Bloomberg had an article titled As Gen-X Nears Retirement, Many Fear They Can't Afford It-Now or Ever. The article profiled a half dozen Gen-Xers ranging from 45-60. Most of them definitely have accumulated decent sums thus far, maybe not enough to be on track for what they think they need, but they aren't in desperate trouble except for maybe one of them. Generally they all plan to work to 70 or beyond out of necessity.
There was an odd and I believe inaccurate emphasis on workplace retirement plans pivoting from defined benefit plans (pensions) to defined contribution plans (401k) starting around the turn of the century. My second real job after college started in 1993 and at that point many companies had already switched from pensions to 401k including that second job. People entering the workforce in 2000 were not the 401k guinea pigs. According ICI via Microsoft Co-Pilot, in 1985 there were 30,000 401k plans. There was no information on what percent 30,000 was back then, but those folks were the guinea pigs.
I'm not skeptical that employers to a poor job with educating employees but for an audience of new employees in their 20's it can be wrapped up in a couple of sentences. "You're gonna want to retire some day and your 401k is how do it. Put in as much as you can afford every paycheck and buy a stock index fund (there were plenty of them 35 years ago), the company is gonna match some of it and then in ten years, start learning about personal finance." Optimal? Probably not. Adequate? Probably so. Simple? Hell yes.
At some older age, I'll assume 50's, you start to begin to understand if/when/how you'll retire in terms of the dollars and cents of it. If at 35 or 40 some sort of financial calculator told you your "number" is $1,300,000 at age 65 and at 55 you have $275,000, there's a low probability of hitting your number. If you have $900,000 with ten years to go, odds are pretty good of hitting that number.
The number you anchored to when you were younger is essentially meaningless. Whenever you retire, whatever amount you have, that is your reality, that is what you have to make work. If your total nut is $82,000 in today's dollars, your Social Security combines to $40,000 and a safe withdrawal rate from savings is $31,000 then you gotta figure some way to make up that $11,000 difference. That could mean cutting back somehow (many different ways to do that) or creating a third income stream of which there are infinite ways to do that. These sorts of numbers can reasonably start to take shape quite a few years before you hope to retire giving plenty of time to work on creating an income stream if needed.
The article tried to scare readers about Social Security getting cut but gave no detail or context. If Social Security actually ever gets reduced, older Gen-x is not going to be impacted across the board. I wrote a post earlier working through my guess that maybe starting around birthyear 1975, younger Gen-X, could face across the board reductions. More likely for older Gen-X is some sort of means testing that impacts the very wealthy. Another idea I haven't seen anywhere else but from me is the elimination of the spousal benefit, not to be confused with the survivor benefit. Still though, the odds of any reductions are incredibly remote. I would still take the time to run your numbers assuming a 20-30% reduction all the same.
There was very little from any of the profiled Gen-Xers about health and fitness except for the 60 year old with very little accumulated. We spend a lot of time on diet and exercise here because good health is crucial to a successful retirement. We learn as children not to eat too much sugar. There is a learning curve to what that actually means beyond cookies, candy and soda but the less sugar we eat, the healthier we will be. I won't go too far down the rabbit hole on this point but the list of health benefits from less sugar (sugar=carbohydrates) is endless. The more meals you eat consisting of any combo of meat, eggs, fish and cheese the healthier you'll be. If you're vegan, you need to figure out how to make up consumption of quite a few micronutrients and amino acids. I think it's doable, not 100% certain, but there is a learning curve to this too.
We learn as children that it is important to exercise. The list of health benefits from lifting weights is endless. Maintaining the ability to walk fast, bend down to pick heavy things and have a strong grip are all important benchmarks for physical health. Harshness coming but for most people, the only thing between having a very similar body shape to what they looked like in their 20's is habits. If you Google Dick Van Dyke's recent appearance on Kimmel, it is obvious that at 99 he pretty much has the same physique as he had 60 years ago when he played Rob Petrie. I've mentioned once or twice we have 97 year old neighbor who walks every day down on the paved road. From far away he looks like a teenager walking. I just learned the other day he plays pickleball.
The great thing is no matter your state now, irrespective of age, the body is very forgiving. A lot of problems are reversible with changes to habits but you have to start. Think of the money saved not having prescriptions and the time saved not going to the doctor all the time.
With a nod to yesterday's post, having health and fitness in order is our best shot to maximize our flexibility, resiliency and optionality.
And a follow up to last night's blog post related to very expensive things that happen and can throw off retirement plan math.
That is Rooster. Rooster loves duck toys. My wife brought that duck toy home yesterday and Rooster spent the afternoon loving it. He was so selfish with it, so motivated that no one else play with the duck that he swallowed it. My wife figured out that he swallowed it right away. "That makes no sense, he's never swallowed a toy like that before" I said. The odds of Rooster passing the duck were very low. This was potentially a very expensive problem. My wife guessed $3000-$4000. She runs a huge animal rescue here in Prescott so her guess is pretty educated.
We had something similar happen many years ago and fortunately I remembered the solution. He had to drink hydrogen peroxide which would make him throw up and out would come the duck. By drink I mean one of us (me) had to hold him while the other poured the peroxide down his throat. It took two or three minutes for Rooster to start throwing up and up came the duck on the second lurching. I was worried about having to pull the duck out if it got stuck in his throat on the way back up but thankfully it came right out.
In yesterday's post, I had more expensive things in mind than what this could have been but still, no one ever wants to write a four figure check to the veterinarian. We were lucky that between the two of us, we knew what to do. That won't always be the case.
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