Retirement in Hard Times Challenges and solutions facing boomers in the transition years Mark Miller
A case of bad timing <ul><li>Largest generation of Americans hits retirement during worst economy since Great Depression <...
The new economic realities <ul><li>Damaged stock portfolios and real estate values </li></ul><ul><li>Job security has evap...
The new economic realities <ul><li>Recovery will be protracted, with sluggish job growth </li></ul><ul><li>Housing won’t b...
The great wake-up call The economy we have now is the economy boomers will retire into!
What now? <ul><li>No magic bullet solutions </li></ul><ul><li>Cutting through the noise to solid strategies </li></ul><ul>...
Challenges and solutions Financial Career Living
And, in all three of these areas . . . <ul><li>Our old concept of retirement will be RETIRED! </li></ul>Otto Von Bismarck,...
Two reasons to retire retirement <ul><li>We’re living much longer </li></ul>
Two reasons to retire retirement Source: 2009 Social Security Administration Trustee’s Report
Two reasons to retire retirement <ul><li>Boomers don’t want to retire--and they shouldn’t </li></ul>
Challenge: Financing retirement  <ul><li>Financing retirement = retirement investing? </li></ul><ul><ul><li>401(k)s, IRAs ...
Challenge: Financing retirement <ul><li>401(k) isn’t getting the job done </li></ul><ul><ul><li>35% of workers don’t have ...
Solution: Automation, expanded access <ul><li>Target date funds </li></ul><ul><li>Auto-enrollment </li></ul><ul><ul><li>Bu...
Solution: Get Otto out of the closet! <ul><li>Social Security will be there </li></ul><ul><li>It will supply at least 1/3 ...
Solution: Do-it-yourself pension <ul><li>Income annuity or longevity insurance </li></ul><ul><ul><li>Protects against long...
Solution: Have a plan! <ul><li>Don’t start with 80% replacement rate!  </li></ul><ul><li>Rule of Thumb = Rule of Dumb </li...
Solution: Have a plan! <ul><li>Debt reduction may be your best return on an available dollar </li></ul><ul><ul><li>Pay off...
Solution: Have a plan! <ul><li>The value of unbiased advice </li></ul><ul><li>Spending a bit for advice now can pay off do...
Challenge: Health care risk <ul><li>One of the largest components of expense in retirement - even with Medicare! </li></ul...
Solution: Understand Medicare  <ul><li>Traditional Medicare doesn’t cover everything </li></ul><ul><li>Choices outside bas...
Solution: Health care reform Time to stop scaring Grandma!
Solution: Health care reform <ul><li>Law adds benefits to Medicare </li></ul><ul><ul><li>Closes prescription drug doughnut...
Solution: Health care reform <ul><li>Law gives a big boost to older Americans too young for Medicare </li></ul><ul><ul><li...
Solution: Consider long-term care policy <ul><li>Two-thirds will need some form of long-term care after age 65 </li></ul><...
Solution: Working longer  <ul><li>Critical component of restoring post-crash retirement security </li></ul><ul><li>But wor...
Solution: Working longer <ul><li>Annual Social Security payments rise every year you wait. Example assumes $75,000 annual ...
Solution: Working longer <ul><li>The triple threat </li></ul><ul><ul><li>More Social Security  </li></ul></ul><ul><ul><li>...
Challenge: The workplace <ul><li>Employers </li></ul><ul><ul><li>Workplace age discrimination </li></ul></ul><ul><li>Emplo...
Solution: Entrepreneurship <ul><li>Some will strike out on their own as entrepreneurs </li></ul><ul><li>Some will launch e...
55+: highest rate of business formation 2005: 0.34% of adults age 55-64 started businesses
Challenge: A life well led <ul><li>Hard times call for belt-tightening </li></ul><ul><ul><li>But it’s not going to be all ...
Solution: Encore careers <ul><li>Redefining the second half of life with meaning </li></ul><ul><li>Transitions to teaching...
Solution: Volunteering <ul><li>30-year high point of activity, especially among 50+ </li></ul><ul><li>Boost from Washingto...
Solution: Lifelong learning <ul><li>Great way to keep engaged  </li></ul><ul><ul><li>“ Come for the classes, stay for the ...
Retirement in Hard Times Challenges and solutions for the transition years Mark Miller
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Transformation in Progress: A Report from the Trenches - Mark Miller

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Mark Miller, author of the forthcoming The Hard Times Guide to Retirement Security and editor and publisher of RetirementRevised.com spoke on the challenges and solutions facing boomers in the transition years.

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  • Darkest line at top if 55-64 group. Other lines indicating high rates represent 45-54 (solid blue) and 35-44( dotted gray). Lowest rate (blue at bottom) is 65+.
  • Transformation in Progress: A Report from the Trenches - Mark Miller

    1. 1. Retirement in Hard Times Challenges and solutions facing boomers in the transition years Mark Miller
    2. 2. A case of bad timing <ul><li>Largest generation of Americans hits retirement during worst economy since Great Depression </li></ul><ul><li>Pre-crash Boomers on retirement planning: “Something will work out.” </li></ul><ul><ul><li>Relatively little planning for huge life transition </li></ul></ul><ul><ul><li>Only half of Americans participate in workplace retirement plan </li></ul></ul><ul><ul><li>Average retirement savings: $60,000 </li></ul></ul><ul><ul><li>Half file for Social Security too early </li></ul></ul>
    3. 3. The new economic realities <ul><li>Damaged stock portfolios and real estate values </li></ul><ul><li>Job security has evaporated </li></ul><ul><ul><li>55+ joblessness rises 339% since 2000 (AARP) </li></ul></ul>
    4. 4. The new economic realities <ul><li>Recovery will be protracted, with sluggish job growth </li></ul><ul><li>Housing won’t bounce back to pre-crash levels </li></ul>
    5. 5. The great wake-up call The economy we have now is the economy boomers will retire into!
    6. 6. What now? <ul><li>No magic bullet solutions </li></ul><ul><li>Cutting through the noise to solid strategies </li></ul><ul><li>Focus on basic blocking and tackling </li></ul>
    7. 7. Challenges and solutions Financial Career Living
    8. 8. And, in all three of these areas . . . <ul><li>Our old concept of retirement will be RETIRED! </li></ul>Otto Von Bismarck, German Chancellor, 1862-1890
    9. 9. Two reasons to retire retirement <ul><li>We’re living much longer </li></ul>
    10. 10. Two reasons to retire retirement Source: 2009 Social Security Administration Trustee’s Report
    11. 11. Two reasons to retire retirement <ul><li>Boomers don’t want to retire--and they shouldn’t </li></ul>
    12. 12. Challenge: Financing retirement <ul><li>Financing retirement = retirement investing? </li></ul><ul><ul><li>401(k)s, IRAs never intended to replace pensions-and they have not! </li></ul></ul>
    13. 13. Challenge: Financing retirement <ul><li>401(k) isn’t getting the job done </li></ul><ul><ul><li>35% of workers don’t have access to a workplace retirement savings plan </li></ul></ul><ul><ul><li>Average contribution rate is 7.5%--about half of what is needed </li></ul></ul><ul><ul><li>Faltering corporate match </li></ul></ul><ul><ul><li>Inappropriate allocation (too much risk as retirement approaches) </li></ul></ul><ul><ul><li>Cash-outs, borrowing from accounts </li></ul></ul><ul><ul><li>High fees in smaller plans (up to 5 percent of assets) </li></ul></ul>
    14. 14. Solution: Automation, expanded access <ul><li>Target date funds </li></ul><ul><li>Auto-enrollment </li></ul><ul><ul><li>But, you need to drive! </li></ul></ul><ul><ul><ul><li>Default enrollment levels </li></ul></ul></ul><ul><ul><ul><li>Asset allocations </li></ul></ul></ul><ul><li>Automatic IRA - government sponsored program for small businesses </li></ul>
    15. 15. Solution: Get Otto out of the closet! <ul><li>Social Security will be there </li></ul><ul><li>It will supply at least 1/3 of retirement income for most of us </li></ul><ul><li>Need for greater education to understand benefits </li></ul>
    16. 16. Solution: Do-it-yourself pension <ul><li>Income annuity or longevity insurance </li></ul><ul><ul><li>Protects against longevity risk </li></ul></ul><ul><ul><li>Use to cover fixed costs </li></ul></ul><ul><li>Single premium - not variable! </li></ul><ul><li>Still a small part of the market </li></ul><ul><ul><li>The “wealth illusion”/loss of control of assets </li></ul></ul>
    17. 17. Solution: Have a plan! <ul><li>Don’t start with 80% replacement rate! </li></ul><ul><li>Rule of Thumb = Rule of Dumb </li></ul><ul><ul><li>And, wrong for a hard-times economy </li></ul></ul>
    18. 18. Solution: Have a plan! <ul><li>Debt reduction may be your best return on an available dollar </li></ul><ul><ul><li>Pay off credit card debt </li></ul></ul><ul><ul><li>Pay down mortgage debt </li></ul></ul>
    19. 19. Solution: Have a plan! <ul><li>The value of unbiased advice </li></ul><ul><li>Spending a bit for advice now can pay off down the road </li></ul>
    20. 20. Challenge: Health care risk <ul><li>One of the largest components of expense in retirement - even with Medicare! </li></ul><ul><li>Lifetime cost for 65-year-old couple--excluding nursing care: $197,000 </li></ul><ul><li>It’s a wild card in the plan </li></ul>
    21. 21. Solution: Understand Medicare <ul><li>Traditional Medicare doesn’t cover everything </li></ul><ul><li>Choices outside basic Medicare complex, difficult </li></ul><ul><ul><ul><li>Part D prescription drug plans </li></ul></ul></ul><ul><ul><ul><li>Medicare Advantage </li></ul></ul></ul><ul><ul><ul><li>Medigap </li></ul></ul></ul><ul><ul><ul><li>Long-term care insurance </li></ul></ul></ul>
    22. 22. Solution: Health care reform Time to stop scaring Grandma!
    23. 23. Solution: Health care reform <ul><li>Law adds benefits to Medicare </li></ul><ul><ul><li>Closes prescription drug doughnut hole </li></ul></ul><ul><ul><li>Adds free preventive care visits </li></ul></ul><ul><li>Reduces Medicare Advantage reimbursements over a period of years </li></ul><ul><ul><li>Reimbursed now at 114% of traditional Medicare rates </li></ul></ul>
    24. 24. Solution: Health care reform <ul><li>Law gives a big boost to older Americans too young for Medicare </li></ul><ul><ul><li>2010: high-risk pools </li></ul></ul><ul><ul><li>2014: insurance companies can’t turn you away for pre-existing condition </li></ul></ul><ul><ul><li>Creates competitive insurance exchange to help those without group coverage </li></ul></ul>
    25. 25. Solution: Consider long-term care policy <ul><li>Two-thirds will need some form of long-term care after age 65 </li></ul><ul><ul><li>Average time of care: 3 years </li></ul></ul><ul><li>Best to buy sometime in your 50s </li></ul><ul><li>Stick with the major AAA=rated insurers </li></ul>
    26. 26. Solution: Working longer <ul><li>Critical component of restoring post-crash retirement security </li></ul><ul><li>But working longer doesn’t mean working forever </li></ul>
    27. 27. Solution: Working longer <ul><li>Annual Social Security payments rise every year you wait. Example assumes $75,000 annual salary. </li></ul>
    28. 28. Solution: Working longer <ul><li>The triple threat </li></ul><ul><ul><li>More Social Security </li></ul></ul><ul><ul><li>More years of 401(k) contributions </li></ul></ul><ul><ul><li>Fewer years drawing down savings </li></ul></ul>Percentages = increase in annual retirement income over amount collected if retirement occurs at age 62
    29. 29. Challenge: The workplace <ul><li>Employers </li></ul><ul><ul><li>Workplace age discrimination </li></ul></ul><ul><li>Employees </li></ul><ul><ul><li>Career transition readiness is poor </li></ul></ul><ul><ul><li>Technology readiness </li></ul></ul><ul><ul><li>Expectation of staying in current field </li></ul></ul><ul><ul><li>Over-valuing own experience </li></ul></ul>http://tinyurl.com/yjn8jnk
    30. 30. Solution: Entrepreneurship <ul><li>Some will strike out on their own as entrepreneurs </li></ul><ul><li>Some will launch encore careers </li></ul>
    31. 31. 55+: highest rate of business formation 2005: 0.34% of adults age 55-64 started businesses
    32. 32. Challenge: A life well led <ul><li>Hard times call for belt-tightening </li></ul><ul><ul><li>But it’s not going to be all about money and work </li></ul></ul><ul><ul><li>Boomers thinking legacy as nation faces multiple challenges </li></ul></ul>
    33. 33. Solution: Encore careers <ul><li>Redefining the second half of life with meaning </li></ul><ul><li>Transitions to teaching, government, health care, non-profits </li></ul><ul><li>http://encore.org </li></ul>
    34. 34. Solution: Volunteering <ul><li>30-year high point of activity, especially among 50+ </li></ul><ul><li>Boost from Washington: Serve America Act </li></ul><ul><ul><li>Expanded funding for community-based service organizations </li></ul></ul><ul><li>U.S. and international </li></ul>
    35. 35. Solution: Lifelong learning <ul><li>Great way to keep engaged </li></ul><ul><ul><li>“ Come for the classes, stay for the community” </li></ul></ul><ul><li>Brain fitness </li></ul><ul><li>Lifelong Learning Institutes, continuing ed, learning-oriented travel </li></ul>
    36. 36. Retirement in Hard Times Challenges and solutions for the transition years Mark Miller
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