Rethinking retirement

For many baby boomers, the road to retirement has detoured through low-interest potholes and a skidding stock market.
Marie Havenga
Dec 15, 2012

Instead of cruising into retirement with wealth, the recent recession battered many boomers with job loss, stock and housing value collapses, and almost non-existent interest on savings.

Many portfolios simply idled along in what some are calling “the lost decade.” Or, worse yet, values hit reverse, forcing some investors to rethink their retirement route.

In 1991, one in 10 workers told the Employee Benefit Research Institute that they planned to postpone retirement until they were older than 65. By 2007, three in 10 said that.

This year? More than four in 10.

Because of the economic S-curve, many nest eggs simply don't have the padding to support what some retirees had planned. So many are opting to fluff it up by either delaying retirement or going back to work.

Grand Haven Township resident Ronald Ring is 65 and has been drawing Social Security for three years, but he's still working part-time to bring in some bucks.

Ring worked for the Eagle Ottawa Leather Co. for 37 years until the Grand Haven plant closed five years ago. He worked part-time at Meijer for many years and took a job as a Wal-Mart greeter in 2009.

“I started working because I ran out of unemployment and ended up with a divorce,” said Ring, who works 25 hours each week. “Things happen. But this is the best job I've ever had.”

Ring said he has pensions from Eagle Ottawa and Meijer, and also contributes to a 401(k) through Wal-Mart.

“I figure as long as I don't need to touch it, I've always got that to fall back on,” he said. “I can survive. I call Wal-Mart my 'fun mon.' Once in a while, something breaks that you don't expect and that money always comes in handy. As long as my body holds up, I'll keep working. I'll probably work until I die.”

Ring is part of a growing national trend.

During a recent Wells Fargo study, 30 percent of middle-class Americans said they believe they'll need to work until they're at least 80 in order to retire comfortably.

According to the Bureau of Labor Statistics, there were 36.2 million Americans age 65 and older in the labor force five years ago. Last year, 39.7 million retiree-age workers were still drawing paychecks.

A recent survey by the consulting firm Mercer discovered that 59 percent of people age 50 and older said they may delay retirement, a jump from 55 percent a year ago. And more than half of all workers surveyed said they expect to work at least part-time in retirement.

Mark Lancaster, president and CEO of Employmentgroup, said he's witnessed that trend in the firm's Lakeshore office, which serves the Grand Haven area.

“I don't have any exact data, but in polling some of my staffing offices, they definitely are seeing people coming back to work,” he said. “Maybe they're not getting enough interest on their nest egg or their nest egg has been depleted. There certainly are people who are forced to go back to work because of the economics.”

Lancaster said he also thinks the West Michigan work ethic plays into the trend locally.

“I think it's the way we're wired in West Michigan,” he said. “I'm 52 and I have no plan to retire. I like making a difference.”

Lancaster noted that many retirees simply want to stay active, with or without economic considerations.

“Today's 65 may be like yesterday's 50,” he said. “I think people don't want to retire. They want to stay engaged and want something to go do that's meaningful. People are vital into their 70s, and want keep working and make a difference.”

Emily Santellan, spokeswoman for the Ottawa County Michigan Works agency, said she sees several common scenarios.

“We see a lot of folks putting off retirement and working longer than they had planned to,” she explained. “Some people had to use their retirement funds to get by the last couple of years, they had to dip into their 401(k) or take a penalty to access their annuities. Or, they were laid off and their unemployment wasn't enough.

"As they get closer to retirement, some other factors come into play, like increasing health care costs," she added.

Another common scenario is that people didn't contribute enough over the years and they want to continue working to fluff up their nest egg.

“We know there were also folks that were hit hard by what happened in the stock market, along with the rest of the economic downturn,” Santellan said. “But this is a resilient group. There's definitely a sentiment that I don't want to become a burden to my children. I need to either find employment or I'm going to have to move in with one of my kids, which is really sad to see.”

Santellan said many baby boomers planned for retirement their whole careers with a target age of 62.

“Some are finding they can't feasibly do it until 68 or older,” she said.

Financial advisor Evan Llewellyn of Edward Jones in Spring Lake stressed the importance of diversifying when planning for retirement.

“There are very thin interest rates out there right now,” he said.

Certain bonds and dividends may offer stronger options, according to Llewellyn.

“We still want to have a balanced approach and properly mixed levels,” he said. “Just because somebody retires doesn't mean inflation and the cost of living stops. It's always something retirees need to keep an eye on. Right now, with low interest rates, it makes it more of a topic for people to keep their eye on.”

 

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