Politics / Press Releases

AMAC Offers the Facts of Life For Would-Be Retirees in the 21st Century

pensions retirement money work retire AMACThe average 50-something-year-old is ill prepared for retirement

WASHINGTON, DC, Sep 21 – Recent reports of an increased rate of bankruptcies among America’s senior citizens provides a new incentive to prepare for retirement, according to Dan Weber, president of the Association of Mature American Citizens [AMAC].

“It’s not as easy as it used to be to retire.  It’s even harder to imagine early retirement these days.  So, for the over 50 set, in particular, it is time for a reality check.  Ask yourself ‘do I have a plan’ and if the answer is no, you’d better start making up for lost time,” says Weber.

Meanwhile, President Trump has stepped in issuing an executive order that would “expand access to workplace retirement savings plans for American workers.”  Weber notes that the order is aimed at lowering the costs for small businesses to create retirement plans for their employees.  It would also let small business owners pool resources to create retirement plans.  In a recent interview with iHeartMedia’s Sally Adams, Weber also explained that the order would allow employees to put away more money in IRA and 401k accounts for a longer period of time.

He told reporter Adams, “Right now, you have to start collecting from your IRA or 401K at 70 1/2 years old.  Many people are still working at 70 and don’t want to take out money that’s making money for them quite yet.  This will allow them to have some flexibility.”

Most of the experts on the subject of retirement agree that the average 50-something-year-old is ill prepared for retirement.  Many of them will tell you that a family man, these days, will need a million dollars in savings.  That may seem like a lot but people are living longer in this day and age and things are only going to get more expensive as the years go by.

Social Security can supplement retirement savings, but bear in mind that the average recipient currently receives a monthly benefit of $1,329.  And, if you decide you want to retire earlier than the Full Retirement Age [FRA] of 65 to 67 years old, bear in mind that your benefits will be reduced.  For example, if you decide to file for Social Security at age 62, it can be 20 to 30 percent less than it will be at your FRA.

If you want to see what you’ll have in your retirement, the American Institute for Economic Research offers a handy retirement calculator.  It will tell you how much you’ll be able to safely spend from your savings when you retire.

Weber notes that “many of us will decide to continue working in either full-time or part-time positions in order to supplement retirement savings and income.  We’re also making life-style adjustments such as reassessing our housing needs.”

He noted that more than 80% of those in the 65-plus-age bracket own their own homes in the U.S. and that in the great majority of cases their homes are their single biggest asset.  “So, it stands to reason that when the kids grow up and move on, many of them start thinking about downsizing by moving into more efficient and affordable housing.”

Or, he says, you may want to consider moving to another part of the country where the weather is better, the cost of living is lower and there are no local income taxes.  “However, it can be difficult to choose that option if it’s a big move and there are other considerations such as proximity to friends and family.”

 

ABOUT AMAC

The Association of Mature American Citizens [AMAC] [https://www.amac.us] is a vibrant, vital senior advocacy organization that takes its marching orders from its members.  We act and speak on their behalf, protecting their interests and offering a practical insight on how to best solve the problems they face today.  Live long and make a difference by joining us today at https://amac.us/join-amac.

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Jon
2 years ago

Solution to Social Security insoolvency:
1) Do a ‘Bail-Out ‘ for Social Security just like Wall Street received for the 2008 crash.
2) Have Wall Street PAY BACK WITH INTEREST the Bail-Out it received, and have those funds go into Social Security.
3) Have the government return the funds misappropriated from Social Security, and prevent funds from wrongful use in future.
4) Many other possibilities…

John Higgins
2 years ago

Be nice to your kids- THEY GET TO PICK YOUR NURSING HOME!

Dan W.
2 years ago
Reply to  John Higgins

Like a lot of things in life, we laugh because it’s funny and we laugh because it’s true.

~Bob Di Niro

Virginia Hull
2 years ago
Reply to  John Higgins

Beautiful ?

Dave
2 years ago

My retirement plans DON’T include sitting around worrying about finances. I have hobbies, and I expect my spending to go UP significantly in retirement, at least for the first decade or two.
My retirement goal is $2,000,000 in retirement savings before I fully retire.
That, along with income from several rental properties and other investments, should provide for a reasonable income level for an enjoyable retirement.

PaulE
2 years ago
Reply to  Dave

Exactly the right strategy. The only way to ensure a comfortable and enjoyable retirement is to have a long-term strategic plan for both savings and investment and stick to it. I can tell you that It works and I know many others who have done the same thing.

I tell young people I speak with that if you don’t want to end up having to scrap by on SS and worrying about choosing between food and paying for utilities or prescriptions, like a lot of your parents or grand-parents, then you should develop a long-term strategy for how YOU are going to be able to retire well. That means educating yourself on various financial options and getting started as early as possible.

This is one of the most glaring failures of our public education system at the high school level. There is absolutely nothing taught about serious economics or finance. Sure they offer a simple class on how to balance a checkbook and some very rudimentary household finance tips, but that is the sort of stuff that should be done in fifth or sixth grade. I’m talking about the need to have serious classes on understanding the markets, how they work, how to build a properly diversified portfolio or stocks, bonds, ETF’s, mutual funds both domestic and international and the risks and trade-offs associated with each. Something a 10th to 12th grade student should be able to easily handle. This way they develop a basic understanding of the financial markets before high school graduation. Then they can either make better decisions themselves or be able to better evaluate any financial advice given to them by CFA or some bank sales rep pretending to be an actual certified financial planner.

MaryAnn Wiedl
2 years ago

Back in the 1990s, financial planners were telling those who were responsibly planning for retirement that 4% interest on CD savings could be depended on. Since George W Bush ‘temporarily” lowered interest rates so the gov could “spend its way out of that recession”, interest on CDs has been insanely low. (Instead the feds spent like drunken sailors, apologies to drunken sailors). That’s been almost TWENTY years now! People approaching retirement haven’t been able to grow their savings. Those in retirement have had to deplete their savings to survive. A lot of the nations wealth and individual wealth has been sacrificed at the altar of insane federal government spending!

Dave
2 years ago
Reply to  MaryAnn Wiedl

This is why you DIVERSIFY your investments. Sure, CD interest is miserable, but equities have done quite well over the long term.

MaryAnn Wiedl
2 years ago
Reply to  Dave

Diversifying investments requires a good degree of knowledge and finding trustworthy advisors. There are a lot of people who for whatever reason don’t have the intellectual or educational sophistication to navigate choices with risk. The best way to get folks with very little extra money in their budgets to put some aside and watch it grow is FDIC insured CD savings. Keep In mind that the reason for FDIC insurance is that so many people lost everything in The Great Depression.

PaulE
2 years ago
Reply to  Dave

Absolutely correct Dave. A well diversified combination of savings and investments is the best way to ensure that you not only have enough money for a comfortable retirement, but that you’re not dependent on SS and whatever the federal government may do to further erode the program in the future.

Dan W.
2 years ago
Reply to  Dave

Agreed. Diversification doesn’t have to be complicated.

For liquid assets, short-term money in CDs, U.S. government instruments or money market funds and long-term money divided between a Vanguard (because of the low fees) total stock market fund and a Vanguard total bond market fund with the division based upon your age.

Bill H
2 years ago
Reply to  Dan W.

The only thing I would disagree with is any significant bond exposure. Before moving to my present advisor I was doing the Dave Ramsey plan in my 401 and doing very well. Bonds have been a poor place for investing for quite a while and that doesn’t appear to be about to change.

The other fallacy is that you have to cash out investments at 70 1/2. Yes you do have to pay tax on a percentage but you don’t have to sell in a possible down market. All you have to do is move the correct amount to a taxable account and pay tax on it.

Dan W.
2 years ago
Reply to  Bill H

Agree on your comment on bonds. It is better to have less exposure in bonds than the old school rule of thumb about the weight of stocks versus bonds at any given age.

If I am understanding your comment on required minimum distributions (RMDs) beginning at age 70 1/2, I also agree.

For example, you could transfer the value of your RMD from your IRA that was in a stock market mutual fund to purchase an equivalent amount of a comparable stock market exchange-traded fund (ETF) in your taxable account. Your overall risk and diversification would remain the same on the date of the transfer.

PaulE
2 years ago
Reply to  MaryAnn Wiedl

Please don’t confuse the lousy advice from the typical bank sales rep with a financial advisor name plate on his or her desk and pushing bank CD’s with an actual independent certified financial advisor. Those bank advisors telling you to park all your money in a CD paying 4 percent, while the rate of inflation in the 1990’s was running between 5 and 5.5 percent annually were NOT doing you any favors. Not only were you loosing money to the rate of inflation being higher than your rate of return, but what little interest you made on your money was fully taxable. That also ate into what little interest you were getting. So there is a real cost to playing it ultra safe and non-diversified.

I’ve spoken to a lot of fellow seniors over the years that have done the same thing who have and ended up in the same place. The primary concern that all of them voiced was to NOT TAKE ANY POTENTIAL RISK with their principle, while still making some interest on their money. Unfortunately, that leaves you with two low yielding, sub-optimal options: U.S. Treasury Bonds or bank CD’s. Neither of which keep up with the rate of inflation over time and are designed to “grow your savings”. In reality, there is little to no real after-tax growth to either. Their primary purpose is the protection of principle. If you buy a Treasury Bond, you are assured that you get back what you put in and a couple of bucks in accumulated interest. Same holds true with a bank CD.

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