Retirement?

My parents both were teachers in Illinois and took advantage of an early-retirement program there in the early '90s. Way it worked was that if you retired at age 57, you'd receive 60 percent of your final salary for the rest of your life. Plus health benefits until age 65, and Medicare supplemental after that. So they both took advantage of that, as did most of their co-workers -- the public retirement system in Illinois was quite well-funded back then.

More than 20 years later, Illinois has screwed the financial pooch so badly that it'll probably take at least a decade to fix the problem, and (at least according to mom and dad), younger teachers now are required to work until age 67 to get the same deal they did. Rod Blagojevich, in his final year before he got the boot as governor, floated the idea of cutting benefits to retirees who got the deal my parents did, but that push died. Still, the days of state employees getting lucrative retirement deals in Illinois probably are gone for good.

 

If Social Security isn't solvent 15 years from now, I might as well walk out on the ice and drift out to sea. I pretty much have a guaranteed place to live, if I can cover the taxes and bills, but food might be nice in my dotage. Sometimes, pursuing your dream career, no matter how satisfying, doesn't set you up well for retirement.

 

Even if it were solvent in 20 years, my SS installments project to be less than 25% of my current salary.
If its available to me at that rate, I'll be shocked, but pleasantly so.
I'm working under the assumption that by the time I can access that, it'll either not exist or be greatly, greatly reduced.

SS is not a retirement plan.

 

MommaQuant practices architecture part time, and her firm treats her as an outside contractor. As I understand it that's not the way they're supposed to do it -- she should be an employee -- but so be it. They're fine with her as a part-timer and she's comfortable there, so we just put up with it. Anyway, since she's a contractor that means none of her taxes (federal and payroll) are deducted by her firm. So awhile back she and I were musing over the retirement question (she'll turn 58 this fall) and she said, in a regretful tone, "And of course I won't draw Social Security."
"What?"
"Well, I don't pay Social Security taxes."
"The hell you say. You pay 15.3% in self-employment tax."
"When?"
"Every damn year when I do our taxes!"

 

This comes across as an admonishment, which is not really the intent.
I have people in my own family who labored under the delusion that SS would support them in retirement, despite attempts to help them understand otherwise.
Now they are dealing with difficult circumstances.

 

Oh, I absolutely know that and didn't take your comment as scolding. Unfortunately, circumstances sometimes conspire. I have never had more than $16,000 in my "IRA" and even that got drained due to an emergency. I pay a shitload of SS (contractor for 20+ years), so I hope to one day get some back.

 

My father took early retirement something like 20 years ago. He sits on his butt and watches TV all day. He also day trades and between that and the latest craash he's gone from having close to a million banked to being completely dependent on SS.

My mom got out a few months before she turned 65. Not forced out, had a bitch for a boss and couldn't stand it any longer. Now 72, she is on the go constantly; her daily emails tell me how she did in pickleball (or softball), where she ate lunch and how much yard work she's done. (Early in his retirement, my father planted hundreds of trees in their yard, which we said was a bad idea and now they're awful. She works to maintain them, but he doesn't do anything.) She won't let my father touch her money.

I'll be forced out at 65 and should be in good shape. I max out the TSP annually, and socked a decent bunch away from before the gig I have now. Single no kids helps drastically. Plan is to buy a home around the age of 50 so it will be paid off by then, but not sure where that would be. My assumption is Florida, where I'm from, but could be anywhere.

Have also learned that one benefit of my current job is that upon retirement -- even early retirement -- there is a program I can apply for that allows full-time temporary work gap positions worldwide. I've met several who've done it for 5-6 months out of the year. Salary and per diem. So that's now in the plan.

 

You're not alone, if it's any consolation. There's going to be a retirement crisis because far too few people are saving adequately during a time period when employers (with Congressional support) have been gradually shifting the financial burden of retirement directly to employees.

I read recently that there existed more than 175,000 defined benefit plans across the country in 1983 and that number is down to fewer than 30,000 today. Meanwhile, a growing number of employers are reducing or abandoning altogether contributory 401k plans and a rapidly increasing number of people are self-employed, not necessarily of their own choosing.

So millions of people have been basically on their own in terms of retirement savings the past 20 years ago and evidence suggests they're failing miserably at it.

Apparently, many these folks just didn't foresee and plan accordingly for the 2008 economic crisis and other life catastrophes. Can you believe it?

 

One thing that I feel I have vaguely heard about is that people have gotten smarter about carrying credit card debt. Mrs. Whitman and I are finally almost paid off after being over $50K a few years ago. I have around $3,500 left on a card and Mrs. Whitman has around $1,600 on one card and $1,100 on a no-interest card. I use a Chase Sapphire Visa for almost every purchase I can use a credit card for, but that's to accumulate cash back points and to simplify keeping track of our checking account. Next up: Student loan debt and saving for college. We also just bought a new car, but paid off another pretty much simultaneously. I have 140,000 miles on it and everyone makes fun of me, but I'll drive it until there are 300,000 miles or more on it if I can. Anyway, that credit card debt was a horrendous drag on saving for a while.

 

That car is barely even broken in.

My 206,000-mile Honda will soon pass our 210,500-mile Lexus in odometer miles.

Because the Lexus odometer stopped working nine years ago.

 

That's how I feel, too. And it's a Prius that I just drive to the train station and back home every day, about 15 miles a day total. Mrs. Whitman had an '02 Escape until a few months ago. I wanted her to drive it until it wouldn't go any more, as well, but I guess you do need one really reliable family transporter.