Some Wisconsin seniors are working well past retirement age. They have lessons for millennials who fear the same fate.

Happy Monday All! I’ve spent a lot of time writing about how to save for retirement from the point of view of a younger person and I wanted to review an article that discussed the other side of the equation. Today’s article is from Post Crescent: “Some Wisconsin seniors are working well past retirement age. They have lessons for millennials who fear the same fate.”

Now, that title may sound very doom and gloom, but the article is actually fairly uplifting…. I’m kidding. The article is also fairly doom and gloom, but unfortunately that is the reality that many millennials are currently facing.

Note: This article uses the Center for Retirement Research at Boston College’s definition of millennials as those born between 1981-1999.

Setting the Stage

While there are many boomers who work well past their 60s, a large portion of them do so for the love of working or to avoid having to “stay at home and dust.” In the future, working may not just be something to do for millennials.

Stagnant wages and a floundering job market has been the environment in which millennials entered their 20s. The gig economy is in full swing and the days where staying at your job for 20+ years are slowly dwindling away.

This reality coupled with the staggering levels of student loans has kept millennials from being able to save at the rate necessary to keep pace with industry recommendations. This situation is best summarized in the following quote:

Many of today’s workers will have inadequate income when they reach retirement, but the prospects for millennials seem more challenging than for the generations ahead of them. Having entered the labor market in tough times, millennials have lower wages and fewer fringe benefits than Gen-Xers and late baby boomers did as young adults.

2018 study from the Center for Retirement Research at Boston College

Working Into Later Years

Bill Miller, 74, works as a yoga instructor and finds that it greatly enriches his life by:

  • Maintaining his physical fitness and spirituality.
  • Bringing in income to supplement their retirement and allow for his training.
  • Keeping him relevant in today’s society by giving him reason to be out.

Sharon Huss, 77, continues to work as a real estate agent because she enjoys it and is good at what she does. This job also allows her to afford some luxuries.

Overall, the boomers that worked into their 70s, 80s and 90s have similar traits:

  • Positive Attitude
  • Appreciation of their much younger coworkers
  • Ability to adapt to a changing work environment.
  • Learning new skills
  • Focus on work

In addition to these personal traits, longer lifespans, healthier lifestyles and increased education are large contributors for many boomers to remain in the workforce. However, the reasons to continue working are not all rainbows and sunshine.

Changes to social security, loss of pensions and smaller employee retirement plans have created the need for higher personal savings. To make up the difference, lifestyles and incomes would have to change and with a reduced timeline before traditional retirement age the odds of this being successful are slim.

Showcasing this more upsetting situation, Sharon describes a friend that gets by on $1,500/month of Social Security with $1,000 of that being allocated just for rent.

What Can I Do?

With the current economical climate for millennials and current levels of savings, the earlier mentioned Boston College study states that 85% of millennials may not be able to retire comfortably by age 67, the age of full Social Security benefit. They will need to continue working until age 70 or later.

Current data shows that only 60% of Americans are on target with their retirement savings. Coincidentally, 38% started saving and investing early. Revealing the key to a successful retirement savings plan.

Time.

By giving yourself time to save and invest early and have that money grow in the markets, a successful retirement savings plan is completely doable.

The following chart shows an example of three different working professionals, Sam, Rob and Diana. Each of them deposits $300/month to their retirement accounts until they reach age 65. The only difference is the age that they start. Sam starts on her first day of her first real job at age 22. Rob starts only when he reaches 30 and Diana only starts when she reaches 35.

At age 65 Sam has almost double what Rob has saved and almost THREE TIMES as much as Diana has saved. The earlier you can start to save, the better. In order to catch up to what Sam was able to save, Rob would have to save an extra $235/month and Diana would have to save an extra $480/month. To sum this up, I leave it to an old Chinese Proverb:

The best time to plant a tree was 20 years ago, the second best time is now.

If you want to work past age 65, that’s something you’re more than welcome to do. There are so many psychological and physical benefits to this. However, you don’t want to be in a position where you HAVE to work. So, still plan on saving as much as you can, as early as you can for retirement. Anything you make after that can be spent on luxuries/travel, given to grandchildren, donated or whatever else you want to do with it. Your options will be limitless.

Have you started saving for retirement? Do you think you will want to work after age 65? Have you factored this into your retirement plans? Let me know in the comments below!

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