggles. His friends took jobs – not good paying ones – because, as he said, “All the good jobs were taken,” so they simply eked out a living as best they could. They weren’t able to put much money away and lived poorly while doing odd jobs. 

The 2018 Retirement Confidence Survey by the Employee Benefit Research Institute and Greenwald and Associates, found that 45 percent of workers report the total value of their household’s savings and investments was less than $25,000.

At nearly $481 a week, or $2,084 a month, if the full $25,000 were liquid, it wouldn’t cover one years’ worth of expenses for most people. So unless change is around the corner – like meeting with a Hefren-Tillotson financial advisor to assess the situation and then make intelligent, informed recommendations to help grow the invested dollars over time – the answer for some people might resemble Britain’s bleak future poverty dilemma. Compare that to today’s average 65 and older adult that spends, on average, $48,885 a year, reports the Bureau of Labor Statistics. That works out to be $940 a week and $4,073 a month for one year with no mention of the amount of liquid or investable assets. Some consider this “moderate” income.

Unfortunately, nearly 50 percent of Americans today still feel they cannot afford to save for retirement because they are having trouble making ends meet. Despite the lowest unemployment rate in 66 years, some say suitable employment that pays well is “already taken.” Sound familiar? Add inflation, student load and retail credit debt into the mix and all survival alternatives would need to be considered to avoid bankruptcy. After all, the Baby Boomer crisis is underway with approximately 10,000 Boomers retiring every day. Will they have the retirement they had planned for or will they enter the age of no retirement?

Side Hustle: Start With the Basics

The time to find a side hustle – today’s vernacular for “second job” – is either while you are working or are nearing retirement. It is a non-issue for some people; the mere thought of working “more” repulses them. Quite possibly though, a side hustle might be the way to make your retirement happen. Many people don’t think of it as meaningful work. And that’s okay. Remember that retirement is about time and money. What would you like more of?  

If you are able to earn $500 a month in your spare time and in addition to your regular paycheck, wouldn’t it be better to help maintain your lifestyle, not jeopardize your home or car, and quite possibly, cut smaller expenses? Wouldn’t reducing your expenses increase your chances of saving more? And, wouldn’t a side hustle be a good way to avoid having too much nonproductive time on your hands? You get the idea. You just have to find your niche.

Do Something That Makes You Feel Good

“I’ve always wanted to write,” said my neighbor, John. To which I said, “Then you should.”  Many retirees must do something to salvage their retirements to avoid making drastic compromises they might regret. Others feel the need to help others by volunteering. They pass the time while giving back to their communities. And they have fun doing it.

Take my friend, Mike. He is retiring from the Fortune 500 corporate world and decided to take the first proactive step by joining SCORE, the Service Corps of Retired Executives. To him, joining SCORE is an opportunity to build a local network of similar business people, while meeting with clients seeking assistance, and pay forward his years of experience in ways he wasn’t able to in previous years because he was either too busy or too tired.  For these reasons, Mike is excited about this adventure because it feels good to him. “It’s funny how life goes full circle on so many levels,” he said in a recent text message. “It feels like I just graduated college and am looking for my first job. Except, I am not 22 anymore.”  

If you have questions about your own retirement longevity, reach out to a Hefren-Tillotson advisor today. We can customize a plan to fit your needs and goals.

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.
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Hefren-Tillotson Inc. is a leading diversified financial services firm providing investment and retirement plan management and comprehensive, financial planning through MASTERPLAN® for individuals and businesses. The firm’s wealth management services are administered by Certified Financial Planner (CFP) professionals, Chartered Financial Analyst (CFA) Charter holders, attorneys, Chartered Life Underwriters, and CPA/PFS’s. Hefren-Tillotson offers corporate services including 401(k) retirement planning, executive financial counseling, fiduciary reviews and workplace financial planning seminars. Founded in 1948, the firm is headquartered in Pittsburgh and has offices located in Pittsburgh, Butler, Greensburg, North Hills, and South Hills. MEMBER SIPC.