Social Security, established to assure some income during retirement years, is becoming an even more important resource in this new economy. Unemployment statistics are not very accurate. Many people eligible for early retirement have found themselves out of work--many for more than a year. More than that, most have exhausted their state's unemployment benefits and are still not finding jobs that paid the kind of salaries they were earning before they left their previous employment.
Many are becoming "semi-retired"--taking early retirement and continuing to look for work--or, more importantly, finally becoming entrepreneurs. It appears that this may be becoming the norm. The "new economy" and the new jobs do not appear to be helping people born between 1943 and 1960--the group of people eligible for early retirement at 62 and who attain "full retirement age" on their birthday at age 66.
A recent article from Abby M. Locke and TheLadders.com was entitled, "Facing Age Discimination as Young as 40" The article went on to talk about the difficulty in "the new economy" for people 40 and above to find the kinds of jobs they are looking for.
Many in the 40+ age group have advanced degrees and have held high-paying positions in the job market. Unfortunately, many may have expenses that match the income they are used to receiving. It may take some time for adjustments to be made.
Social Security is designed to be flexible for early retirees who plan to continue bringing in income. They have to report their income to Social Security and their benefits may be temporarily reduced when they earn over the limits set by Social Security until they reach "full retirement age." In general, if there have been any benefit reductions due to earned income, those benefits will be restored after the person achieves full retirement age.
The good news for soon-to-be entrepreneurs is that Social Security will help cover expenses as we begin to grow our fledgling businesses. We may need to take one or more contract, temporary, part-time, or lower-paying jobs than we are used to to bring in additional income and, depending on the economy and the areas we are focusing on in our entrepreneurship, we can soon be generating quality and sustaining income for our years of "semi-retirement."
Showing posts with label retirement. Show all posts
Showing posts with label retirement. Show all posts
Saturday, April 17, 2010
Sunday, November 15, 2009
Sustainability--Retirement--Extended Lifetimes--Quality of Life--Relative Terms
Sustainability has become a key word this year. President Obama mentions it in connection with the economy and preserving the ecology of the planet by developing alternative fuels and lifestyles that do not destroy our environment.
In this context we need to pay attention to the long-term impact of our solutions. We don't want to begin relying on new car batteries that will further harm the environment when they wear out. One aspect of sustainability is keeping in mind an extended time frame.
Sustainability is important to keep in mind when thinking about retiring--especially in today's economy in the USA. Improvements in medicine, nutrition, and health have extended life expectancy. To maintain a high quality of life (not necessarily a very expensive lifestyle) to age 100, for example, it is important to create a flow of income adequate to support that quality of life (including inflation) either before retirement age or to supplement any retirement income that a person has access to.
After World War II, social security was developed to make sure that wage earners could have some supplementary income in case their pensions from work plus their savings were not enough to provide basic needs. Medicare came out of a similar concern. More recently, most companies have decided not to fund pensions directly and have turned to 401K plans where companies and employees purchase stocks, bonds, or mutual funds to plan for retirement. In the last few years, when the stock market took a nose dive, on paper, people have lost between 75% and 50% of the money they had invested. Of course they did not realize these loses yet because they do not manifest until the stocks, bonds, or mutual funds are actually sold. While the concept of dollar cost averaging (the concept that every dollar invested in the stock market will increase in value over an extended period of time) is still valid, some people do not have 40 more years to wait for the value to rise to the point where they need it to be.
News reports in the last few days have talked about "a jobless economic recovery." Claiming that while there are indications of economic recovery, new jobs--or jobs of equal value to the jobs that have been lost--are not being created. These same reports speak to a 10% unemployment rate for the country. Unemployment rates do not include those whose benefits have run out and who, while possibly still unemployed, are now "off the radar."
My mother's highest salary in the public school system was about $22,000 per year as a supervisor. When she retired, two supervisors were hired to do what she did and they each earned about $60,000 per year. The economy shifted and her generation operated under a much lower ceiling for pay.
In today's economy we may be facing a reversal. Excluding the super-high-incomes of certain executives of what have historically been multi-million dollar companies, many salaries have been in a six-figure range. There appear to be fewer six-figure salaried positions available today. The salary for many jobs seems to have dropped significantly.
As baby boomers continue to age and as the next generation advances in their careers, openings for leadership jobs will continue to shrink. While no one practices age discrimination, some people are calling for a particular type of training or experience that older workers will not have. Other companies are paying only entry-level wages for higher responsibility positions.
A challenge for baby boomers happens when, for whatever reason, the job or business they are used to ceases to exist and they have to begin planning for a sustainable retirement. Social security (for as long as it lasts) will help and needs to be supplemented. Supplementary income can be much less than baby boomers used to get in their previous jobs. At the same time, many of these baby boomers are especially concerned with the quality of life they experience--at home and at work. With age comes a desire for less stress, a shorter commute, regular hours, and quality time outside of work. Six-figure jobs frequently don't offer these added benefits.
Some people work best as employees and others enjoy earning their income directly--through sales or running their own business. Planning for retirement differs for these two types of earners and both need to create effective, workable, and sustainable plans to enjoy a good quality of life for the lifetime left to them. Planning for a 100-year lifetime does not seem to be too unreasonable in the near term, especially if the person planning is currently age 50 or less.
All of these terms are relative--we will each be thinking of what quality of life means to us and how much income we will need to cover planned and unplanned expenses as we age. What we do need to plan for is a network of income resources that will be sustainable as we age. This usually means that we need several streams of income, each of which can last for a long time.
In this context we need to pay attention to the long-term impact of our solutions. We don't want to begin relying on new car batteries that will further harm the environment when they wear out. One aspect of sustainability is keeping in mind an extended time frame.
Sustainability is important to keep in mind when thinking about retiring--especially in today's economy in the USA. Improvements in medicine, nutrition, and health have extended life expectancy. To maintain a high quality of life (not necessarily a very expensive lifestyle) to age 100, for example, it is important to create a flow of income adequate to support that quality of life (including inflation) either before retirement age or to supplement any retirement income that a person has access to.
After World War II, social security was developed to make sure that wage earners could have some supplementary income in case their pensions from work plus their savings were not enough to provide basic needs. Medicare came out of a similar concern. More recently, most companies have decided not to fund pensions directly and have turned to 401K plans where companies and employees purchase stocks, bonds, or mutual funds to plan for retirement. In the last few years, when the stock market took a nose dive, on paper, people have lost between 75% and 50% of the money they had invested. Of course they did not realize these loses yet because they do not manifest until the stocks, bonds, or mutual funds are actually sold. While the concept of dollar cost averaging (the concept that every dollar invested in the stock market will increase in value over an extended period of time) is still valid, some people do not have 40 more years to wait for the value to rise to the point where they need it to be.
News reports in the last few days have talked about "a jobless economic recovery." Claiming that while there are indications of economic recovery, new jobs--or jobs of equal value to the jobs that have been lost--are not being created. These same reports speak to a 10% unemployment rate for the country. Unemployment rates do not include those whose benefits have run out and who, while possibly still unemployed, are now "off the radar."
My mother's highest salary in the public school system was about $22,000 per year as a supervisor. When she retired, two supervisors were hired to do what she did and they each earned about $60,000 per year. The economy shifted and her generation operated under a much lower ceiling for pay.
In today's economy we may be facing a reversal. Excluding the super-high-incomes of certain executives of what have historically been multi-million dollar companies, many salaries have been in a six-figure range. There appear to be fewer six-figure salaried positions available today. The salary for many jobs seems to have dropped significantly.
As baby boomers continue to age and as the next generation advances in their careers, openings for leadership jobs will continue to shrink. While no one practices age discrimination, some people are calling for a particular type of training or experience that older workers will not have. Other companies are paying only entry-level wages for higher responsibility positions.
A challenge for baby boomers happens when, for whatever reason, the job or business they are used to ceases to exist and they have to begin planning for a sustainable retirement. Social security (for as long as it lasts) will help and needs to be supplemented. Supplementary income can be much less than baby boomers used to get in their previous jobs. At the same time, many of these baby boomers are especially concerned with the quality of life they experience--at home and at work. With age comes a desire for less stress, a shorter commute, regular hours, and quality time outside of work. Six-figure jobs frequently don't offer these added benefits.
Some people work best as employees and others enjoy earning their income directly--through sales or running their own business. Planning for retirement differs for these two types of earners and both need to create effective, workable, and sustainable plans to enjoy a good quality of life for the lifetime left to them. Planning for a 100-year lifetime does not seem to be too unreasonable in the near term, especially if the person planning is currently age 50 or less.
All of these terms are relative--we will each be thinking of what quality of life means to us and how much income we will need to cover planned and unplanned expenses as we age. What we do need to plan for is a network of income resources that will be sustainable as we age. This usually means that we need several streams of income, each of which can last for a long time.
Wednesday, September 2, 2009
Freedom, Choice, Priorities, and Streams of Income
As we age, we have opportunities for multiple experiences. My birthday is coming up this month, in fact, it's one week from today. This has been a great time for reflection. Part of my reflection has been about "freedom." The freedom I am referring to is more than the freedom we enjoy as citizens of the USA. That's wonderful in itself. This freedom is about the possibility of making choices and priorities regarding quality of life now and in the future.
Robert Allen has written a series of books dealing with the importance of streams of income. He talks about "money mountains" and that streams of money flow from these mountains. If everyone has three or four of these mountains, then, if the stream slows or drys up from any one, enough money is still coming in from the other mountains. The economy in the USA in 2009 shows the importance of many of these ideas.
Some of these mountains include our employment (jobs, businesses, farms, what we do to earn income). There are several investment mountains (stocks and bonds, residential and commercial real estate to name two). The Internet is another mountain which can add a variety of income generating opportunities. Another area of need is the concept of residual income. Robert Allen suggests that network marketing may be one way to begin to generate residual income, though it is not always easy to find legitimate network marketing opportunities that someone wants to engage in.
Freedom comes when we can make the choices and priorities we want in our lives and have sufficient income to support them.
Birthdays are good times to think about retirement. I know I won't stop working. I love what I do too much. What I want to have the opportunity to do is to choose whom I will work with and to be able to make my fees reasonable and affordable so that I can work with more people and organizations.
An axiom in investment is that high rewards come from high risks. In employment, high salaries usually are associated with high demands and expectations--and less freedom. Often people choose to invest time and energy in high paying jobs today for a better quality of life tomorrow.
As I grow older, my tomorrows are today. I want more freedom in my life and am willing to work for that. The resididual income I have in place from work and experience done "yesterday" and my lifestyle choices today help me balance my freedom to choose what I'll be doing with my life in terms of income.
I need to keep working the "multiple streams of income" ideas to keep my future quality of life as good as it can be. Health care insurance is important to creating this sense of freedom. No matter how much reserve we accumulate, health care needs in our future can consume everything we have. With a good balance of health care insurance as part of our daily quality of life choices, we can preserve our freedom and quality of life in our futures for a much longer time.
Robert Allen has written a series of books dealing with the importance of streams of income. He talks about "money mountains" and that streams of money flow from these mountains. If everyone has three or four of these mountains, then, if the stream slows or drys up from any one, enough money is still coming in from the other mountains. The economy in the USA in 2009 shows the importance of many of these ideas.
Some of these mountains include our employment (jobs, businesses, farms, what we do to earn income). There are several investment mountains (stocks and bonds, residential and commercial real estate to name two). The Internet is another mountain which can add a variety of income generating opportunities. Another area of need is the concept of residual income. Robert Allen suggests that network marketing may be one way to begin to generate residual income, though it is not always easy to find legitimate network marketing opportunities that someone wants to engage in.
Freedom comes when we can make the choices and priorities we want in our lives and have sufficient income to support them.
Birthdays are good times to think about retirement. I know I won't stop working. I love what I do too much. What I want to have the opportunity to do is to choose whom I will work with and to be able to make my fees reasonable and affordable so that I can work with more people and organizations.
An axiom in investment is that high rewards come from high risks. In employment, high salaries usually are associated with high demands and expectations--and less freedom. Often people choose to invest time and energy in high paying jobs today for a better quality of life tomorrow.
As I grow older, my tomorrows are today. I want more freedom in my life and am willing to work for that. The resididual income I have in place from work and experience done "yesterday" and my lifestyle choices today help me balance my freedom to choose what I'll be doing with my life in terms of income.
I need to keep working the "multiple streams of income" ideas to keep my future quality of life as good as it can be. Health care insurance is important to creating this sense of freedom. No matter how much reserve we accumulate, health care needs in our future can consume everything we have. With a good balance of health care insurance as part of our daily quality of life choices, we can preserve our freedom and quality of life in our futures for a much longer time.
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