Your Retirement | WYPR

Your Retirement

Thursdays at 3:04 P.M.

From WYPR 88.1 FM.  Anirban Basu reviews retirement news.

We often discuss the benefits that come from garnering professional advice regarding one’s finances and retirement planning. However, recent research indicates that most Americans are content simply to manage matters on their own. Despite reports indicating that many workers live paycheck to paycheck and that fewer than half of all adults would be able to cover an unexpected $1,000 expense, the majority of Americans decline any financial help or advice.  

Anirban tells us more. 

It's Retirement Time

Apr 18, 2019
Flickr/Creative Commons

Anirban discusses the "fragile decade" and approaching retirement.

Usually, we spent this time talking about preparing for retirement or living during it.  Today, we take things one step further and talk about funerals.  I know, not fun, but funerals can be expensive and it makes some sense to speak to the relevant economics. 

Anirban tells us more.

Many financial advisors will tell you that you may need about a million dollars or more saved if you retire at the age of 65. So how much money does the average American have in retirement savings? As indicated by writer Eric Reed, the answer is about nothing. While sources of data differ, the broader story remains the same.  

When people consider how much financial wealth they will need in retirement, they may have a relatively simple time calculating things like property taxes, groceries or even travel. But healthcare costs are extremely difficult to estimate, and that makes it all the more important that people save with regularity even in their 30s, 40s, and 50s.  

Many financial advisors will tell you that you may need about a million dollars or more saved if you retire at the age of 65. So how much money does the average American have in retirement savings? As indicated by writer Eric Reed, the answer is about nothing. While sources of data differ, the broader story remains the same.  

Shifts in public policy have rendered it more appealing to put more money into your retirement accounts in 2019. Anirban tells us about new limits.

Trying to determine how much one needs to save for retirement is likely one of the most challenging computations that one faces in life.  One can simply avoid such complexities by not even trying to save for retirement and living off of Social Security, but that could render retirement unpleasant.  As indicated by the Retirement Living Information Center, the average Social Security payout these days is approximately $1300 per month.  

Anirban tells us more. 

Many of those who are presently working believe that coming generations will be worse off in retirement that the retirees of today – this according to a recent report from insurance company Aegon. This is not simply a belief among Americans, this is increasingly the view in much of the world. The most significant trend impacting retirement is an aging population. As indicated by writer Tom Sightings, in 1950, there were 205 million people over the age of 60 globally.  

Anirban tells us more. 

A new study supplied by a pair of Harvard Business School researchers finds that employers often underappreciate the struggles their employees face in balancing their professional are caregiving responsibilities. Caregiving will expand as both more children and older people come to depend on those of prime working age. Nearly three quarters of workers in America face some form of caregiving responsibility. Among those workers, 32% indicate that they have left a job because they could not balance work and family duties.  

Anirban tells us more. 

Presently, the U.S. labor market is very strong.  Unemployment is low and there are nearly seven million available, unfilled jobs in America.  But at some point, the economy will find its way into another recession, layoffs will rise, and unemployment will head higher. As indicated by Forbes, recent survey data indicate that older workers may bear a disproportionate share of those layoffs when they arrive.  Anirban tells us more. 

It was Mark Twain who said “Find a job you enjoy doing, and you will never have to work a day in your life.”  While that may be true, most of us still want to retire eventually. Many of us dream about early retirement.  Alas, the bulk of people appear to retire in their 60s. According to SmartAsset’s analysis of U.S. Census Bureau data, the average retirement age in America is 63-years-old.  The average retirement age varies by state, with a low of 62-years-old and a high of 65-years-old. New Englanders are associated with the highest average retirement age.  

Anirban tells us why that may be the case. 

You may be among the millions of U.S. workers who will say farewell to full time employment in 2019. Roughly 10,000 baby boomers turn 65 every day, the age most often associated with retirement. Of course, many people do not retire at the age of 65. Approximately 60 percent of workers had to stop working before they intended due to reasons such as layoffs or health issues according to a 2015 Voya Financial Study. 

If you are intending to retire this year, you will want to be able to check all the right boxes. 

The tide may have finally turned for retirement savings in the U.S. According to a GoBankingRates survey, from 2016 to 2017, the percentage of Americans with nothing saved for retirement increased. But in 2018, the percentage lacking any retirement savings fell dramatically. Moreover, the percentage of those with $300,000 or more in retirement savings increased.  

Pension Problems

Jan 3, 2019

Many of us envy those who have public pensions. Public pensions produce income during retirement – sometimes elevated levels of income that far exceed Social Security benefits. But while having a pension is wonderful, it’s not so great when there’s a governmental bankruptcy, which can put those pension benefits at risk. According to a report released by the Pew Charitable Trusts, many pension funds for public workers already owe far more in retirement benefits than they have in the bank.

Let’s say that you are a recent college graduate and that you’re trying to determine how you can save for retirement while paying down your student loans. Most advisors seem to agree that at any given moment, you should be doing a bit of both – paying down your loans while saving for retirement. One of the first things you’ll want to consider is the interest rate on your student loans. When you pay down your debt, essentially, your rate of return is guaranteed. If you pay down your debt by let’s say a thousand dollars, it means that you won’t have to pay any interest on that amount into perpetuity. Still, the math is complicated.  

Anirban tells us why. 

As people age, the need for care rises. The population of older Americans is surging.  Accordingly, an estimated forty million people in America supplied unpaid care in some form or fashion in 2014, the last year for which data are available. As indicated by writer Christian Weller in Forbes, unpaid care added an estimated $470 billion in economic value in 2013. While the provision of care is to be celebrated, there are some negative consequences. Unpaid care worsens an already large gender gap since women are more likely to be caregivers and therefore to save less due to less availability in the job market.

Listen for more. 

It’s fair to suggest that virtually all of us would like a financially comfortable retirement. Many of us take significant steps toward achieving this goal, including setting aside money and working long hours. One of the other things we could do is pay more attention to the fees charged to our retirement accounts. These fees may appear small, but can produce large, negative impacts over time. 

Anirban tells us more. 

Here are some good ideas for preparing for retirement – save, invest, work longer, and wait to collect Social Security. But all of these tactics may not amount to much if you are unable to form a permanent bond with your current spouse. According to new findings from the Center for Retirement Research at Boston College, when all is said and done, ending a marriage can be nearly as destructive to your retirement savings as say the Great Recession was. Divorce implies legal fees, splitting assets in two, and shifting from a two-income household to a one-income household.  

One of the reasons that many of us have failed to save adequately for retirement is that we love to purchase new cars. It is of course tempting to immerse oneself in that new car smell, as well as to find oneself benefiting from new technology like heated steering wheels, Bluetooth, and automatic braking. The average car payment in the U.S. is estimated at $523 per month.  

Anirban tells us more.

If you intend to work for income after you retire, you need to be aware of how your Social Security income may be taxed.  In a recent AARP survey, 37 percent of people indicated that they plan to work either full or part time during retirement.  As indicated by Fidelity Investments, many older workers believe that working after retirement can supply valuable structure to their day and provide the mental stimulation that emerges from interacting with clients and co-workers.  There are of course those who intend to work in retirement out of financial necessity.

Anirban tells us more. 

As indicated by CNBC, overall inflation in the United States averaged 2.1 percent during the first half of 2018. But the annual median cost of a room at an assisted living facility is expanding by a rate closer to seven percent. Genworth Financial reports that the average annual cost of a private room in a nursing home recently surged past the six-figure mark. 

Anirban tells us more. 

When we discuss delayed retirement, we often fixate on factors such as inadequate savings. But there are other explanations for why people are working for many more years than they anticipated, including policy changes made to Social Security during the early 1980s. As indicated by writer Peter Orszag, in 1997, 57 percent of men claiming their retirement benefits were 62 years old, the earliest age at which one can do that.

Anirban tells us more. 

Here is a shocking forecast.  Nearly half of middle class Americans face a slide into poverty as they enter retirement – this according to a recent study conducted by the Schwartz Center for Economic Policy Analysis at the New School.  The risk of losing middle class status in retirement has been driven by a number of factors, including depressed earnings and rising health care costs.  This is causing 74 percent of Americans to plan to work past traditional retirement age. 

Anirban tells us more. 

As indicated by writer Diane Oakley writing in Forbes Magazine, nearly 20 million working Americans between the ages of 55 and 64 have no money in 401k retirement accounts and lack a pension. These near-retirees have little time to reap the benefits of compound interest to help expand their nest eggs at a time when interest rates are still quite low.  With these forces working against them, financial advisors frequently recommend that these folks keep working, in part to avoid drawing on Social Security until they reach full retirement age of later.  

Anirban tells us more. 

Senior Poverty

Oct 18, 2018

The notion of a retirement crisis is bandied about rather frequently. Behind that crisis are real people who face some very difficult choices. As pointed out by The Atlantic, many people reaching retirement age lack pensions and often have not put enough money into their 401ks or other retirement accounts to live on once they retire. According to the National Institute on Retirement Security, the median savings in a 401k plan for people between the ages of 55 and 64 is presently just $15,000.  

Anirban has more. 

There are so many rules of thumb to guide one’s retirement. Here’s another. You will need 70 to 80 percent of your pre-retirement income to live comfortably once you depart the workforce. In other words, your income won’t need to be as high in retirement as it was when you were working. That’s because once you retire, your expenses will presumably fall. But as indicated by USNews, many financial experts advise against adhering to such advice.

Anirban has more. 

Home Values

Oct 4, 2018

Many people think about saving a million dollars for retirement. A considerable body of conventional wisdom suggests that a million dollars makes for a happy retirement, though like all rules of thumbs, this one is imperfect. When discussing savings, people and their advisors often discuss 401ks, 403bs, IRAs, or other financial savings vehicles.  

Anirban has more. 

In a survey of workers from the Transamerica Center for Retirement Studies featured by CNBC, 56 percent of respondents indicated that they have not fully recovered from the Great Recession. 37 percent say that they have recovered somewhat, but 12 percent say that they have not begun to recover and seven percent suggest that they may never recover.  

Anirban has more. 

Calculating Retirement, Pre-Retirement

Sep 20, 2018

If you are in your fifties or sixties, you may have begun to pay closer attention to commercials regarding annuities, Medicare Part B, or those ads featuring Tom Selleck talking about reverse mortgages. You are not alone. Financial advisors suggest that many of us abruptly awaken to the realities of retirement about five years or so prior to its onset. While such awareness can be jarring, most advisors consider the panic attacks that occur several years prior to retirement helpful.

Anirban has more.