Tuesday, January 17, 2017

Millennials Won’t Retire

Millennials Say They’ll Never Retire – Is That Realistic? by James Cordelaine, 1/12/17

Right now, a large portion of baby boomers are finding out how difficult it is to save enough for retirement. Their incomes aren’t high enough to put as much money away as they should, their investments aren’t yielding much of a return, and Social Security is projected to run out within the next couple of decades, reducing the amount of money they can count on from the government.

If things are this bad now, they’re likely to be even worse by the time the younger generation reaches retirement age. How do millennials—those who will turn 20 – 36 this year, and now a larger demographic than baby boomers, intend to deal with the situation?

They don’t. Around 83% of millennials plan to keep working, even after retirement age. Interestingly enough, that’s also the percentage of current retirees who aren’t working at all. Those two statistics are a good illustration of the difference in outlook between the younger and older generation. The question is, though, is this course of action viable, for millennials to keep working their whole lives? Probably not.

Possible Reasons for Continuing to Work
The 83% figure comes from a survey by Merrill Edge on financial concerns of the average American. While it didn’t explicate the reasons why millennials plan to keep working, there are a couple of possibilities.

Bottom of Form
First, there’s the concept of loving what you do, so that you don’t feel like you need to retire in order to be fulfilled. There’s also the looming dread of what retirement planning will entail, particularly in the current economic climate. Coming of age professionally during the Great Recession, many are barely making ends meet as it is, and feel like they won’t be able to put away enough by retirement age to sustain themselves. Therefore instead, they’ll have to continue working at least part time in order to live.

It is likely millennials will end up working for longer than their parents and grandparents did. The current age to collect full Social Security benefits is 66; for Americans born after 1960, it’s 67. Given that life expectancies are increasing, and that the Social Security trust fund is about to run out, it’s doubtful that will still be the standard retirement age forty years from now, as millennials start to wind down their careers. If Social Security still exists then, benefits may well not kick in until age 70 or 75. However, there’s a big difference between continuing in your job for a few extra years, and working until you die.

The Problem with the “Plan”
Many people, even today, find that they would rather continue working past retirement age, even if they transition to a part-time job in their golden years to extend their income. The problem, though, is that many millennials are assuming that, because they intend to maintain an income forever, they don’t need an actual retirement plan, or at least not much of one.

It’s easy to say, while you’re in your twenties, that you plan on working forever. However, once you reach your sixties, you may find a lot has changed. As you age, there may be health issues or other physical limitations that keep you from continuing at your current job. You may decide to look for part-time work, only to find it more difficult than you anticipated. You might even find, after 40 or 50 years in the workforce, that you actually do want to retire after all, and spend your days fishing or playing golf. However, if you don’t have a retirement fund built up, you won’t be able to do it.

Even for Americans who are planning for their retirement, it often seems to be seen only as a vague concept. More than half of those surveyed said they didn’t anticipate needing more than $1 million in their retirement fund, and 19% said they had no idea what amount they actually would need. $1 million seems like a lot, but given inflation, and the amount of time it needs to last, it may well not be enough to sustain a millennial through their golden years.

If millennials are able to continue working and earning comfortably, without having to retire, then more power to them. However, it’s foolish to rely on that possibility as one’s entire retirement plan. As those of us over forty can tell them, you never know what might happen in the meantime. It’s vital to have a nest egg built up, so that you’re ready for the future, no matter what it may bring.

https://goldcopreciousmetals.com/goldco-precious-metals-blog/millennials-say-theyll-never-retire-realistic?utm_ campaign=Weekly+Blog+Update&utm_source=hsemail&utm_medium=email&utm_content=40651125&_hsenc= p2ANqtz-8KPCDNpeKnbCdG_Q7vrKn6q 6bTjq1_WlY5P zlqhJY8qG0-b47eWpWRU4iRWOSYB9bBzvyvdlpoUDv-34TzaylcJlF Shg&_hsmi=40651125

Comments

Prior to 1900, nobody in the retired except for a few who were independently wealthy. Many other wealthy people still continue to work beyond what had been established as “retirement age”.

From 1900 to the 1950s, the US changed its retirement except for professionals and business owners who were self-employed.

Unions represented occupations that required physical exertion and many of the older laborers found it harder to work as their bodies aged beyond age 60. The unions first demanded higher wages and pensions. Unenlightened business managers established age 65 as retirement age for all employees. They did a study to determine how long employees could work “productively” and they agreed on age 65 as the right age to dump their codgers.  When Social Security was passed in the 1930s, the “average” life expectancy was age 65.  The invention of penicillin in 1945 heralded the elongation of the “average” life span. So, mandatory retirement at age 65 is no longer needed, but businesses will probably not change the rule.  They like to get rid of older employees, because they usually are paid more than younger employees who could do the same job.

All others, including family business owners and self-employed professionals didn’t adopt the age 65 rule for themselves and many didn’t impose retirement on their employees.  Universities allowed Professors to remain working way beyond age 65 as long as they were productive.

Retirement isn’t necessary.  A bricklayer could work in his trade from age 16 to age 60 and if he had received a teaching degree in the meantime and could get a teaching job, he could “retire” from bricklaying and take a job as a teacher at a Junior College.  He could teach bricklaying and perhaps other construction-related trades.

Retirement should come whenever the individual reaches the age where it became very stressful or impossible to put in the hours required to pull their own weight. Retirement is totally dependent on a person’s ability to continue working. Sedentary office work can continue indefinitely. Folks in their 70s and 80s may need part-time work that allows them to take a nap when they want to.  Folks in their 90s generally don’t hold a job.  They are really “retired”.

Millennials who prepare for and are capable of getting one of the “middle-class” jobs that will certainly be available can begin their careers, albeit too late. If they can also buy a home and pay it off, they may have the price of the house to live on throughout their 80s and 90s. But for most, the days of leaving a bundle of cash to the kids will be over.

My grandfather was an MD in St. Louis Mo. And he worked full-time until his death at age 79 in 1961. 

My grandfather Leahy had been a corporate CEO and board member for and investor in several other large chemical and munitions companies in St. Louis Mo.  We called him “Daddy Warbucks” He became an “investor”.

My father was a corporate CEO with a large European-based global company; he retired at age 65, but immediately started a Real Estate Company in Dallas Texas at age 66.  He worked until his death in 1990 at age 80.

My father-in-law bought 3 acres on Highway 21 in St. Louis County and built a gas station with mechanic bays, a barber shop, a shoe repair shop and an agricultural implement sharpening and repair shop in the strip mall he built next to his house. He owned these businesses and retired at age 87. He died in 1993 at age 89.

I managed my own career to allow me to leave corporate life at age 50.  I was able to own my own private general consulting practice.  In 1993, I was approached by a half dozen electronics companies to quit my corporate personnel job and serve as their consultant.  The practice provided help to 45 large and small Atlanta-based companies.  I am age 73 and still doing projects for some of these customers on a part-time basis.

The secret of success is to love what you do. Your work will feel like play.

Norb Leahy, Dunwoody GA Tea Party Leader

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