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How my retirement went missing

April 27, 2012

| Money Rates Columnist

Gary Boxall thought he was well prepared for the future. With nearly 40 years in the automotive industry, Boxall had contributed to his 401(k) plan and invested his money in his employer's company. But it wasn't enough when he was unexpectedly laid off three years ago.

After 17 years as a sales manager at a large dealership in Salem, Ore., a change in ownership brought about a change in employees.

"After 30 days, they started chopping heads like crazy," says Boxall. "There were no good-byes, no severance package."

At 63 years old, Boxall wasn't ready -- either professionally or financially -- to retire. While searching for a new job, he had to dip into his 401(k) to pay the bills. Now, at age 66, Boxall has found a new job, but he doesn't foresee being able to leave the workforce anytime soon.

"I am working because I need to have the income to support my family and the mortgage to keep my family comfortable," Boxall says.

Beyond the money, Boxall also says he is hoping to continue working to pass along his years of expertise to younger people. Although he currently has a full-time job, he continues to search for new employment in a position that will take full advantage of his people skills, training experience and work ethics.

More workers postpone retirement

Boxall isn't alone when it comes to delaying retirement. According to a 2010 issue brief from the Carsey Institute at the University of New Hampshire, the number of older Americans in the workforce has grown in the last decade.

In 1995, 17 percent of men and 9 percent of women older than age 65 were still in the workforce. By 2009, those numbers had risen to 22 percent of men and 13 percent of women. Nearly half of these men and a third of these women were employed year-round on a full-time basis. Individuals with college degrees and divorced urban women were among the groups most likely to continue working past retirement age, according to the Carsey Institute report.

Michael Argiro, a financial planner with 4T Financial, teaches a class called Savvy Social Security Planning for Baby Boomers. He says retirement doesn't have to automatically happen just because someone hits the Social Security Administration's full retirement age.

"There are many things to be said for working past 65 if you are healthy and enjoy what you do," says Argiro. "It is a social outlet and may allow you to delay Social Security, which will give you a higher amount later."

Delaying retirement can also lead to a delay in withdrawing money from IRA and 401(k) accounts. That alone can be a significant benefit for those hoping to stretch meager a savings account across a retirement that could conceivably span two decades or more. According to the 2012 Retirement Confidence Survey from the Employee Benefit Research Institute, more than 60 percent of workers have savings and investments totaling less than $25,000.

Exiting the workforce

"For those who would like to retire but can't, there are two options," says Keith Weber, certified retirement coach and author of "Rethinking Retirement." "The first is to reduce expenses as much as possible to see if they can retire on a greatly reduced income."

The second option, according to Weber, is to simply change jobs. Weber says research indicates many individuals retire not because they don't like working, but because they don't like their job.

However, getting a new job as a senior can be difficult -- just ask Boxall.

"Nobody wants to hire someone of my caliber at my age," Boxall says of his difficulty finding a job comparable to his previous position.

Retirement strategies for older workers

For those who are ready to retire but would struggle financially without their job, dropping to a part-time schedule may provide necessary income while reducing the strain of employment.

In addition, older workers may want to consult with a financial professional about the following strategies:

  • Managing retirement funds conservatively: If you haven't already, it is probably time to transfer your retirement money to a stable mutual fund or bond account. These funds earn little interest, but they also minimize the chance of losing money due to a volatile stock market.
  • Using a file-and-suspend Social Security strategy: For couples with one main breadwinner, this strategy can bring some extra cash into the household. The working spouse can file for Social Security and then immediately suspend payments. Suspending payments allows them to receive a larger monthly payment later. However, their spouse can then immediately begin collecting spousal benefits, provided they meet Social Security's eligibility requirements.
  • Consider downsizing: Houses are expensive to maintain, and older couples may find it makes sense to downsize to a smaller home, a condo or even a retirement community. In addition, one vehicle may be enough for some couples, and others may want to reconsider how often they use vacation property or second homes.

But ultimately, Boxall says there is only so much you can do when faced with the prospect of working away your retirement years.

"The only thing you can do is regroup," he says. "That's the bottom line."

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