SEBRING Retirement could be worse for Wes Linscott. He retired at 60 after 24 years as a police dispatcher and 911 operator in Maine.
He had planned to work two more years, but the demands and stress changed his mind, said Linscott, who now lives in Sebring. Linscott’s generation may be the last of the lucky ones. The early classes of the Baby Boomer Generation had company, state or local pensions.
“We are on the precipice of the greatest retirement crisis in the history of the world,” Ted Siedle wrote for the March 20 edition of Forbes. “In the decades to come, we will witness millions of elderly Americans, the Baby Boomers and others, slipping into poverty. Too frail to work, too poor to retire will become the new normal for many elderly Americans.
When governments and corporations eliminate their pensions, they banked on employee 401(k) plans, to which the employer would contribute. Then the Great Recession came, along with increasing unemployment, the stock market crash and the banking crisis. The 401(k) values were cut in half, according to monthly surveys by the Employee Benefit Research Institute in Washington, D.C.
As a result, the 2013 Retirement Confidence Survey found worker confidence in having enough money to live comfortably throughout retirement declined, “resuming the slow downward trend that began in 2008. More specifically, 28 percent of workers now say
“The average 401(k) balance for 65 year olds (is) estimated at $25,000 by independent experts – $100,000 if you believe the retirement planning industry,” Siedle wrote. “The decades many elders will spend in forced or elected retirement will be grim.
Teresa Ghilarducci, an economics professor at the New School for Social Research, estimates that 75 percent of Americans nearing retirement in 2010 had less than $30,000 in their retirement accounts.
Even worse, seniors who retired and then realized they couldn’t possibly live on retirement savings realized they can’t re-enter their professional workplaces.
“The paradigm has truly shifted,” Bill Vick told the Associated Press. The Dallas executive recruiter started BoomersNextStep.com to help Baby Boomers who are now deciding how to buy a business or stay in the workforce, if that’s still an option.
“Now, when you’re looking for a job, you’re competing in a world where the competition isn’t just the guy down the street, but the guy sitting in a café in Hong Kong or Mumbai.”
Linscott realized he’s no longer well suited for the new jobs he got. “I did plan to continue working in another job for a few more years. I tried two different jobs and ended up working only four months at each one. They both involved dealing with folks on the phone, something that I was used to in a way, but still were stressful for me.”
Americans are waiting longer to retire these days, wrote Michelle V. Rafter for SecondAct.com. “Whether it's because they're motivated to stay active in a career, want to make a difference in the world, or struggling with skyrocketing bills, 46 percent of U.S. employees over 50 now say they plan to work longer than they once expected.”
The top reason for not retiring as early as they planned: employer-paid benefits. “Because private health insurance is so expensive,” Rafter wrote. Instead, 77 percent will keep working until they're eligible for Medicare benefits.
The second reason: 63 percent of older working Americans are still paying off debt – more than double the number from 2009, according to a Towers Watson survey. “Many current workers and retirees at some point realize that they can never fully retire, i.e., stop working altogether, and commit to working part-time for as many of their golden years as possible,” Rafter wrote.
“We moved from Maine to Florida last year and are debt-free,” Linscott wrote. “I wish I had a little more income, but we make it with my state pension and small Social Security benefit, because my wife is 59 and still working. It could be a lot worse.”
“The great 401(k) experiment of the past 30 years has been a disaster,” Siedle opined for Money. “It is now apparent that 401(k)s will not provide the retirement security promised to workers.”