Force Landing Into Retirement

This skill is essential for all working Americans as they approach retirement.

My wife is currently excelling in her career as an administrator; she's truly thriving. I had hoped we could retire together, but the air traffic controllers informed me that due to unforeseen circumstances, I was required to land my plane. My wife just reached 30,000 feet.  I was blessed that there was an airport nearby, allowing me to safely land my aircraft. Many might not anticipate such an event occurring at the height of their career.

What are you talking about Ted?  Early retirement is leaving many stunned and unprepared nowadays. I keep driving my wife crazy by telling her, "you need to at least start looking into the landing procedures." She doesn't even know how to lower the landing gear. "Honey, that's a long way off for me," she says. I state, "the past four years have flown by for me". Yet, I can't seem to convince her that four years is a short time at our age. If she works for four more years, we'll have fewer financial concerns in retirement. I've run our scenario through retirement calculators like Honest Math many times. That program is excellent and free.  They all show that 4 more years is key for us.

Ms. Farabee may not recognize that numerous scenarios could shift in the upcoming four years. Her parents have been a support for everyone in the family through end-of-life challenges. Having witnessed this with two aunts, an uncle, and a family friend, I anticipate significant changes in the next five years.

She might be caught off guard because everyone lives as long as Methuselah (Right?), according to the annuity salesman who declares, "this generation will live to 95."

 However, reality often tells a different story.  My Uncle Al was still spry, scampering to the bathroom at 91, until a fall and a broken hip put an end to that. I believe he passed away within 72 hours. The last four years were miserable for him because he missed his wife, and he told me every time I visited that he wanted to die. The others departed at a much younger age, in their early eighties. My Aunt Mary's passing at 81 was a complete surprise, given her active lifestyle as an avid walker. A fever in her childhood had caused damage to her heart. My Aunt Donna struggled with many health issues for many years before she went to glory.

But I digress......

I had a pandemic to start my decent.  The amount of research and paperwork to retire as a teacher was significant.  However, that is not the main issues that will make a forced landing into retirement terrifying. 

The budget: If you are the type of personality that doesn't closely monitor your revenues and expenditures then retirement will be a drastic adjustment.  You have a set amount of money to distribute for your needs and wants.  In fact, you will need to evaluate if you can continue the standard of living to which you've grown accustomed.  Truthfully, most cannot.

In retirement, paying a standard mortgage and unsecured debt may require millions of dollars.  There are only about a million millionaires in this country out of 300 million people. Up Oh.  How are these folks going to pay their expenses?

Debt:  If you still have debt in your late 40s then you need to look into Dave Ramsey's Financial Peace Studies today.  For the average person like me, the money accumulated without employment is simply not sufficient to cover most debts during retirement. If your 50s sneak up and your job dries out the changes in retirement will be alarming.Your retirement could be marked by sacrifice and poverty.  Your primary residence may have to be sold for additional funds. 

Health Care: The big issue once the 50-year mile marker is reached is the most expensive.  Your health. I've had my personal physician request an examination for the "C Word" twice within the last 7 years.  I've also had an expensive minor surgery.  And to think, I was quite the athlete in my youth.  Now my body can't handle simple carbohydrates or granulated sugar.

 Many people are unprepared for the inevitable decline in health that comes with aging, even among those who are currently in good health, and the associated costs that accompany this deterioration.  From my readings, it appears I am pretty average. I've needed two root canals and crowns the last couple of years even though I floss and brush my teeth twice a day.  My dentist and endodontist say my teeth are amazing for my age.  Really? My wife could retire today except for health expenses today and potential major health issues in the future.

Social Security: While employed you've heard that Social Security is running out of money, again (AND AGAIN), and don't give this issue much thought.  Then you are force landed into retirement and start looking at what paltry sums you've collected. 

 Even if you've saved a million dollars that's only about 40,000 bucks a year if you live to an average age. The average working household brings in about 20,000 more than that as of today.  Not exactly a comfy retirement for most. Eh? Most can't travel to beautiful locations a couple of times a year on that. And most people have a pathetic 200,000 saved in their retirement accounts according to experts. Yikes!

 So then that SS pamphlet comes in the mail showing you get about 2000 dollars a month at 62, 2500 at 67 or 3000 at 70. That brings you and your significant other up to about 70,000 a year. Sweet!  That's a lot of moolah in retirement and the government promised to give your money back.   And as sure as I am writing most retirees will be raving lunatics stating, "that is my money, don't touch it!!" The fact that there is no money there.......there is a subject for later musings.

 It's safe to say that you should not worry, and that SS will be available for those that worked at least 10 years and paid in.  Pretty bold statement, Ted.  Not really.  The largest demographic of our population is going into retirement right now and not adjusting or cutting social security would make the political party held responsible unelectable.  The last post WW2 baby would be in the ground before that political party would resurge.

 We are also instituting more socialist policy, not less. The socialist media or media for short would have a field day with this move. Any changes to SS would have to be very gradual, or grandfathered in. Almost imperceptible.  I learned this as a song leader wanting to change the sanctuary carpet color or move the piano. I once sat in an elder's long-time pew.  I learned to not repeat that action. I remember the 17-year-old teens reaction when they moved the drinking age to 21. However, they might make adjustments to this young demographic's paybacks in the far future that believe SS is a scam anyway, like I did. 

We'll discuss this sick game our illustrious leaders play with retirees lives of starve and feed SS in later blogs.  SS is one of their favorite pawns that in reality they can only move very small increments. They moved the retirement age up a little and put a tax on a portion of it. Examine closely for a moment.  We can build useless million-dollar military aircrafts, and fund wars across the world, but can't pay working people back their money at bond rates when they are infirm? Please. Absurd. That's not political, that's just truth.

 Don't get sucked into the lies surrounding social security. It's unnecessary stress. Besides, granny and papa would not get most of their hard-earned money stolen by Uncle Sam in this country. It's just not going to happen. Take crazy someplace else.......we're all full up here.

The myth continues, fueled by some cynical senior citizens who say, "Don't count on social security; there'll be nothing left after I'm done." Charming, right? It's akin to the unsettling uncle who jokes about cutting off your toes. Such a considerate perspective towards the upcoming diligent generation, isn't it? Sarcasm intended. Ironically, those who advocate most strongly for reducing social security are often the ones with substantial wealth, hence they have no stake in the outcome.  They are lying to you and should be ignored. 

Most retirees will rely on SS for a large portion of their funds.  Living large in their youth, they could dance the night away, but they will retire with far less. They will come to the stark realization, once the party ends, that the cool cars, cell phones, gourmet coffees, and mini mansions were not worth the poor investment. Those items are actually the deterioration of your wealth. Thus, social security becomes of primary importance.  They are blessed to have it, in my opinion.

Pensions: Most retirees don't need to explore pensions today when they are grounded.  The shift occurred because, by the 1970s, workers changed jobs more frequently, and pensions were considered inequitable. Therefore, unless one is employed by a government agency and can tolerate the occasionally dreadful work environment for a long duration, it becomes necessary to allocate a part of one's earnings to a self-managed investment plan.  I receive a pension as a state retired employee and am blessed to have this income.  

Nevertheless, I endured to become vested and persevered through several stagnant years to secure a sufficient retirement fund. This compelled me to remain in a toxic work environment for more years than I would have if I had the option to pursue employment elsewhere.

The malpractices and criminal activities of pension managers have led to a decline in the popularity of pensions. I am among the few employees, I believe, who understand the reasons behind this. The final phase of my career was particularly challenging, and I was eager to leave. However, departing would have meant substantial financial losses. It's up to each individual to decide if they can make the same choice I did. When I left, it took a toll on my health, and I am still resolving some matters. Were the benefits of persevering worth it? I certainly hope they prove to be in the long run.

401K:  Due to the aforementioned pension issues, the government established a portable retirement fund in the late 1970s that stays with you throughout your career. This type of investment has accompanied my wife from her initial role in home health care, through a nursing home position, to a small private firm, and now to the large national corporation where she is currently employed. Sweet!  I wish I could have had this option to step from job to job out of a government institution without losing any of my savings.

All that being said, teacher pensions are forced like taking out income tax. 401K type of investments is elected.  And guess what the average worker does. Elects to only cover the employer match of about 3-5 percent like we did. 

. That leads to about a 180,000 or less when you are forced down. You have pretty much put this fund out of you mind until you hit your 50s so initially you will be impressed. When you started work in your teens or twenties that is a lot of money.  When you are retired, this is a pitiful amount that is less than 1000 dollars a month to live on. With one spouse landing in retirement, we started maxing this fund out adding catch-up contributions before the pandemic.  If the mortgage and all debts are paid this is a wise thing to do.  

Time is the most influential factor for a 401K; delaying contributions can be costly. If we continue investing at the current rate for four more years, we will do well. However, this next thought can dishearten many. Had we started contributing 10 percent in our 20s, our investments could have exceeded a million dollars in this one investment by now. Investing 15 percent could have yielded about 3 million dollars today. I was taught sine, cosine and tangent in Trigonometry, but not this information. I discovered this information myself in my late 40s.  

 Looking back, I would strive to contribute at least 10 percent to the 401K. Most people could live comfortably with such wealth, supplemented by Social Security, and for very few, a pension.

 In the future, I aspire to distribute golf clubs at a mini-golf course or perhaps sell appliances at Lowe's. I desire a job that stays at the workplace, unlike education and ministry, which can encompass nearly every facet of life. Yes, part time work could be necessary.

These are just a few considerations if your employer, after a couple of decades, is hinting, not so subtly, that they want you to leave.

Later, we will discuss emergency funds, transportation and housing requirements, long-term care, taxes, and many other topics that often catch people off guard. It can be daunting when you are putting your aircraft in the hanger permanently.