#CashFlowQuadrant #RobertKiyosaki #employee #BusinessOwner #investor
The Cash Flow Quadrant.
The concept was created by Robert Kiyosaki, author of the “Rich Dad, Poor Dad” series, among other works.
Basically, Kiyosaki divides all of us, financially, of course, into one of four squares, forming a quadrant. In the two squares on the left side are the people who work hard for their money. In the two squares on the right side are the people who have systems or money that work hard for them.
Let’s look at the left side. The top quadrant is labeled E, for employee. Here are the people who have jobs in which they work hard to make someone else rich. These folks basically trade their time and effort for dollars. The amount of money they get depends on what someone else is willing to give them.
The second quadrant on the left side is labeled S, for solo practitioner, or self-employed, depending on how you look at it. These folks, too, trade their time and effort for dollars, but the amount they get paid can depend on how much time they want to put in, and how much in demand their service is. Though they pay themselves, largely, few of these folks get rich. Hopefully, they are able to set aside some money for insurance, retirement etc.
Moving to the right side of the quadrant, the top square is labeled B, for business owner. Kiyosaki said his “rich dad” called this quadrant B for big business or Bill Gates. Kiyosaki defines a big business as having 500 employees or more.
“Unlike the S, they don’t want to run the company by themselves. They want smart people to run the company for them,” Kiyosaki writes.
The B folks also could have large networks that can help them put gobs of money in their pockets. They may not own a large, bricks-and-mortar business, but they have big organizations that they’ve cultivated, and not only get rich themselves, but do so by helping others get rich in the process.
The fourth square in the quadrant is I, for investor. These are the folks who’ve accumulated lots of money, and are watching it grow exponentially through investing. Think of the “Sharks” on the TV show, “Shark Tank,” as a good example of people who are I’s.
Obviously, the object of the economy, as we in the U.S. know it, is to move more people from the left side of the quadrant to the right side.
Easier said than done, you might ask? Obviously, one can’t move freely from the left to the right. Certain things have to happen – or, better yet, YOU have to make certain things happen.
First and foremost, a person must WANT to move from the left to the right. That desire must be powerful enough to make him do whatever it takes to move – and take however long it takes to move.
Wealth accumulation requires discipline and sacrifice. You might have to give up some of life’s pleasures to get where you want to be. Take your lumps now, and take your pleasure later, as it were. It also, often, requires patience. Sure, there are some folks who inherit a lot of money and become instant investors. Big lottery winners can become instant investors, but often don’t have the discipline to do so. Therefore, many just spend their winnings until they run out of money.
You can also spend years toiling on the left side of the quadrant, putting away a little at a time and never touching it. That requires a good deal of patience.
So, how do you get from the left to the right side of the quadrant in your current situation? You may not need 500 employees, but if you have a big enough desire to move, there are many vehicles that can potentially get you there. To learn about one of the best, message me.
Meanwhile, if you are among those who criticize those who have more money than you, and you continue to toil on the left side of the quadrant, you may need an attitude adjustment, f you want to go to the other side. You may also need a big-enough desire to join, rather than beat, those you now criticize.
A move to the right side of the quadrant could be possible if you BELIEVE you can get there.
Peter
Tag Archives: retirement
FEAR OF RETIREMENT
#retirement #FearOfRetirement #boredom #RetirementFinancing
Are you afraid of retirement?
Does the thought of not working anymore create anxiety?
Are you postponing retirement, even though you know you should retire, because of your fear?
There may be lots of reasons people fear retirement. The biggest, perhaps, is financial. Perhaps loss of a paycheck would crush you. Perhaps you haven’t saved enough, and your pension, if you are lucky enough to have one, plus Social Security may not be enough for you to live the way you want.
Another fear may be boredom. You may say things like, “what am I going to do with myself?” Perhaps you don’t have a hobby or hobbies to occupy your time. Perhaps you fear what you might become by just hanging out, day in and day out.
Retirement experts have advice on both counts. Most say that retirement without the financial backing would be difficult. One way to determine whether you have enough to retire on is to look at your savings. Without touching your principal, are the dividends, interest and capital gains those savings produce, combined with other income such as a pension or Social Security, be enough for you to live on?
When we talk about “living” in retirement, it should be more than just survival. You should be able to have the money to do things you like to do, perhaps things you never had time to do while you were working.
If you think about this while you are young, you can plan accordingly. If you are older, and are at or close to a reasonable retirement age, and believe you won’t be financially secure in retirement, you may as well keep working as long as your employer will keep you. Remember, though, that you could walk into work one day, and be shown the door.
Let’s examine the time factor. If you believe you’ll be bored in retirement, there are many activities available to occupy your time. There are countless volunteer opportunities, for example. Before you retire, find an activity that would interest you. There should be no reason anyone has difficulty occupying his time.
There are some solutions that would both occupy your time and give you a potentially great income. To check out one of the best, message me.
In this day and age, retirement decisions are often made FOR people. Employers who reorganize, downsize or otherwise want older workers gone use many tactics to get people to leave. If they don’t leave voluntarily, the employer will find some reason to terminate them. Most employees don’t have recourse against the employer, and most older workers will have trouble finding new employment in their professional fields.
Older workers are supposed to be protected by labor laws, but creative employers will find ways to force them out.
The lesson in all this is that one should prepare for retirement as soon as he starts his career. Unlike decades ago, when job security was more prevalent, there is no real job security in any field today. A worker is one reorganization, or one bad manager, away from a dead career.
If you can work until you want to leave on your terms, you are among the very fortunate. More than likely, your retirement decision will be made for you.
If you are at a good retirement age and fear retirement, you may be wise – especially if you see things in your workplace that seem stacked against you – to retire as soon as you are able. Know that it won’t be hard to find things to occupy your time. In fact, you’ll probably find it amazing that you had time to work.
Peter
WORKING LONGER WILL MAKE YOU SICKER
#RaisingTheRetirementAge #retirement #WorkingLonger #disabilities
The government continues to raise the retirement age.
People are working longer.
Yet, their health continues to decline.
Ben Steverman discussed this in an article for Bloomberg News. It was also published Oct. 24, 2017, in The Atlanta Journal-Constitution.
“The age-adjusted mortality rate in the U.S. rose 1.2 percent from 2014 to 2015, according to the Society of Actuaries,” the article reads. “That’s the first year-over-year increase since 2005, and only the second rise greater than 1 percent since 1980,” the article says.
So, Americans are retiring later, dying sooner and are sicker, the article says.
Almost one in three Americans age 65 to 69 is still working, along with almost one in five in their early 70s, the article says.
Americans in their late 50s have more serious health problems than people of those same ages 10 to 15 years ago, according to the article. To boot, cognitive skills have declined. Those with a retirement age of 66, 11 percent already have had some kind of dementia between ages 58 and 60, the article quotes a study by University of Michigan economists HwaJung Choi and Robert Schoeni.
Experts say obesity, high rates of suicide, drug overdoses and alcohol abuse have been cited as causes, the article says.
The higher death rates are good news for pension plans, the article points out.
“Americans may have already seen most of the benefits from previous positive developments that cut the death rate, such as a decline in smoking and medical advances like statins that fight cardiovascular disease,” the article reads.
So are you among the group that feels worse than you think you should for your age? Has the economic downturn of 2008 got you working at a job you hate, when it’s high time for you to retire?
Perhaps a solution to the latter problem may relieve the difficulties of the former. There are many ways to make money beyond a traditional W-2 job – especially one that you hate, or that is making you sick. To check out one of the best such vehicles, message me.
And though pension plans may like this news – the Society of Actuaries calculates a typical pension plan’s obligations could fall by 0.7 to 1 percent , the article says – not everyone is fortunate enough to have a pension.
That puts the onus on every worker to make sure their retirement is not only survivable, but potentially prosperous.
This may entail some thought outside the proverbial box, especially if your employer is not providing you a pension.
If you’re young, start saving your money sooner. Cut out that extra coffee-shop visit or extra meal out, and put that money toward your retirement.
If you are older, not only must you think about how long you WANT to work, but also how long you will BE ABLE to work. It may not be an illness that gets you. You may be one bad manager or one reorganization away from a dead career.
You may not be able to solve health problems, but money problems can be conquered. You just have to have the best life you can, and try to live as long as possible.
Peter
MOST PEOPLE AREN’T SAVING ENOUGH FOR RETIREMENT
#retirement #pensions #savings
Most everyone knows or suspects that people aren’t saving enough for a decent retirement.
But a World Economic Forum report spells it out: People are living longer. Investment returns have been disappointing. Therefore, within three decades there will be a $400 trillion shortfall worldwide in retirement savings.
The report was cited in an article by Katherine Chiglinsky for Bloomberg News. It was published June 4, 2017, in The Atlanta Journal-Constitution.
The shortfall includes a $224 trillion gap among the six large pension-savings systems: the U.S., U.K., Japan, the Netherlands, Canada and Australia, the article quotes the report.
Employers have been moving away from pensions and offering defined-contribution plans, which include 401(k)s, and individual retirement accounts. Those categories make up about 50 percent of global retirement assets, Chiglinksy writes.
The report warned that the savings shortfall in the U.S. is growing at a rate of $3 trillion a year, and may climb at an annual rate of 7 percent in China and 10 percent in India – countries with aging populations, growing middle classes and a higher percentage of workers in informal sectors, Chiglinsky writes.
So, how are you set for your retirement?
Have you got a pension lined up? If so, it’s entirely possible that it won’t be there when you are ready to take it, or it could be reduced.
Social Security by itself won’t let you live a decent life. And, if Washington doesn’t act, benefits could be reduced eventually. Many experts say we needn’t fear that Social Security will go away entirely. But benefit reductions are a possibility in a few decades.
Think of your retirement planning this way: if it is to be, it’s up to ME.
If you are young, and just starting your career, make retirement savings a priority. If you aren’t raking in big bucks, start with a small percentage of what you are making. Put that money away. Don’t touch it!
Once your savings have grown to an investible amount, say, a few thousand dollars, get it out of your bank savings account and put it into something that will pay you higher rates. Get good advice from a financial planner that you trust. You may want to start with fairly safe – everything outside of insured bank deposits carry some risk – investments, and diversify more as your money grows.
If you are older, you need to put more of what you earn into retirement savings. Young folks have lots of time to balance gains and losses. Middle-aged folks have much less time. Talk to a financial planner about you goals, and let him or her guide you as to how much to save, and in what vehicles to invest.
Of course, cutting spending is a must. Increasing income may give you a leg up on your retirement savings. To learn about one of best vehicles for doing both, message me.
In short, you can take matters into your own hands. It’s all about setting priorities, making good choices and sticking to your plan.
Whatever you sacrifice now, be it $100 a month in lattes, taking too many expensive trips etc., will pay you back in spades when your job goes away. And you don’t have to live in complete deprivation to do it.
Just look for value in what you buy, and make good choices in how you save.
Peter
DO WHAT YOU LOVE; LOVE WHAT YOU DO
#DoWhatYouLove #LoveWhatYouDo #BuildALife
If it weren’t work, they wouldn’t pay you for it.
If you do what you love, you’ll never work again.
You work so you can have the things you want in life.
Instead of building a life around income-producing activities, build a life – then figure out how to make money.
All of these axioms are true. Depending on the type of person you are, some ring truer than the others. If you hate your job, the first and third ring especially true. If you love your job, the second one probably fits you. If you are among the few who’ve looked for, and found, ways to produce income WITHOUT having a traditional or typical “job,” the fourth statement can be your mantra.
As the job scene changes, we don’t have the luxury of reliving the past. We have to find a way to deal with what is today. The economic downturn of 2008 changed a lot of lives. Some people’s jobs were lost and will never return. Those who stayed employed may have found their jobs have changed – probably forever.
If the first axiom rings true for you, and you lost your job, you are probably out pounding the pavement looking for another one. If you’ve found another one, you are lucky. If you are still looking years later, perhaps a new strategy is needed. You may have to figure out what your skills are, and figure out how to parlay those skills into a business of your own. When you own your own business, no one can fire you, or lay you off. However, you can do it to yourself if you give up on it too soon. If you need an immediate income, you may have to resort to finding a different job, even if it pays less – and most do – than you had made previously.
START YOUR OWN BUSINESS
If you’ve saved well, invested well and were wise about how you’ve lived – and have lost your job — you may now have the luxury of starting a business and staying with it until it succeeds. If you do this successfully, the second axiom could ring true to you. If you have a business, you’d better love what you do, or learn to love it, because it will take the routine out of your previous life. It could consume you, especially if it is either wildly successful, or a real struggle to keep afloat. Remember that being in business for yourself involves more than just doing what you do. You have to market yourself, and find ways to let others know you are out there and available for them. That may not come easily to most, but it’s vital to your success.
If you are working, and don’t think your job will ever disappear, remember we are in an age in which companies reorganize often. You might want to take to heart the fourth axiom. Look around for any number of ways to produce income. To learn about one of the best vehicles for that, message me.
You can set up an income stream without it interfering with what you are doing now. Never believe that you’ll always be able to work at a job on YOUR terms. Try to make yourself “retirement ready,” even if you are young and believe you have a lot of good years left.
Who knows? You might be so successful at your part-time gig, you’ll have forgotten how much you loved your old job. Remember, too, that anything good requires some effort. Starting now to build a part-time income can reap big rewards later. You may even have fun doing it!
Work is changing. So are the ways people can make money. No matter your situation, look to leverage your time and income to build the life you’ve always wanted.
Peter
NOT BUYING LUNCH CAN CREATE $90,000
#LunchMoney #savings #retirement
On average, Americans eat out lunch twice a week.
It could be more than that, if you buy your lunch at work every day.
The average American forks over $11.14 twice a week for lunch, according to a Visa survey.
If a person skipped that meal – or made or brought his own lunch – and redirected that money into an investment account earning 6 percent, he’d have an estimated nest egg of $88,500 30 years later.
These numbers were quoted in an article by Adam Shell for USA Today, also published in the June 8, 2017, edition of The Atlanta Journal-Constitution.
OK, sometimes dining out for any meal is a nice treat. And, one does not want to live a life of deprivation.
But if you are having trouble saving for retirement, or you believe you don’t have the money to do so, perhaps one can find the money in places he never thought to look.
As a child, if your parents gave you an allowance, it usually was meant to teach you how to make the most of your money.
If you got a weekly allowance, did your spending habits cause you to run out of money before your next allowance installment?
Ask the same thing, now that you are an adult, about your paycheck. Are you accustomed to cashing the check and spending the money until you run out? Put another way, how much of your money do you spend without first giving it a thought?
Some people are well off in retirement because they had a great job, with great benefits and a great pension plan or 401(k). Others have a nice retirement because, from the beginning of adulthood, they earned a paycheck, and knew where every cent was going. These folks also made sure that a certain percentage went into savings.
Once they saved enough money, perhaps they parlayed it into a house, which, for them, was probably a good investment. As they kept saving, they then began to invest in other things so that, when they reached retirement, they didn’t have to worry how they were going to live.
The younger you start this process, the more you will have when you get older.
So, let’s pose the question again: is skipping a couple of lunches out every week worth close to $90,000? Some might say that $90,000 won’t go far in retirement, which is true. But eating lunch at home, or bringing your own lunch to work, is just one way to build a bigger nest egg, even if your job is hardly lucrative.
Another way is to use some of your non-work time to find, and work on, other great ways to make extra money. There are many such vehicles out there that don’t involve taking a second job. To check out one of the best, message me. Perhaps you will also find other ways to save money, besides not buying lunch.
So, it is possible to have a nice retirement, even though your income is hardly a rich person’s tally. You may have to do without some things that give you a moment of pleasure. Naturally, don’t cut ALL fun out of your life, but just take great care in your spending habits. Perhaps you could not only bring your own homemade lunch to work, you could brew and Thermos your own coffee.
Then, you have to be disciplined enough to put that money into safe savings at the start. As your nest egg grows, you can graduate into investing, without being overly aggressive at first. Then, as the money grows you can parlay it into more diversified investing – all with the help of a trusted adviser.
So, to borrow from Stephen Sondheim, here’s to the ladies (and gentlemen) who lunch – without spending $11 a pop.
Peter
RETIREMENT SAVINGS SHORTFALL PREDICTED
#retirement #savings #RetirementSavingsShortfall
Most everyone knows or suspects that people aren’t saving enough for a decent retirement.
But a World Economic Forum report spells it out: People are living longer. Investment returns have been disappointing. Therefore, within three decades there will be a $400 trillion shortfall worldwide in retirement savings.
The report was cited in an article by Katherine Chiglinsky for Bloomberg News. It was published June 4, 2017, in The Atlanta Journal-Constitution.
The shortfall includes a $224 trillion gap among the six large pension-savings systems: the U.S., U.K., Japan, the Netherlands, Canada and Australia, the article quotes the report.
Employers have been moving away from pensions and offering defined-contribution plans, which include 401(k)s, and individual retirement accounts. Those categories make up about 50 percent of global retirement assets, Chiglinksy writes.
The report warned that the savings shortfall in the U.S. is growing at a rate of $3 trillion a year, and may climb at an annual rate of 7 percent in China and 10 percent in India – countries with aging populations, growing middle classes and a higher percentage of workers in informal sectors, Chiglinsky writes.
So, how are you set for your retirement?
Have you got a pension lined up? If so, it’s entirely possible that it won’t be there when you are ready to take it, or it could be reduced.
Social Security by itself won’t let you live a decent life. And, if Washington doesn’t act, benefits could be reduced eventually. Many experts say we needn’t fear that Social Security will go away entirely. But benefit reductions are a possibility in a few decades.
Think of your retirement planning this way: if it is to be, it’s up to ME.
If you are young, and just starting your career, make retirement savings a priority. If you aren’t raking in big bucks, start with a small percentage of what you are making. Put that money away. Don’t touch it!
Once your savings have grown to an investible amount, say, a few thousand dollars, get it out of your bank savings account and put it into something that will pay you higher rates. Get good advice from a financial planner that you trust. You may want to start with fairly safe – everything outside of insured bank deposits carry some risk – investments, and diversify more as your money grows.
If you are older, you need to put more of what you earn into retirement savings. Young folks have lots of time to balance gains and losses. Middle-aged folks have much less time. Talk to a financial planner about you goals, and let him or her guide you as to how much to save, and in what vehicles to invest.
Of course, cutting spending is a must. Increasing income may give you a leg up on your retirement savings. To learn about one of best vehicles for doing both, message me.
In short, you can take matters into your own hands. It’s all about setting priorities, making good choices and sticking to your plan.
Whatever you sacrifice now, be it $100 a month in lattes, taking too many expensive trips etc., will pay you back in spades when your job goes away. And you don’t have to live in complete deprivation to do it.
Just look for value in what you buy, and make good choices in how you save.
Peter
MILLENNIALS: MORE SAVERS AND SPENDERS THAN INVESTORS
#millennials #investors #savers #spenders
Millennials don’t see themselves as investors.
According to the 2016 Fidelity Investments Millennial Money Study, 46 percent of the millennials surveyed considered themselves as savers, 44 percent considered themselves spenders and only 9 percent considered themselves investors.
This study was quoted in an Adam Shell article for USA Today, which was published April 27, 2017, in The Atlanta Journal-Constitution.
Despite Wall Street’s attempts to woo the nation’s largest generation into the stock market, millennials have yet to embrace investing, Shell’s article says. Only one in three say they invest in stocks, the article quotes a Bankrate.com survey.
A Black Rock study says nearly half of the millennials surveys found the market “too risky,” the article says.
And, four in 10 say they don’t have enough spare income to put away for the future, the article quotes a financial literacy survey from Stash, a financial app.
Let’s break down the facts. If you are a saver, and are putting money away, where are you stashing it? In a bank? Under your mattress?
In this market, the rates of return on that money between those alternatives are not far apart.
Secondly, there is wild and crazy – “risky” – investing, and there is careful investing. Each requires consultation with someone you trust , but here’s a good rule of thumb: as you start investing, look for more conservative vehicles, i.e. relatively safe mutual funds. As your wealth grows, you can diversify and take a few, well-thought-out risks. If you really do well, and want to play, take a very small amount of money and invest aggressively.
Here’s another rule: it’s difficult to have a nice nest egg for retirement just keeping your money in a bank. There are very few, if any, traditional, regulated banking products that are paying decent returns. Banks are wonderful institutions for your checking account, and perhaps a small savings account to cover unexpected expenses.
But to really be a saver for retirement, you have to take SOME risk. And, make no mistake, EVERYONE has to save for retirement. As stock-market-loving baby boomers can attest, you never know when your job is going to go away.
For those of you in the category of not having enough spare money to save for the future, there are ways to solve that problem. First and foremost, you have to make saving for the future a priority in your life. Even if you see yourself as a spender rather than a saver, you have make SOME saving a priority, or the fun you are having today will turn into poverty when you retire, or when that good job goes away.
A suggestion might be to look at the many ways out there to use your spare time to earn a secondary income. To check out one of the best such vehicles, message me.
In short, saving is not just prudent, but necessary. The more you save when you are young, the more you will have, and the better your life will be, when you are older. If you are a millennial, talk to your parents about what to do. However their lives have turned out, there are lessons in their lives that will apply to you. Don’t underestimate their story, or their advice.
As you save, some risk will become necessary. Though the stock market looks scary, over time it has proved to provide the best returns. Find a trustworthy, knowledgeable adviser to help you get started, and who will continue to work with you. Don’t be afraid to ask lots of questions about fees, returns etc., so that you will have a clear picture of how to proceed.
Finally, watch what you spend. Don’t deprive yourself, necessarily, but look for things you can eliminate to allow you to save more money. Remember that a dollar in your pocket generally is better for you than a dollar you put into someone else’s pocket.
Your future could well depend on decisions you make in your youth. You don’t have to depend on things “going right,” if you make good choices now.
Peter
STATES RESPOND TO RETIREMENT CRISIS
#retirement #pensions #401(k)s #SocialSecurity
“It’s clear there’s a retirement crisis,” Illinois State Treasurer Michael W. Frerichs told small business owners. “This is a problem not only for families but for all of us,” the quote continues.
Frerichs was quoted in an Associated Press article on the subject by Maria Ines Zamudio. It was published Feb. 22, 2017, in The Atlanta Journal-Constitution.
Zamudio’s article focused on how seven states – California, Connecticut, New Jersey, Maryland, Oregon and Washington, as well as Illinois, are in various stages of implementing state-sponsored retirement savings plans.
The plans, the article says, are tax-deductible IRAs with automatic payroll deductions, for which employees don’t pay federal taxes on the money until it is withdrawn.
Americans without work-sponsored savings plans are less likely to save for retirement, the article says. Zamudio quotes research from the Employee Benefit Research Institute that shows 62 percent of employees with an employer-sponsored savings plans had more than $25,000 in savings. Some 22 percent of those had more than $100,000 in savings.
Meanwhile, according to the quoted research from 2014, 94 percent of workers without access to those plans had less than $25,000.
We can certainly debate whether it should be the government’s role to set up savings plans for workers. What isn’t really debatable is that $25,000, or even $100,000, won’t get a person very far into retirement.
A good retirement savings would provide enough so that the person or couple could live comfortably off the interest and dividends those savings would kick off. If one does not have to touch his principal in retirement, he’ll never outlive his money.
Of course, those fortunate enough to get a pension from their employers, combined with Social Security, have a little more to work with, in terms of income.
But will those vehicles be enough to have the retirement you want?
Retirement should be about more than just living Social Security check to Social Security check. It should be about having the resources, combined with the time, to do things one didn’t have the time to do while working. Examples include travel, hobbies etc.
But so many at or near retirement age are not in that position. Some had signed on to work for an employer because of pension benefits, only to find that when the time came to access those benefits, they weren’t there.
Others, perhaps, were forced out of their jobs prematurely through downsizing, technology or other efficiencies. As a result, they lost of lot of work time that could have allowed them to save more. Or, they were forced to take a lower-paying job elsewhere, making saving for retirement impossible, or nearly so.
If you are among those facing tough decisions about retirement – perhaps you tell yourself you’ll have to work until you die – there are a number of good options for earning income that could augment or even enhance your potential retirement income. To check out one of the best, message me.
Meanwhile, if you have a job, make saving for retirement a priority. Closely examine where your money goes, and see whether you can trim spending to put money into retirement savings. Presume that there will be very little to bail you out if you are “retired,” but can’t afford to be.
Also, too, think about your time. How are you spending what free time you currently have? How will you spend your time when you retire? Will you be bored? Will you have the resources to perhaps do what you’d like to be doing?
Certainly, retirement is about more than money. But having enough money will take one worry off your plate so you can decide how best to use your time.
If you don’t want to work until you die, do something today to help eliminate that possibility.
Peter
DLEAYED RETIREMENTS DON’T HELP TROUBLED ECONOMY
#DelayedRetirement #retirement #OlderWorkers
In decades past, one worked in a job, or for a company for 30 to 40 years and retired with a pension, Social Security and, perhaps, a no-stress, part-time job.
Some fortunate ones retired earlier than the traditional age 65. A scant few worked past age 65.
Retirements opened positions for younger workers to move up, and the jobs they vacated were available for newer workers. That was helpful to the economy.
In the last few years, since the 2008 recession, that dynamic has changed. More people are delaying retirement, largely because the relatively generous retirement benefits of decades past have been cut, or have disappeared. Another reason is that more people are being forced out of good jobs ahead of when they wanted, or had planned to, retire. They end up taking jobs that pay a lot less, so they have to work longer and retire later.
Michael Molinski, a Paris-based economist and writer, discussed this topic in a column for USA Today. It was published July 24, 2016, in The Tennessean newspaper of Nashville.
“People in the U.S. are working longer and waiting longer to retire – often not by choice – and that could be bad news for our economy,” Molinski writes. He quotes a study done at the University of Paris-Sorbonne that says, in part, “the most productive group is the group of core workers (ages 25 to 54) right in the middle” of the barbell-shaped labor force, Molinski writes.
In other words, more older and younger workers, starting at age 15, are being pushed into the labor force, he says.
He adds that older workers can be, and often are, valuable mentors to younger workers. But the average age for retirement in the U.S. has jumped to 62 in 2014, up from 59 in 2010, he writes.
“As a result, our economy is less productive than it could be, and that trend is expected to continue for the next 35 years unless something is done to turn it around,” Molinski writes.
Actually, when the traditional work cycle was alive and well decades ago, life expectancy was a bit younger than it is now. So, more people have more energy and, at least in theory, get “old” much later in life.
That isn’t to say that everyone WANTS to keep working later in life. Most of us, unless we really love our jobs, want to retire as soon as we are able. Also, many of us do not want to be FORCED to retire before we are able.
The key to making the work cycle work for you is to be retirement-able as soon as possible. You might decide to keep working even if you can retire, or you may be forced to retire before you want to. The key here is to make whatever you do YOUR choice. Circumstances may hit you in the face, but if you have options, you can hit back.
One option is to save and invest wisely throughout your working years, starting at the youngest age possible. Another is to have a Plan B, at which you work part time during your working years that will help you save money and earn an income that could enhance your options. There are many ways to do that, for those willing to look for them. If you’d like to check out one of the best, message me.
Working longer because you want to is commendable. Working longer because you have to could be torturous. At the youngest age possible, everyone should be thinking about how to enhance his or her options as life, and the labor force, takes its turns.
If you are an older worker and are able to retire, perhaps you should think about the younger person who really needs your job. If you are a younger worker and see many people working past when you think they should retire, don’t resent them. Instead, learn from them.
Peter