About Me

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Fishers, Indiana, United States
Brenda gained career expertise as a human resources leader at a global company before becoming an HR consultant. She gained functional experience in a variety of sales roles in the health care industry achieving success for over 20 years. Her passion is participating in, writing about and observing the evolving workforce. For the first time in history four generations work together. It keeps things interesting. Baby Boomers (born 1946-1964) are redefining retirement and what it means to age in the workforce. It is not just about money. Okay it plays a role! At 76.4 million members strong, Boomers are leveraging technology to continue their careers and the personal fulfillment working brings. Managing a late-stage career requires more thought than 20 years ago. Unexpected changes in life force us to consider the future. There is no roadmap or one size fits all answer. This blog is about sharing, networking & finding your own right answer to working later, managing your career, redefining retirement, looking for work in your 50s & 60s and reinventing yourself.

Sunday, January 27, 2013

The Early Retirement Myth



                           The Early Retirement Myth: Why I am Not Retiring Early
                                                    and Neither Are You

I have a friend named Fred who constantly asks me when I’m going to retire. This is simultaneously a compliment and it is annoying. It is a compliment because obviously Fred imagines as a single mom/head of household for nearly twenty years; I am financially savvy enough to make the numbers lineup to retire at age 55. It is equally annoying because:

(a) The numbers are FAR from lining up despite my best efforts
(b) I enjoy working and the social engagement that comes from interacting with others
(c) With my genes I could easily outlive the Institute of Medicine’s forecast for U.S. women’s life expectancy of 80-85. My grandma died at home in her sleep at 104 of no particular disease and other family members are living well past IOM’s predicted expiration date
(d) All of the Above.

At forty-three years old, Fred has a rockin’ career, 2.0 young children, a wife, suburban home and seems to be on the trajectory to “Dream Street.” He assures me when he’s my age—he’s closing his office door for a life of 24/7/365 leisure. With a 401(k) approaching seven figures, Fred thinks his future is going to be an endless vacation. This is the point when I bring out the stick pin to burst the bubble of Fred’s Early Retirement Fantasy. If you are reading this in your 40s (and I know some 20s & 30-somethings read this blog even though I tell them there are secrets spilled here you have to be at least 40 to comprehend), let me guarantee you this: Barring some extraordinary life event, 99% of employees and business owners will not retire by choice at 55. There is a good reason for this. Fred, take notes.

Most of the people who talk about early retirement only focus on the financial aspects. From researching and interviewing people who have retired well and marginally before starting this blog; the happiest retirees approach leaving work from a holistic perspective. If you aspire to the traditional 3G retirement lifestyle of Golf, Grandkids and General Practitioner with no extra revenue being earned; it is very expensive. In 2012, according to Fidelity Investments, a 65-year-old couple is estimated to need $240,000 to cover out-of-pocket medical expenses not covered by the Medicare plan in place today. Imagine carrying the weight of all your family's health care needs on your broad shoulders at 55—you might even still have kids in college!

When I was consulting a financial planner in the roaring 1990s—she said I would only need 70-80% of my income when I retired. What did she expect me to give up? Driving? As I was shredding her proposal a few nights ago, I realized her projections were before Starbucks, iPhones and DirectTV were even in my budget. Anyway, the retired people I interviewed said in the early years of their retirement, they spent much more than when they were working. Many retirees wanted to travel and never had time when they were employed full-time. Other retirees found time to indulge in hobbies and it cost money to pursue these activities—even gardening can become pricey. You have your first grandchild and lose your mind buying “stuff” even the most boring grandparent will donate money to their namesake’s College 529 plan. Uber-cool grandparents splurge on the $$ (not available in stores) 6V Hello Kitty Quad ATV scoring it on eBay.

It doesn’t matter how much is in your 401(k) in 2013 or if your company is the rare one with a defined benefit pension plan. At fifty-five you’re walking away without the full company benefit that kicks in at 62 or 65 anyway. If Fred thinks he can retire at 55 and then cruise into Social Security with a reduced benefit at 62—oh please! When he turns fifty and joins AARP their website will warn him of the folly associated with that strategy. Claiming social security benefits early is the right choice for only certain situations. Still not convinced? In Part II we’ll cover that other non-financial reasons, you may want to nix the early retirement idea and think again. Forward this to someone!

2 comments:

  1. Thinking you are going to retire at 55 is the thought process of a 25-year-old. In my twenties, I believed people in their 50s were near death. Years ago, 50s seemed older. I am 51, own a growing business and my wife just turned 50 and is a freelance photographer. Retirement never crosses our minds, we love what we do and our careers keeps us young and energized.

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  2. With cuts in social security and medicare even those of us already retired are going to have to come back into the workforce.

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