You’ve probably seen the term used describe the job market in the past year or so — “The great resignation.” The reality is closer to “The great re-alignment.”
Few workers are quitting the world of work, they are only quitting jobs that are not satisfying financially or in any number of other ways. A term we will be hearing soon is “The great retiring.”
Demographics and COVID have combined to give us the greatest generational shift of work and wealth the world has probably ever seen.
Retire at what age?
As more and more of us hit what had been considered retirement age, fewer and fewer of us want to — or can afford to — retire. About 51 percent of Americans retire between the ages of 61-65. That means that about half of us don’t.
Many of us continue working, not because we need to, but because we want to — we like the idea of continuing to contribute to the market, the economy, even the culture around us.
Where’s the money?
According to a 2020 report from the Federal Reserve, one-fourth of Americans don’t have any retirement savings. Half of Americans aged 65 or over have an annual income lower than $24,224. The average retirement income in the U.S. for households run by someone aged 65-69 is $53,951, while the median income of households managed by someone 75 or older is $34,925.
About 46 percent of homeowners aged 65-79 still have mortgage debt. And many of them have other kinds of lingering debt.
Almost a third of older adults live alone, retirement statistics show. That means that 13.8 million seniors in the US live alone. And 53 percent of seniors live with a partner or spouse, while 10 percent live with their children.
About one million people each year in the U.S. move after they retire — and most move to a place with a lower cost of living.
Do the math
How much does it cost to live the way you expect to live in retirement? If housing is still about one third of your income, can you afford what you want?
The numbers are astounding — 28.6 million 56- to 74-year-olds retired in the third quarter of 2020.
Most of us can expect to live an average of 10-20 years after retirement — if we can afford to retire. You can see an exploration of how long the average person lives after retirement here: bbc.com/news/magazine-18952037.
For this reason many of us choose to keep working in some capacity on an indefinite basis. More and more of us are choosing that option. (See a previous article on this trend here: tacomadailyindex.com/blog/the-rise-of-the-un-retired/2452162.)
About one quarter of workers started saving in their 30s, while another 25 percent began putting money away in their 40s or later. When it comes to saving, sooner is always better because starting at a later age means putting more away each month.
And a simple principle, when setting money aside for retirement the more the better — and the earlier the better.
That extra $10 or $20, or even $50 every pay period makes a huge difference over several years.
The average yearly pension benefits in the United States range from $9,262 for private pensions to $22,172 for a federal government pension. Either way, it’s not much.
And many of us don’t have any kind of pension. These were once common, but less and less common each year. They have disappeared entirely in many industries. And they are unlikely to reappear any time soon.
Social Security to the rescue?
The typical American receiving Social Security in 2020 gets an average monthly benefit of about $1,294, according to the Social Security Administration. How much is that when it comes to your accustomed and expected expenses?
The literal bottom line question is: Is it enough? Your spending habits are unlikely to change much, so consider how much you already spend, compared to how much your income will be.
One consideration is to wait before claiming your retirement benefit. Those who claim at age 70 can get as much as 75 percent larger monthly payments than they would if they claimed at 62.
Consider Social Security as your economic baseline. You don’t want to go under it, but as far as possible above it would be preferable.
The ultimate bottom line for retirement is not exclusively financial. In every respect, retire when you need to. Working full-time is not for everyone.
And more and more companies are hiring — with flexibility as a central feature of many jobs. In this, as in many other ways, this is not the economy — or workplace — we once knew. Many offices have multiple generations working alongside each other.
Each one has its strengths and energies. We just might never see age-segregated work spaces again.
The gig-economy, after all, just might be a good fit for those of all ages.
Morf Morford is editor of the Tacoma Daily Index.