Have You Asked Yourself, “Will I Ever Be Able To Retire”, Yet?

by Vered DeLeeuw · 8 comments

Whether retirement is possible or not is an important question to ask, but many of us never stop to take a look at the big picture of our finances to answer the question. (David’s Note: Maybe we are too afraid to ask?)

A few weeks ago, over dinner with friends, one of us did ask the question – and it had lead to an interesting discussion. We started talking about how he works in a “young” industry, where age discrimination is pretty much the norm, especially if you don’t climb up the management ladder.

At some point, he said, “I’m forty, and I can expect to have a hard time finding a job in my profession by the time I’m nearing sixty, maybe even sooner than that. That gives me 15-20 years to finish building a nest egg that should be large enough to support me for at least 20 years. How do I do that?”

A difficult question to ask, and even more difficult to answer. Certainly, age 40 is typically an age when many of us do stop for a moment to take a long, hard look at our life, our goals, take inventory and reevaluate the future. But in terms of building a nest egg, 40 might be too late to ask this question, since if you haven’t saved adequately before, you will need to make a huge effort to catch up.

Acknowledging that the question of “How do you make retirement a possibility” is not becoming easier to answer over the years is also important. If anything, saving for retirement seemed to have actually gotten more difficult.

As ageism in our culture becomes more and more of an issue, experience less valued and youth taking its place as the number one priority for many employers (have you seen the movie Company Men? It addresses this beautifully), older workers in Corporate America are finding themselves vulnerable. You can no longer assume that you will be able to work until the traditional retirement age of 65, because if you lose your job when you’re over 50, you could have a very hard time finding another one with comparable salary. But retiring young is also not an option for many of us, since today’s life expectancy means that most of us can expect to live until we’re around 80.

How many years can you support yourself with no active income, and with the social security system expected to collapse by the time you’ll need it?

One possible answer is that retirement as we know it is gone, that people will not be able to retire at 65. So, if you’re in a “young” industry where ageism is a major issue, you will have to find a way to keep working past 65, even part time and possibly not in your profession. Therefore, starting your own business before you find yourself forced into early retirement might not a bad idea, even if it means working harder than the guy next door and trading some of the leisure time you have now.

Another answer: Go to the T. Rowe Price Retirement Income Calculator, input your data, and see where you stand in terms of your ability to save enough to meet your needs during a long retirement. If you’re on track – great! If not, use the tool’s recommendations to ramp up your savings. You might also need to change your asset allocation and put more in the stock market, although that could prove to be a disastrous decision if when another recession strikes.

This is a complex topic with no easy answers. But whatever you do, you must ask this question, and you must ask it sooner rather than later: “I am now at point X and want to get to point Y in Z years. How do I make it happen?”

Have you asked yourself this question?

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{ read the comments below or add one }

  • John Brownstein says:

    The key to retiring is to start saving early and be consistent. Save with every paycheck and take advantage of any employer matching plan. I recently came across a new retirement site at retirementandgoodliving.com that provides good information on finance/investing, health/exercise, retirement locations and more. Worth checking out.

  • Greg Miliates says:

    I agree that the traditional view of retirement is becoming outmoded, and workers nowadays should expect to work even after they pass traditional retirement age.

    However, there’s also a trend completely against traditional retirement, called lifestyle design, where you essentially structure your work and income source(s) so that you’re able to take “mini-retirements” throughout your working years, rather than waiting until you’re 65 (and hoping that you’re still healthy enough to do the things you dreamed about 20 years earlier).

    That’s an appealing paradigm, and since starting my own consulting business several years ago, I can see that mini-retirements can be an option if you own the right kind of business and put systems in place to automate as much as possible.

  • Joe says:

    Or…..he could try starting his own company in his field before he’s too old to work for someone else.

  • Early Retirement Extreme says:

    Asked it and answered it.

  • Patricia says:

    Retirement – may only be a few more bike tours a year for us – we will just keep plugging along as best we can until we are no longer able.

    We had a truly great plan – the best laid plans can fall apart.

    …and ageism is alive and well – 61, female, and “over qualified”

  • Jameson says:

    “Traditional Retirement” isn’t all the much of tradition. Middle class retirement is a concept of the post WW2 economic expansion and is one of history’s exceptions not one of history’s rules. In the past people stopped working mostly because the couldn’t do the work anymore, usually physical labor, and only recently (last 60 years) with advent of pensions, 401ks and social security have the received pay after they stopped working.

    I’m 42 and I believe that the concept of our working life and retirement as two distinct entities is obsolete, at least for my generation and the ones to follow. A new blended transition from full-time work, full-time retirement to death is a likely choice. Even small nest egg will last a great deal of time if you subsidize your 401k withdrawals, with rental incomes, consulting, online businesses, etc…

    In fact, this kind of approach could actually result in a much earlier semi-retirement, where you take your retirement in installments such as longer vacations and shorter weeks throughout your 50’s-60’s-70’s and beyond.

  • MoneyNing says:

    I think about retirement all the time (sometimes, actually too much.) I have a number that I want to get to where I can just walk away from my business and just live off the income that can be generated from my portfolio. Knowing that I’m on track not only motivates me to save but being on track also helps me feel less pressure from the ups and downs of my business. I imagine it would have a similar effect for people who have a conventional career/job too.

  • Barb Friedberg says:

    Thanks for bringing up an often ignored topic, “the difficulty getting work as one ages.” The most important factor in amassing wealth is “time in the market.” What this means, is start investing early. If it’s not early anymore, then you have to commit more money to investments in order to amass wealth. If you want to retire, you have to make some sacrifices now and put money in a retirement account. There’s no other way.

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