Dedicated to Deposits: Deals, Data, and Discussion
Featured Savings Rates
Featured Accounts

What Retirement Crisis? Retirees Say They’re Doing Just Fine, Thank You Very Much

Saturday, June 8, 2013 - 8:05 AM
Maybe we worry too much about retirees. As a group, they are more likely than working people to describe their finances as comfortable, according to a new poll.  How can this be? Aren’t oppressively low bank rates crushing the lifestyle of folks concentrated in conservative investments?

On its face, the comfort level that retirees express is confounding.  Low rates  have curbed income, rendered fixed annuities a costly solution, and jacked up the premiums on long-term care insurance, among other things. Meanwhile, retirees are far more likely to report less income than working people.

So why are retirees feeling so secure? For one thing, only 41% of folks past age 65 have interest-bearing and other financial assets in retirement accounts; Social Security is the principal income source  for nearly half of older Americans and many others receive guaranteed income from a traditional pension plan. If you have no rate-sensitive investments, low rates are nothing to worry about.

Meanwhile, many of those with financial assets have shifted them into riskier segments of the market, like Real Estate Investment Trusts, high-yield corporate bonds, and dividend-paying stocks. They have added risk but their income hasn’t necessarily fallen. So, again, low rates have had little impact on monthly income.

http://business.time.com/2013/06/07/what-retirement-crisis-retirees-say-theyre-doing-just-fine-thank-you-very-much/
 
12
ShorebreakShorebreak2,613 posts since
Apr 6, 2010
Rep Points: 14,167
1. Saturday, June 8, 2013 - 8:17 AM
Shorebreak:  If retirees are "doing just fine" it may be because they have learned the mantra "when you have less money, you spend less money".  It may mean living a different type of lifestyle than you had envisioned for yourself but you can still manage to survive.  Savers are people who usually have learned to live a more frugal way of life in order to save more so upon retirement, they just can't really splurge.  They probably already have their homes paid off so even with these low interest rates, they can do "just fine" if they were smart to save enough.  In our case, we got hit badly by losing our paid up home in a disaster and are back to paying apartment rent for the rest of our lives.  Now that can be a bummer but we can still survive thanks to our frugal way of living.
6
paoli2paoli21,372 posts since
Aug 10, 2011
Rep Points: 6,010
2. Saturday, June 8, 2013 - 8:42 AM
Re: paoli2 @ 1. Saturday, June 8, 2013 - 8:17 AM

Unable, and remaining hesitant, to comment on individual retirement situations except my own, it appears by reading the highlighted article that a "frugal way of living" is not the case with the majority of retirees right now.  Most seemingly do not really rely on interest bearing accounts to provide significant income, receiving adequate income from pensions and Social Security. Those that do require a stream of income to supplement their lifestyle have merely shifted from low yielding fixed income vehicles into "riskier segments of the market, like Real Estate Investment Trusts, high-yield corporate bonds, and dividend-paying stocks." Just like Chairman Bernanke advocated that they do.
6
ShorebreakShorebreak2,613 posts since
Apr 6, 2010
Rep Points: 14,167
3. Saturday, June 8, 2013 - 9:25 AM
Shorebreak:  Your article makes my same point:

Besides, “many of today’s retirees are Depression-era babies who have learned to live on less,” says Debra Whitman, head of policy, strategy and international affairs at AARP. They feel secure because they have made financial adjustments to match their expenses with their income, she says. Such adjustments can be more difficult for working people who may still have children in the house and far higher expenses."

"Financial adjustments" means the same to me as living "frugally".    If they don't want to make financial adjustments or live more frugally, then they are forced to go into riskier investments, imo.
1
paoli2paoli21,372 posts since
Aug 10, 2011
Rep Points: 6,010
4. Saturday, June 8, 2013 - 9:47 AM
Re: paoli2 @ 3. Saturday, June 8, 2013 - 9:25 AM

In contrast to "Depression-era babies", retiring baby boomers have learned to live with more riskier sources of income. More elderly retirees rely on the proverbial three-legged stool to prop them up in their golden years: Social Security, pension checks, and savings. Retirement doesn't have to last too long because life expectancies don't go as far as those retiring today. Retirement for boomers is very different. They will live longer, and have a more active (expensive) lifestyle. Their parents may have survived on 70% of their pre-retirement income (perhaps you've heard this common rule of thumb?) but that's probably not enough for boomers. If they put their retirement on that proverbial three-legged stool, there's a good chance it's going to collapse.
7
ShorebreakShorebreak2,613 posts since
Apr 6, 2010
Rep Points: 14,167
5. Saturday, June 8, 2013 - 10:16 AM
Re: Shorebreak

I tend to think about these things as it personally impacts me.  When it comes to the boomers, I am in total agreement with you.  They are a different breed.
1
paoli2paoli21,372 posts since
Aug 10, 2011
Rep Points: 6,010
6. Saturday, June 8, 2013 - 12:46 PM
SB,

Is there a report on the new poll to be attached?

Again, I do not trust "poll" results unless they are backed up by comprensive statistical anlysis.

As for retirement crisis/security, to each his/her own.  Some may live on social security and feel completely secure and happy.  Some may have $10M but still feel the world is coming to the end.

As for me, live one day at a time and by joyful with what I have (physically and spiritually).
3
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,426
7. Saturday, June 8, 2013 - 1:01 PM
51:As for me, live one day at a time and by joyful with what I have (physically and spiritually).

Yikes!  And I thought it was Shorebreak who drove me to Mylanta.  What is this be "joyful" stuff?  Haven't you read some of the other posts on the Blog?  Oh well.  Whatever works for you.  I prefere "Misery loves company". :)
1
paoli2paoli21,372 posts since
Aug 10, 2011
Rep Points: 6,010
8. Saturday, June 8, 2013 - 2:36 PM
Re: 51hh @ 6. Saturday, June 8, 2013 - 12:46 PM

"Is there a report on the new poll to be attached?"

http://www.gallup.com/poll/162890...tirees.asp
5
ShorebreakShorebreak2,613 posts since
Apr 6, 2010
Rep Points: 14,167
9. Saturday, June 8, 2013 - 8:49 PM
51:As for me, live one day at a time and by joyful with what I have (physically and spiritually).

Yikes!  And I thought it was Shorebreak who drove me to Mylanta.  What is this be "joyful" stuff?  Haven't you read some of the other posts on the Blog?  Oh well.  Whatever works for you.  I prefere "Misery loves company". :)

Why wouldn't I live a joyful life day by day?  I certainly hope we all do.

Let's put it this way: I know people who do not own much but they are quite happy and live a meaningful life.  I also know a few filthy rich guys (yeah, $10M or more), who are always anxious to make more and have no security or meaning for their living.  Go figure. 



3
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,426
10. Sunday, June 9, 2013 - 1:00 AM
 Yikes!  And I thought it was Shorebreak who drove me to Mylanta.  What is this be "joyful" stuff?  Haven't you read some of the other posts on the Blog?  Oh well.  Whatever works for you.  I prefere "Misery loves company". :)

 

Mylanta? Doesn't that taste like liquified chalk? Why would you want to take consolation in Mylanta? For me, I vote for a stiff drink and a cigarette! They taste better than Mylanta, and they're a hell of lot more fun than "misery loves company"!

Okay, joking aside, there's truth on both sides here. There is a difference between boomers and their parents' generation, as Shorebreak said. I was born in the final year of the Baby Boom (unfortunate me), and I have to admit in all sincerity that my generation has always been a little too full of itself, and will not settle for scaling back their style of living. The early boomers will probably be okay, but late boomers, who are still years from retirement, like myself, face a very real prospect that one of the legs of the aforementioned stool will be gone (Social Security), or at very least have substantilly scaled back benefits, for those that got to it before them may very well exhaust Social Security. So for us younger boomers, as well as the generation behind us, we can't count on that "leg." Instead, our savings will have to take a larger role in funding our retirements. And to build up a sufficient nest egg, that means assuming the risks of investments that can offer a better return than cash. What we can't afford is inflation risk. We may also be forced, whether we like it or not, to learn how to live more frugally. If there was a "silver lining" in the financial crisis of 2008, it scared many people into finally cutting their levels of debt, living more within their means, and building up a safety net of liquid savings. So there is wisdom in Paoli2's words as well.

But I have to agree with 51hh, up to point. Money alone doesn't guarantee happiness. Is the linguistic connection between "miser" and "misery" or "miserable" coincidental? People need to have meaning in their lives, the sense that there is a purpose to their existence, and money and other material goods cannot buy that. So the values that offer sustenance to our spiritual side matter. But people who are frightened that they lack the means to obtain the necessities of life aren't joyful either. It is true that money can't buy happiness, but it is also true that poverty is generally an obstacle to happiness.

What was this thread about again? Oh yeah. retirees feel secure in spite of low rates. I suppose the whole point is that it depends on which retirees you are talking about. The ones being corralled by Chairman Bernanke into riskier asset classes, or the ones like our friend Paoli2 who are concerned about being sheep led to the slaughter?

As for me, maybe my stiff drinks and cigarettes might mean that I won't have to worry about retirement and three-legged stools after all!

 

4
WilWil242 posts since
Feb 26, 2010
Rep Points: 1,285
11. Sunday, June 9, 2013 - 7:05 AM
Good point, Will.

I am disciple for optimum theory.  It states that "If one does every step of the process (in this case our entire life) the best one can; it is ultimately the optimum process" because one cannot improve it further and because one does not waste time/energy on those "uncontrollable" variables.

Here is my point: The controllables in our life is to make the best of each day in terms of physical health, investment/savings strategy and pursue of happiness (I prefer a deeper word called joy).  Sorry, I do not worry about the "uncontrollable" variables such as loss/reduction of social security, market drops, Government (Fed's) policy, low interest rate, etc.  I employ all the information I have each day and optimize my "life" strategy accordingly.  For example, I got in SWACU with 4% APY, I do not worry about low interest rate at this point and I have a strategy when that rate drops as well.  Thus in sum: live best and live full each day and carry no anxiety or regrets (or misery) -- No need for wine and stuff:D

Contentment is the best virtue: After all these, is $10M going to make one happy? or is it $100M, $1B?  Ask Bill Gates/Warren Buffett  whether he is truly happy due to the $xx B or something else.  Folks, money can not make one happy; with too little it makes one anxious/miserable of course.  But I believe that most of us here have "enough", depending on our perspectives of life.  The happiest (most joyful) people I witness over the years are certainly not "rich" people from the worldly standard. 

Nobody (Fed or others) are forcing us into riskier asset classes: We ourselves need to consider our own situation and make the "best" of the financial environment/climate (including Fed's policy and including social security future).  It is our money and our future, take control under those controllable variables we have and live a joyful life (i.e, quit complaining and suffering since those matters one complains are not under one's control; it simply produces negative energy that would damage ourselves).

Just my two cents (not trying to convince anyone:D) from my own perspectives without retribution.

Off-topic; but I hope that we all see this retirement issue from a balanced perspectives delineated (by several of us) in this thread:-)

Cheers!! 
4
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,426
12. Sunday, June 9, 2013 - 8:36 AM
51 & Wil:  It's Sunday and my day off.  No sermons.  Just want to say "didn't you see the smiley by my "misery loves company"?  I keep forgetting I am typing on the internet and no one can hear the inflection in my voice or see "my" smiley face when I post.  I spend my life helping and bringing as much joy as I can to others.  Don't judge me by my stupid, unthinking posts.  As for the Mylanta, if I could drink, I wouldn't need it, Wil.  I will certainly never be one of the "sheep led to a slaughter".  I will always be the one refusing to "get in line".   However, I speak out mainly to help others refuse to be led to a slaughter.  Now I will give you peace from me since I have other tasks I must attend to.

Have a good Sunday, All!
3
paoli2paoli21,372 posts since
Aug 10, 2011
Rep Points: 6,010
13. Sunday, June 9, 2013 - 11:12 AM
51hh: I agree with most of what you said. Only a fool wastes energy on things that are beyond his control. And, of course, there is wisdom in counseling people to make the best with what they have. Wealth by itself is not the measure of personal happiness. However, supposedly we have a representative system of government, and if that system is indeed working as it should, then the people can exert an influence over government policy. An individual or even a group of individuals may not be able to influence or change that policy, but it is a certainty that it would be impossible to influence or change policy if they all remain silent. I personally don't like the proliferation of government intrusion into my life, and will not respond to further acts of intrusion, which pillage my freedoms and despoil my wealth, without uttering a single word of protest.

Paoli2: I know your Mylanta comment was said in jest, just as were my opening lines. Though I must admit I'm not too fluent in computerese, that is, the symbols used for "smilies." Which explains why you've never seen me use them. I certainly hope you didn't feel I was judging you for a light-hearted comment about Mylanta. And I hope that you don't judge me for a similarly light-hearted comment about stiff drinks and cigarettes. In actual fact, I rarely drink hard liquor. Cigarettes, on the other hand, well what can I say? I really enjoy smoking, so that part of my comment was a little more serious!
4
WilWil242 posts since
Feb 26, 2010
Rep Points: 1,285
14. Sunday, June 9, 2013 - 12:29 PM
Wil:  Me judge others?  I am just envious that you can still enjoy your drinks.  All I can do is cook with wines but boy do I make some yummy dishes with my Burgundy and Chablis!  Since the alcohol cooks out, it has no bad affect on my internal parts too!  I'm so glad you have a sense of humor especially about certain of my remarks and understood the Mylanta post.  I prefere the smilies on sites where you can actually see the little face.  Maybe one day Ken will get his guy to stick one on here for us to use.  I get fussed at a lot by some posters who misunderstand my posts.  Thanks for being so understanding.  Have a nice day!
3
paoli2paoli21,372 posts since
Aug 10, 2011
Rep Points: 6,010
15. Sunday, June 9, 2013 - 7:02 PM
Sorry if I drove anyone to that "Mylanta" moment.
My main concern right now is getting my local upholstery expert to make sure my driver's seat in my pick-up truck doesn't give me back pain. The rest of this stuff can take a temporary 'back-seat' for the time being, thank you very much.
5
ShorebreakShorebreak2,613 posts since
Apr 6, 2010
Rep Points: 14,167
Reply