#retirement #RetirementAge #pensions #PensionPlans #WorkToAge70
Denmark is raising its retirement age to 70, to help shore up its version of Social Security.
Such a move is fraught with peril.
First, many occupations are physically demanding. At age 70, workers may not have all the physical characteristics to perform their jobs adequately.
Second, employers don’t want to keep people around until age 70 in any capacity. Once you get up in age, you are making a lot of money (in the employer’s eyes). They will want you to go, so they can hire someone younger and cheaper. Remember, too, that older people generally use the health insurance a lot more than younger people do, if the employer happens to provide such benefits.
In general, older workers are reliable, follow company protocol and are dedicated. That doesn’t mean they want to keep working until age 70.
Most of those who work until that age, or beyond, are high-level people – executives, celebrities etc.
Some who are still working at that age should not be: think singers.
Still, boosting pension plans is a real issue. With people having children, there are fewer younger workers contributing to most pension plans than there are retirees collecting. With these pension plans, it doesn’t matter whether people are working at age 70 AND collecting, because they are still paying in at the same time.
But, not collecting until age 70 can be a problem for a lot of workers.
Further, if Worker X is laid off by Employer Y before his or her retirement age, who will hire that person after that?
U.S. labor laws of the past were written to protect those older than 50 from undue discrimination. Of course, employers found ways around those laws if they really wanted someone gone.
If a person has a good job and loses it before his or her retirement, will he or she be forced to take a much lesser job at, say, age 60? Will an accountant have to go work in a grocery store until he or she retires?
Even though that happens sometimes, usually the ex-accountant is collecting an income from somewhere other than the store. He or she is just using the store job for pin money, social interaction etc.
But, if he or she is unable to collect an income and is forced to live off the store salary, how much of his or her life will have to go so he or she can survive?
Sell the house? Liquidate savings? None of these is a good option for the worker.
The best way to shore up retirement plans, like the U.S. Social Security system, is to tax every earned dollar during the working years.
Currently, the earnings cap is $176,000, which rises every year as average earnings increase.
The system would shore up pretty quickly if you put no cap on earnings to be taxed for Social Security. That way, executives, athletes, celebrities etc. who earn millions annually can pay their fair share and boost the system.
Perhaps there could be room for refunds if the system suddenly is flush with cash, but that is unlikely.
Forcing people to work into their elder years is not only cruel to the worker, but also impractical in the current job market.
The real problem for workers is finding ways to survive when they are forced to retire before they want to.
Peter
Tag Archives: forced retirement
HAPPY RETIREES
#HappyRetirees #mortgages #MultipleSourcesOfIncome #FullCalendar
There are three characteristics that make happy retirees.
Those are a paid-off, or at least paid-down mortgage, multiple sources of income and a full calendar of activities.
So says Wes Moss, who writes a Money Matters column for The Atlanta Journal-Constitution, and has a Money Matters radio show on WSB in Atlanta. He discussed happy retirees in his April 24, 2018, newspaper column.
Moss narrowed the happiness criteria down from the research he did for his book, “You Can Retire Sooner Than You Think.”
The mortgage issue is certainly up for debate. Certainly, when one is working, paying down mortgage debt is certainly a good use of money. It’s not a substitute for saving and investing, but if you have a relatively high mortgage interest rate, applying extra money to one’s principal in mortgage payments is like putting money in your pocket.
Of course, if your interest rate is relatively low, and you have a good financial adviser, you can probably do better saving your cash and investing it well. A rule of thumb: if you have a 5 percent interest rate on your mortgage, and you have a good financial adviser who can certainly make you a good deal more than that on your money – on average, of course – then saving and investing could be more lucrative over time.
On the other hand, in a down financial market, paying down that mortgage debt IS a good use of excess cash you might have. It’s certainly better than spending it on frivolous things.
Keep in mind that the more debt you pay down early in the mortgage, the less interest you’ll be paying toward the end of the mortgage. As more of your monthly payment is applied to principal, the sooner your mortgage will be paid off.
Multiple sources of income is also a good thing – not necessarily more income, as Moss points out.
We think of income sources for retirees in terms of a pension, Social Security and perhaps a low-stress part-time job that you like doing.
If you’d been a good saver and investor in your working years, you might also use some of the dividends, interest and other income your nest egg is now earning for you. Try to refrain from touching your nest egg’s principal. Whether you die young or live a long time, as long as your principal is relatively intact, you will NEVER outlive your money.
As for a part-time job, it may serve two purposes. It will provide some pocket money and keep you busy in your elder years. However, if you don’t need the job, your time may be better spent pursuing your favorite hobbies or other activities like, say, golf or travel.
Or, you could add to your sources of income one of the many vehicles out there that allow folks – retirees or not – to make a potentially substantial income by spending a few part-time hours a week. To check out one of the best such vehicles, message me. It could allow you to spend some non-stressful, even fun, time adding to your income sources and help friends do the same.
The lesson here is to plan for your retirement while you are young. You never know when you will retire – or be retired by your employer. You never know when that one bad manager comes into your orbit and kills your career.
If you plan well, perhaps forgoing some immediate pleasures to save money, you can retire, as Moss’ book title says, sooner than you think. If you are forced to retire before you want to, good planning could allow you walk away from that job with a smile.
Peter