#retirement #RetirementPlanning #layoffs #buyouts
It’s an alarming trend, a letter writer wrote.
People in their 50s are getting laid off, he continues. The workers may get an optional early-retirement package which, if not taken, leads to a layoff a short time later, he continues.
Or, he says, it may mean becoming a contract worker making half the money with fewer, and more expensive to you, benefits. “A friend who refused a package last year will retire with much less this month because of shortsightedness,” he writes.
The letter writer signed his missive “B.” He wrote the letter to Peter Dunn, the USA Today columnist known as “Pete the Planner.” His column was also published March 4, 2018, in The Atlanta Journal-Constitution.
To sum up Pete’s response, he advises: “Draw a horizontal line on a piece of paper, and create a series of hash marks on the line, representing future age markers. Next, list major life events on the timeline. Be sure to note events such as your mortgage payoff year, when you reach age 59.5 (when retirement funds become available) and when you hit 62 (the first chance to activate Social Security). …
“When I drew my line, I noticed my need for money peaked at age 53,” Pete continues. “If I were to lose my job at or around 53 years old, I would be in big trouble. Therefore, I want to be sure not to take on any additional obligations around that time in my life. Knowing when you’re the most at risk is a reasonable way to avoid additional risks,” Pete writes.
He goes on to say that the age timeline will help people evaluate any early buyout options.
This topic is trending at a rapid pace. Pete advises that retiring at a normal age, with “normal” benefits etc., is challenging enough. Retiring early because one is forced to can be torture, he writes.
Planning is obviously a wise decision, but the best laid plans can go awry when you least expect them, or want them, to. So, we are in a milieu in which we have to PRESUME that we will not be able to work at our current jobs for as long as we want. Reorganizations will come frequently. Bad managers will come into your life and throw you out – or force you to leave on your own.
The age-old advice is to spend less and save more, as consumer adviser Clark Howard preaches. If you “have to have” the latest, up-to-date gadgets, think about whether your current gadgets are serving you well. A rule of thumb might be: if a new gadget will give me pleasure, and is not a necessity of life, postpone buying it and live with the older technology. When the old stuff craps out, then replace it.
If you have, say, a daily habit of buying a cup of coffee in the morning, you might think about buying a Thermos and brewing your own coffee to take with you.
In other words, examine the little things you do in life that cost you money. Do you really need to spend it? Remember, too, to think value rather than price. Sometimes, buying better stuff up front will keep you from buying multiple cheap things later on.
Finally, if you are planning your financial life as best you can, but you don’t think it will be enough when you get shown the door at work, think about investing a few part-time, off-work hours in something that may not only augment your income, but could surpass it. There are many such vehicles out there. To check out one of the best, message me.
Meanwhile, draw the diagram Pete suggests. This is especially good for folks who are less careful about their spending. Save well. Invest well – or as best you can – with a good, trusted adviser.
In today’s world, for many people, retirement decisions, unfortunately, are made FOR them by others. Be prepared for that decision to be made for you, as early as tomorrow, no matter how old you are.
Peter
Tag Archives: Clark Howard
MEDICARE’S EFFICIENCY
Medicare gets bad press as a big federal expense, but it is the hero of a recent expose on health care costs.
In fact, journalist and author Steven Brill, who investigated hospital costs nationwide, found huge markups on things you purchase as part of your hospital care.
Brill wrote the piece for Time magazine, and Time Managing Editor Richard Stengel cites the 10,000 percent markup hospitals put on acetaminophen as just one example.
In fact, Brill said on ABC’s This Week Sunday morning show Feb. 24, 2013, that if the introductory age for Medicare were lowered, not raised, health care costs would drop.
Unlike most businesses, hospitals charge you for everything you use, including the little paper cup you get with your acetaminophen in it. It probably costs the hospital pennies per cup to buy, but they might charge a few bucks for it.
And prices vary from place to place, as consumer adviser Clark Howard cited in an Atlanta Journal-Constitution column Feb. 28,2013.
What’s happening is that if you don’t have any insurance, you’ll get billed the marked-up price for your hospital care. Insurers, because they represent lots of people, can negotiate those prices down. And Medicare, the federal health insurance program for senior citizens, is only allowed to pay, by law, somewhere around the hospital’s cost for the item.
We can certainly debate whether hospitals would lose money if more people were on Medicare. Health care workers sing the blues over how little Medicare pays for things, and some providers won’t treat Medicare patients for that reason.
We also know that hospitals and other health care providers have to make up for those people whom they treat, but who can’t, or won’t, pay them. Hence, they mark up bills for paying patients to help recoup.
Brill also pointed out on This Week that Medicare processes claims for less than a dollar per claim, while private insurers pay about $20 to process each claim.
The point the Brill story makes is that insurance lowers medical costs. Medicare lowers them the best, but would a system in which everyone were on Medicare be sustainable? Would hospitals and other health care providers be able to survive on Medicare pricing?
Unlike other businesses, in which technological advantages and competition LOWER costs, technological innovation and competition can RAISE costs in the health care arena. Suppose Institution X get a CT scanner. Institution Y across town will want one, too, even though one scanner would probably service the whole area.
Institution Y doesn’t want to send its patients to Institution X for CT scans, out of fear that patients will elect to get all of their care at Institution X out of convenience. What if Institution Y LOWERED its prices because it doesn’t have the overhead to maintain the expensive CT scanner? If you cut your hand, would you want to pay the overhead for a CT scanner just to get a bandage?
The point is that people need to see, and care about, what things cost and how they are billed. Insurance makes people less concerned about that, but even though the patient may not be paying much of the cost, he still should negotiate bills. Don’t pay $5 for a paper medicine cup that you know costs the hospital a few cents. Or, better yet, have insurance for everyone and have the insurers negotiate prices down, Brill points out.
Health care is tricky, and there is plenty the average person doesn’t know, or care about. The Brill piece helped expose some of it, but it will be tough to get health care costs down considerably. Also, if we could reduce the costs considerably, how many health care providers can survive with the lower margins? Health care costs are high, in part, because we, as patients, don’t know where the money goes. If everyone were losing money, the system would have changed a long time ago. Someone, or some entities, benefit largely from this lack of knowledge. The money trail needs to be exposed, and the Brill piece goes a long way to do that.
If you don’t want to worry so much about costs, visit www.bign.com/pbilodeau. Not only will it help you save money on some medical care, it can help you earn enough money, perhaps, that you can easily pay for anything you need.
Peter
SPENDING: YOURS, MINE, OURS
We’ve all been taught that spending less and saving more will increase our wealth over time. No one disputes that.
When we want to cut household spending, most of us prefer to do it gradually, rather than all at once. For example, we may decide to go to Starbucks three times a week, rather than five.
As we get used to three times a week, we may go down to two, then one, then none. Then, we see a Starbucks run as a real treat, and do it once in a while. After all, the coffee you bring in your Thermos may not be Starbucks, and you may long for a treat once in a while as a reward for your good behavior. It’s OK to splurge, but not as a habit.
The point is, we feel cuts in household spending directly. They are a real sacrifice, as we see them, but we do it for a better, long-term outcome.
Then, there is government spending. It can best be called a real illusion. Yes, real illusion is an oxymoron, but it applies here. First, the money is REAL, even though the government can print it at will. It’s yours, mine and ours. The illusion comes in the concept that we would not really feel cuts in government spending, since so much of it is waste, so it should be relatively easy to cut.
We can prove that by watching people who advocate government spending cuts in the aggregate, but when it cuts things close to where they live, they complain bitterly.
We can debate whether government should be so intertwined with the economy, but the fact is, it is. It is tough to reduce its importance to the overall economic well-being.
Many private industries, defense contractors, for example, have, as their largest customer, the government. Cuts in defense could affect lots of private sector jobs. And just watch the almost annual debate over cutting superfluous military bases. The communities, and states, in which those bases are located would be hurt badly, even though closing such bases makes perfect economic sense from afar. Perhaps those bases are outdated. Perhaps they are just not needed for the country’s defense. But the shopkeepers, restaurants and other businesses whose clientele lives or works at these bases often go out of business when their base closes.
UNNECESSARY GOVERNMENT DEPARTMENTS VS.HIGHER UNEMPLOYMENT
Many see certain government departments as unnecessary. Certainly, the usefulness of some agencies is debatable, but cutting such agencies in their entirety, all at once, would puts hundreds of thousands, if not millions, more people out of work in a job market that can’t find work for those currently idle.
Proponents of such spending cuts would simply accuse those laid-off government workers as having too easy a life for too long. The fact is, they were working before the cuts, and now they are not. What do you think would be the bigger problem as you see it?
Our personal spending, multiplied out over time and people, affects the economy. The local Starbucks wouldn’t likely go out of business if we cut back our spending there, but if EVERYONE did, it might be a different story. The point is that spending cuts are most palatable if done gradually, over time. If Starbucks anticipates that people would be cutting back their coffee runs over time, they could plan for it – perhaps by lowering prices and providing better benefits to keep people from doing it. If you are a Starbucks fan, and the prices were lowered, you’d be less likely to cut back because Starbucks is reducing the spending for you.
If you want to spend less, save more and make money at the same time, visit www.bign.com/pbilodeau.
As with personal spending, government spending cuts should be incremental and gradual over time to make them more palatable. It’s been said that anyone can cut taxes. Anyone can raise taxes. Cutting spending, in a way that won’t have too many people screaming, is the real challenge. More people get re-elected because of spending, and securing aid for the home district, than by cutting taxes – or spending. Despite the criticism of earmark spending – look at how much of it was in the fiscal cliff deal – politicians rely on it.
The lesson here is to worry about spending in your own household. Saving more and spending less, as consumer adviser Clark Howard preaches on radio, television and in newspapers, is the key to building wealth. We should watch how our tax dollars are spent, certainly. But we should be aware that cutting spending in large amounts quickly is perilous. It’s no surprise that politicians fear taking on that chore.
Peter