Talking Retirement

Teaching Workers About Retirement

The Chicago Tribune has a great article, 401(k) teaching in workplace must improve, that gives a good overview of a tricky retirement issue.

Basically, investing for your own retirement through a 401k plan is complex. The people who set up 401k plans often can afford financial planners, but the average worker doesn’t have the financial assets that a financial planner requires to take on a client. When retirement planning education is implemented to “fix” this problem, it’s often inadequate.

The trainers that have come into workplaces over the years often have left a lot to be desired. That’s partly because everyone’s afraid to say anything that will truly help an employee. There is a fear that if a person gets actual advice, and later doesn’t like the outcome in a bad stock market, he will sue someone. The solution has been to provide pseudo-advice--laying out a lot of pie charts people don’t understand, and throwing a list of mutual funds at people without any usable explanation.

The article continues to argue that even automatic enrollment, which we’ve lauded here before, still doesn’t solve the problem. More and better retirement education is needed.

This article is really informative. If you agree, print it out and send personally hand it to your human resource director. Read the article.

Link of the day: RetirementJobs.com

I just found a site that you might like to check out if you’re a retiree and thinking about re-entering the workforce, RetirementJobs.com. Here’s a bit about them from their site.

[O]ur goal is to identify companies most-suited to older workers and match them with active, productive, conscientious, mature adults seeking a job or project that matches their lifestyle.

You’re Retired. Now What?

I just read an article by a man who has recently retired called Planning doesn’t end with retirement. The author, John Gottcent, tells us some things he’s learned by “finding out the hard way.”

He covers a lot of topics, but one he covers that I don’t think about much is the idea of not contributing to my retirement account anymore, but taking from it.

Get ready to adjust from building a portfolio to withdrawing from it. After years and years of adding to a retirement account and watching it grow (well, most of the time), it’s a bit of a shock to realize that from now on you will be taking away from that total.

I would assume that the moment you start doing that would be a pretty emotionally difficult time. Mr. Gottcent also offers some warnings for people who want to continue to work. He suggests looking “carefully into income restrictions imposed by Social Security.”

There are more topics in his article. You can read it here.

Public Pensions Payout In Question

Years of supporting court interpretations have enshrined the view that once a public employee has earned a pension, no one can take it away. Even during New York City’s fiscal crisis 30 years ago, no existing pension promises were reduced.

But now a number of state and local governments are quietly challenging those guarantees. Financially troubled San Diego is the highest-profile example, but a handful of states, cities and smaller government bodies have also found ways to scale back existing promises and even shrink some current payments.

According to the article, “the nation’s states and cities… have promised a total of about $1.4 trillion” in pension payouts and very little of that money has been set aside. Want to know more? Read the article.

Don’t Plan on Working Past 65 for FInancial Planning

The Globe and Mail article Thinking of working past 65? Think again, brings some unfortunate news from McKinsey & Co.

“While preretirees expect, on average, to work until age 67, the average age of retirees was only 59. Equally sobering, a full 40 per cent of retirees were forced to stop working earlier than they had planned, largely because of health problems or job loss,” McKinsey reported.

According to the article, the problem stems from many factors, including age discrimination. What that means is that the next time any of us run a retirement calculator, you might want to lower the age you expect to retire for your own peace of mind. Read the article.

Companies Must Prepare For Retirement, Yours

Movement to keep boomers on job, from The Arizona Republic, reports on how companies need to deal with the retirement of an increasingly larger percentage of their workers.

“When someone hits 55, you don’t want them saying their career is over and they are just waiting to retire,” said Angelo Kinicki, professor of management at Arizona State University’s W.P. Carey School of Business , who has written extensively on corporate organizational development. “You want to invest in training for them and find ways to keep them around another 10 years or more.”

Some of the ideas for dealing with a workforce nearing retirement include phased retirement. The article gives the example of a woman who, at 57, now continues to receiver her full benefits, but only has a 32-hour work week. Read the story.

Consider Retirement Plans When Job Hunting

Many people don’t look closely enough at potential employers’ retirement plans when job hunting. A job that offers a slightly lower salary with matching 401(k) contributions could be a better proposition over the long term, according to this article in the Hartford Courant. Check it out. 

Early Retirement, Why Not

In CNN/Money’s Before you call it quits, there are some pointers as to why early retirement may not be such a good choice. The article mentions, for example, that people over 50 typically have a longer job search when re-entering the work force. Also, when it comes to the money you’ll actually be living on during your retirement, there are pitfalls as well.  “The typical baby boomer loses as much as 30 percent of his or her Social Security check by taking those benefits early, according to Steven Silbiger, author of Retire Early?” Want to know more? Read the story.

Good Reasons Not to Retire

This week, U.S. News has 7 Reasons NOT to Retire. Most of the reasons are obviously serious, like keeping a job boosts your health and longevity. One seemed to me as a little more light-hearted until I read further into it. “Without those pesky E-mails, you’d feel a loss of connection” sounds like a joke, but it’s actually serious.

Anyone who has ever left a job knows how difficult staying connected can be. Best intentions notwithstanding, lunch dates become phone calls, phone calls become E-mails, E-mails get fewer and farther between, and eventually relationships fade away, taking with them a sense of belonging that can be hard to replace.

Nowhere is that more true than in retirement. Yet, many would-be retirees fail to consider before it’s too late the potentially negative social consequences of leaving the working world.

What to read more? Click here to read the full series of 7 articles.

UK Takes on Pension Reform - Retire at 68

This story is from several days ago. The British government is addressing state pensions on several fronts according to The Independent in State pension age to rise to 68. The retirement age will “rise in line with life expectancy” and there will now be a “National Pension Savings Scheme in which employees will automatically be enrolled but may opt out.” The plans don’t really kick in until 2012 though. Read the article for more information.