So What If I Will Never Be Able to Retire?

by Vered DeLeeuw · 15 comments

When Social Security was established in 1935, average US life expectancy was 60 for men and 64 for women. Now, it is 75 for men and 80 for women.

This means that when the Social Security system was created, women and men were pretty much expected to work ‘till they dropped. Today, men can expect to live about ten years beyond retirement age, while women can expect to live 15 years after they stop working.

This is a significant development.

In terms of the Social Security system, it explains why the system is heading towards an eventual collapse, unless early retirement is eliminated, and normal retirement age is raised. In terms of individuals, it means that the entire concept of retirement must be redefined.

The Lost Decade and Dwindling Nest Eggs

We’ve all been through a lot lately. The Lost Decade of 2000-2009, where jobs grew slowly, incomes declined, and the cost of health care and education reached record highs. A miserable decade, culminating in the Great Recession of December 2007 – June 2009. Many of us are still feeling shaky about the whole thing and are not convinced that turbulent times are indeed behind us.

So what does this mean to individuals who are facing great financial uncertainty, coupled with unprecedented longevity? It means that many of us will need to work longer than the “normal retirement age” of 66.

As of now, you can retire at any time between 62 and 70, with your benefits prorated to reflect your age. If you retire early you’ll receive less benefits, and if you wait until 70, you will receive more. When it gets down to it, picking a date to start collecting your benefits is basically a gamble on how long you are going to live! But on average, if you expect to live until around 75, retiring from paid work and starting to withdraw benefits at age 62 is probably not the smartest move, financially speaking.

What if You Want to Work – But Can’t?

As if the situation isn’t complex enough, another issue is that even if you want to keep working, not all employers will be open to employing older workers. As we’ve discussed before, age-based discrimination is unfortunately fairly widespread, and even if illegal, there are ways to make it appear as if the company is simply downsizing, and not necessarily getting rid of older employees.

The solution is twofold: you need to save enough for a possibly long retirement, and you need to find a way to make money well into your seventies, by starting your own business or by working part time. You likely won’t make much – but with your savings and social security benefits, that extra income might be what it takes to help you live comfortably and avoid running out of money.

What Are People Like You And Me Planning To Do?

In an interesting discussion on Facebook, I asked my Facebook friends, “Will you be able to retire?” The answers I received were interesting, and definitely reflect a change in the way people look at retirement:

“We’ve planned for non-retirement.”

“I never really expected a stereotypical retirement of just hanging out doing whatever seemed fun at the moment, traveling, supper at 4pm, and all the rest. Instead, I see some form of engaged activity until I keel over, and I would expect that some of that produces a way to continue providing for myself. Whether it’s income from a book I’ve yet to complete, a garden I tend for my own groceries, or maybe even some kind of part-time employment I can’t yet envision… Whatever it is, it’ll be because I enjoy it. I refuse to fear the future.”

“I’ll be working as long as I can, then living on Social Security after age 70.”

“I don’t have a plan. I’m winging it from month to month and am confident that I will manage somehow — I’m great at getting by on very little when I have to. Maybe I should be more worried about money but truthfully, I’m grateful for my health and am doing what I can to invest in that.”

“We planned for early retirement and made it. However, with the economy, rising prices and other reasons, working periodically keeps us from having to tap into our savings without having to adjust our standards of living.”

Society Will Needs To Adjust

With longer life expectancy and less in the bank, more and more people are not planning to ever retire. It’s not necessarily bad news – keeping active and alert and exercising those brain cells may actually mean better, healthier aging. But this will require a shift in the way our society views older people. Instead of expecting the over-65 crowd to politely disappear into some sunny retirement community in Florida, we should accept that people can be an active, contributing part of society for as long as they wish to be.

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{ 15 comments… read them below or add one }

Dominique @Dominique's Desk May 12, 2011 at 6:56 am

It’s a scary thought that we may never have enough for our own retirement and have to work till we die.

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vered May 12, 2011 at 10:41 am

This is exactly my question Dominique – IS it scary? Historically, unless you were wealthy, you worked for as long as you could. “Retirement” as in “A decade or two of leisure” is a relatively new concept, and perhaps unsustainable.

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Justin May 12, 2011 at 7:12 am

I hope we start to see more retirees embracing some form of entrepreneurism. I don’t plan on stopping work really, but I intend to be working on my own terms (which I am working towards now) as opposed to being forced to find some part time hourly work. Helping aging boomers, that spent decades working for somebody else, find a way to start some sort of income supplementing business of their own could end up being a very interesting space to explore.

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marci May 12, 2011 at 8:57 am

Just learn to live on less – it’s really that simple. Pay everything off, be debt free, and the Supplement from Social Security should be plenty, especially when added to your savings, etc.

Remember it is SSSI – Social Security SUPPLEMENTAL insurance.

It’s about NOT needing to make more money cuz you don’t NEED to spend it.
Simple as that.

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M.B. May 12, 2011 at 10:02 am

Our social security income provides more than enough for the daily expenses my husband and I have. We have some retirement savings and investments that we use for frugal traveling, often with a tent.

Our healthy lifestyle does not include many visits to restaurants, especially fast food ones. I make meals, often vegetarian, from scratch and bake low-sodium, low-fat breads, rolls, and cookies. Many household items and most of our clothing are purchased at thrift or discount stores.

Fortunately, we live in a community where we can walk or use public transportation. This allows us to save on fuel so we have some extra money for the traveling we enjoy.

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retirebyforty May 12, 2011 at 11:53 am

I think it’s better to find something that you like to do and make some money at it. That way the nest egg won’t deplete as quickly. A part time job or some kind of free lance work is the way to go.

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Joe May 12, 2011 at 3:30 pm

I think retirement is more a problem for the blue collar workers than white. Health concerns can put a huge kink in the works if you have a physical job that you can no longer actually do. White collar work seems a little less punishing on the body, as well as more doable with certain health issues. But I don’t think of retirement the way many people used to, either. It’s good for the soul to be useful–at any age.

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Sue May 13, 2011 at 5:28 pm

Thank you for addressing this, I work in manufacturing and my hands are about shot, (I’m 60). It seems all the advice about aging in the work force completely forgets about us invisible people. We don’t earn as much as the white collar workers so being unable to earn adequate income and afford health care is scary indeed. Why did I not go to collage and make something of myself? Not everyone has the financial or intellectual means to do so. And you are so right about feeling useful.

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Stephanie - Home with the Kids May 12, 2011 at 8:36 pm

It’s rough for older job seekers, that’s for sure. My dad is in his early 60s, lost his job, and there’s just hardly anything out there for him, despite his education and the qualifications he has kept up. No one wants to hire someone his age.

As for me, if I get good enough at my business I don’t know that I’ll want to retire. I like keeping busy and if I’m happy at it, why quit?

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retirebyforty May 12, 2011 at 11:05 pm

Because one day you’ll be in your early 60s and no one will want to hire you?

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Emily May 13, 2011 at 9:50 am

Retirement is a relatively new concept in human history–very new, as a matter of fact. Find work you love and you won’t want to retire, anyway.

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Ruchika May 15, 2011 at 12:52 am

Investing is necessary for retirement. Early planning is helpful. Checkout the site for another perspective.

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Witty Artist May 17, 2011 at 2:09 am

If you love your work and do it out of passion you won’t see retirement and financial planning as scary as most people do. It’s important that we have a plan, but it’s also important to be flexible and open-minded to new possibilities.

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Common SenseGuy May 26, 2011 at 1:57 pm

Here’s a crazy idea – live within your means, and save a dollar here or there for the future. Silly isn’t it? Do you really need a new iPhone and the $80+ bill that comes with it per month for data to play Words with Strangers? Me thinks not. How about this (here comes the crazy talk) – you simply spend less, and save more? I’m not talking about retiring wealthy, I’m talking about paying your bills and increasing your net worth through smarter living. If the rest of you sheep want to work your entire lives away or sit at home hoping that Social Insecurity will feed you some day, you can have it. Stop spending money you don’t have and make better decisions, and oh by the way, take responsibility for your own prosperity. (End crazy talk).

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marci May 26, 2011 at 2:09 pm

Oh. Soooo exactly. What I’ve been trying to say. Quit spending your retirement now. Save it instead.

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