For Many Men Retirement Does Not Go Well

Many men retire and quickly begin to enjoy a happy, healthy retirement. But unfortunately, for many men retirement is anything but a happy, healthy experience. In fact, some researchers believe that for these men, leaving the workplace may be a health hazard.

This is because for these men, involvement in creative, valued, satisfying employment is a significant contributor to good physical and mental health. It is a masculinity thing. And their masculinity takes a significant hit when life after retirement does not live up to its promise.

There has been much research on this topic and it has been going on for fifty plus years. But the results have not been conclusive. I believe the simple reason for the lack of overwhelming support for the research is that many men are affected negatively, but many others are not. Clearly some men look forward to retirementFor them work was over-rated and was never something they actually enjoyed. It was unfulfilling. These men look forward to retirement as a time of freedom and activity. For this group work was never tied to their masculinity and feelings of self esteem.

For many men, however, researchers say there is strong evidence that most of their self identity comes from paid employment. And a self identity based on productive and valued work can be good for one’s health. Thus, the positive aspects of self identity based upon fulfilling work need to be encouraged as part of a healthy life. But conversely, there can be a health risk and danger when an individual over-identifies with work.

So employment confers many health benefits, not the least of which is a steady income. Obviously employment does not guarantee affluence, but on the other hand, the relationship between poverty and poor health is well documented. Other potential health benefits provided by work include:

  1. being in control of one’s life
  2. feelings of being productive
  3. being a place where men make friends
  4. doing something which is valued by others, and
  5. a sense of routine.

As a result, retirement can produce a crisis for some men when this source of self-identity is lost. And in fact, some research suggests that work is actually protection against premature death.

The health risks for these men resulting from retirement; in addition to the loss of income, include:

  1. a negative impact on social well-being
  2. feelings of isolation
  3. difficulty maintaining friendships from work
  4. negative affects when positive expectations of retirement are not met.

As indicated earlier, while these feelings affect large numbers of men in retirement, many men do enjoy happy, healthy retirements. Often social/economic status influences positively retired men’s health. It can be noted that while money cannot buy happiness, it is a resource that can lead to good health in retirement. More wealth can give men the ability to overcome all of the negatives affecting those struggling in retirement.

In conclusion, how well men do in retirement varies greatly. But clearly those whose self identity was based largely on their work can be the ones with the greatest struggle.

On a personal note……….

When I began this blog thirteen months ago, I indicated that I had not made a lot of plans for my retirement, but that I very much wished to “do retirement well”. It was, and is, my hope that my reading and writing on the subject would be a catalyst in helping me to retire successfully. This particular post helps me to understand myself. I relate with the men whose identity was closely tied to their work. And in leaving the workplace I have had many of the struggles described above. In fact, I’m thinking I may have been dealing with depression at times since April 9, 2015, my retirement date.

I’ll need to successfully get past these feelings if I’m to do retirement well and enjoy a Lemonade Retirement! So I plan to continue working on my retirement and writing this blog as well. It’s been helpful to me,…..and I hope at least a few others.

Baby Boomers Indebted With Student Loans? Please Say It Isn’t So!

Over the last year we have highlighted just about every reason why millions of Baby Boomers will experience some difficulty achieving the retirement they have envisioned. In fact the problem is bleak enough to be called a ‘retirement crisis’ by social scientists.

There are many contributing factors. These factors are evenly divided between those that are within the control of the Baby Boomers and those that are beyond their control.

However, there is one roadblock to a Lemonade Retirement that we have yet to mention, and that
would be student loans. Student loans, of course, are fully within the control of Baby Boomers. The Federal Consumer Financial Protection Bureau reported recently that people 60 years of age and older owe an estimated $66.7 billion in student loans! By 2015 the number of seniors with student loan debt had grown to 6.4% of the total in this age group. And in the ten years from 2005 to 2015 the average indebtedness grew from $12,000 to $23,500.

Of course mortgage debt is the most common type of debt that Baby Boomers have in their retirement years, but sadly student loans are becoming more and more common. And it should be no surprise that seniors with student loan debt have less retirement savings than those with no student loan debt.

So whose educations are these Baby Boomers paying for? 73% of these loans were for the education of a child or grandchild. And only 27% were for their own education or their spouse’s.

The significant increase in the number of grandparents and parents agreeing to help pay the cost of their grandchildren’s or children’s education coincides with the skyrocketing cost of a college education. But if seniors are living on a fixed income and/or are struggling to save the funds they will need for retirement, they should think long and hard before agreeing to provide such help.

Besides higher education is often not such a great investment…..

Interestingly I am aware of many examples among affluent people who I know whose children’s education has turned out to be a very bad investment. Here’s just one example. The Blacks (not their real name) educate their one and only son in the finest, and priciest, private schools in Baltimore. He then goes on to an exclusive college in upstate New York to major in International Business and Chinese. Everything seems to be on track at what will be a total education cost of about $750,000! But midway through his college career he decides this is not the track for him. So ‘yes’ he will graduate, but probably not in four years. His degree will be in Music. And we will see, but from what I understand, a graduate degree will be necessary to get a job!

Hopefully the point is obvious. Going into debt to finance the education of children or grandchildren in today’s economy may not be the wisest thing for the majority of Baby Boomers to do. Hopefully some will rethink doing this.

On a related note, it appears that many seniors co-sign the loans for a child or grandchild without a clear understanding of the responsibilities of a co-signer on a student loan. The co-signer is every bit as responsible to repay the loan as the borrower. So if the child or grandchild is unable to make the payments because he does not get a job or for any other reason, the co-signer becomes a “co-borrower” and he must make the payments. The moral of this story then, is that parents and grandparents should never co-sign a student loan unless they are willing and able to make all loan payments.

One other warning. When there is a default or delinquency on a loan from a bank or private lender, social security income benefits are protected. However, on government backed student loans, social security income is not protected and can and will be levied by the lender should note payments be in default.

Note from Blogger:

When I came across the content in this post, I found it to be depressing. And I was reluctant to pass it along to my readers.   Does it make sense to go into debt late in life paying for your children or grandchildren’s education, if your retirement is not 100% secured? I had no idea it was happening to this extent ($66.7 billion). So I put forth this information to inform all, but hopefully to cause a few to reconsider taking on student loans in their retirement preparation years or later.

401k Plans Leave Baby Boomers Struggling to Retire!

Here are some interesting facts.  401k Plans have been for the most part a failure for their entire thirty five year existence. Those who designed the plans and backed their introduction now say they haven’t worked. They add that they regret how they have turned out.

Additionally, in this country we are at the beginning of what will be a retirement crisis of major significance. The failures of the 401k program are a major cause.  But notwithstanding the failures and regrets, 401k Plans continue to be the means by which most Americans do save for retirement.

The list of what has gone wrong is long and extensive, and there is plenty of blame to go around.

In their earliest design some say it was intended that 401k Plans would only supplement the pensions that private sector employers funded for their employees. Instead, employers by and large ended their pension plans when 401k plans were introduced. They did this, of course, for cost reduction purposes. In fact, today only 13% of private sector employees have pensions as compared to 38% in 1979. So justified in large part by the passing of 401k legislation, today almost 90% of private sector employers hand over full responsibility for retirement funding to their employees.

Another problem was that the designers oversold the program and that their math and projections were wrong. The designers stated that employees would only need to set aside 3% of their income in order to have enough to retire. And they assumed investments would grow by 7% per year. Those numbers were all way beyond reality.

In the beginning the Employer Match was a key part of most 401k Plans. The primary funders of 401k plans were always intended to be the Employee. But from the Employees’ viewpoint the best part of a 401k plan was the Employer Match. This was “free money” added to their retirement account. The problem is that over time as the business climate became more and more difficult, companies declined to provide a match or significantly reduced the amount of their match.

Another problem is that more than thirty million workers do not have access to any employer sponsored retirement plan because many small businesses do not provide a 401k Plan.

Two other issues have turned out to be major weaknesses with 401k plans as well.

The first is that money managers have been allowed to make excessive fees from 401k investments. These fees should have been limited. And secondly, employees make too many costly mistakes in managing their accounts. It is too much responsibility for most and thus costly mistakes occur. Common mistakes are taking money out during market downturns, making bad investment decisions, and accessing the money for non-emergency needs.

But the single biggest problem with 401k plans is that too few employees year after year have chosen to participate in their Employers’ Plans. Many employees never seemed to understand what’s at stake for their futures. Employees were never able to wrap their head around the idea of a “salary reduction plan”, another name for a 401k plan. They need to understand that they will be exposed to big fluctuations in the stock market and that it is a long term game. A better job needs to be done to sell all of this to employees and unfortunately that has never happened. As a result, while participation levels in 401k plans have improved in recent years, the level of non-participation still hovers around 33%. Another third under-fund their accounts.

In spite of all of these problems…

401k plans have been a vehicle that has served those who are committed to saving. People in their 60’s who embraced the plans and have been saving diligently since the early to mid- ’80’s have average savings of $304,000 according to the Employee Benefit Research Institute.

I believe, however, that changes can and should be made to eliminate the weaknesses in 401k Plans so that almost everyone could begin retirement with a healthy balance in a 401k account(s). I suggest considering the following:

  1. Require all private sector employers to offer a 401k program.
  2. Require all companies with at least 25 employees to offer at least a minimum match.
  3. Require all employees to participate with a minimum salary contribution of perhaps 3 or 5%.
  4. All commissions and fees paid to money managers for 401k Plans should be limited. And they should be clearly transparent to the employee.
  5. Employers should provided 4 hours of education per year on “Managing Your 401k Plan”.
  6. Finally make it more difficult to access an these accounts before retirement.

While these changes would come too late for most Baby Boomers, certainly future generations would benefit.


Home Sharing for Baby Boomers

We are at the  beginning of an aging crisis in the U.S.  It was five years ago this week when Baby Boomers began to reach the age of 65 at the rate of 10,000 per day. By 2030 one out five Americans will be 65 years of age or older, and all will desire a Lemonade Retirement for their future.

For the most part, though, these Boomers have not planned well for retirement. Or possibly their retirement plan experienced a major setback. They are moving into a time when their income will be fixed. Close to 40% have savings of less than $50,000.

Furthermore, the results of a recent survey indicate that Baby Boomers hoping to retire soon have no idea how much money they will need in retirement. So if you are among this group you are far from being alone. This has been my argument in these posts several times over the last ten months (it is impossible for anyone to know this all important answer).

So what we do know for sure is that it will be a struggle for vast numbers to retire.  The search will be on for new ideas and strategies to make retirements work, financially and otherwise.

This is where home sharing, an outgrowth of the sharing economy, comes in. Home sharing is when two or three people with no familial relationship or romantic involvement come together under one roof to share living costs. It has actually been around for many years. Remember “The Golden Girls”, “The Odd Couple”, and “Three’s Company”. However, fueled by the needs of Baby Boomers it appears there will be real growth in this phenomena in the U.S. beginning in the near future.

It seems clear that this will soon become commonplace for two reasons. 1. It will fill a significant need, and 2. both “for profit” and “non-profit” matching services are beginning to spring up in many states. As an example, Colorado-based Silver Nest is an online roommate matching service which is already doing business in 49 of the 50 states. Silver Nest charges a small fee to both parties to the equation, the homeowner and the renter. In exchange for their fee they do a compatibility survey between the parties. They also do a property verification. And importantly, they perform  a background check on the renters.

A little bit more about why this is an idea whose time has come: the majority of Baby Boomers have a declared desire to age in place. But doing this can be a real budgetary challenge because for many Boomers housing cost is their largest outlay. Home sharing will clearly be a niche option going forward providing a way for Boomers to stay in their home as long as possible. It is perfect for the situation where one person is house rich and cash poor,  while the other has cash and/or services to provide.

In addition to providing relief from financial stress to one or both parties, home sharing often relieves another problem, and that is isolation. Widows and widowers often struggle with feelings of isolation. It often provides a great sense of comfort just knowing someone else is in the house. In addition, seniors often suffer serious falls in their homes. These falls, if they live alone, can go undetected for days. Further, many Boomers travel frequently for pleasure and to visit family. Many find it preferable to have someone else living in their home while they are away on extended trips.

As a variation on this theme, I suspect there might come a day when home sharing doesn’t begin with a home owner seeking a home sharer. Perhaps it will begin first with friends agreeing to live together in their retirement years. Whether they do so in one of their homes or relocate to a more appropriate place will be the secondary consideration.

In conclusion, home sharing has been quite common for years in other parts of the world, but surely it will soon fill a big need here in the U.S. It’s a good solution to the problem of providing affordable living spaces for aging Baby Boomers. Could you see home sharing in your future? It may be a valuable tool to help create a Lemonade Retirement.


Lemonade Retirement: What’s the Point?

Word Press and Facebook are telling me that the number of readers of Lemonade Retirement are picking up quite a bit. As a result I want to use this first blog post of the new year to highlight the mission of Lemonade Retirement for new readers.

I have come across hundreds of blogs on the subject of Retirement. They break down very neatly into three types:

  1. Financial. These blogs are obviously about how to prepare and execute a financial plan to make a great retirement possible. These blogs are geared to a younger audience than the Baby Boomers who I am interested in reaching.
  2. Lifestyle. These blogs are written by people who are deep into their successful retirements and things are going well. They discuss all matters of topics, both philosophical and practical. They are a group of people enjoying life.
  3. Travel. For many, retirement is for travel. These folks travel all over the world and document, photograph and blog at every destination. What a fun life!

Lemonade Retirement is none of the above.

Lemonade Retirement is for, and about, all of the Baby Boomers who know that for them, retirement may not be a perfectly smooth sail. For the most part they have not prepared and planned well for retirement. Or maybe they had a plan and something happened to upset it. Things happen: the economy, loss of a job, divorce, a health problem or other family emergency.

And then, how much money, between retirement income and savings, will be needed to retire? No one knows the answer!! There are too many variables. It’s determined by life span; and life spans are getting longer with projections that one out of four Baby Boomers will live into their ’90’s. It will also be determined by the cost of living, which is sure to continue to increase. As well, the cost of health insurance may continue to increase annually by double digits. All of these and more determine how much money will be needed to retire, and thus it is impossible to know.

Pensions have largely gone away. 401k plans have been unsuccessful in replacing pensions. A recently retired IRS agent commented that from his experience the only people who are able to save are those who have no children. Close to 40% of Boomers have less than $50,000 in savings.

I could go on about this (wages have been stagnant for twenty years; some have tapped in to their home equity to live; the cost of higher education has gotten stupid; etc.). The point is that, sadly, the result of all of this is that there is a retirement crisis. It is affecting, and will affect, millions of Baby Boomers!

Lemonade Retirement hopes to grow into a vibrant community of these Boomers who have a little bit, or a lot, of uncertainty about what type of retirement they have to look forward to. Many of them (hopefully) will be okay financially, but they cannot be sure. Others know with certainty that the road ahead will have some level of financial difficulty.

I have not come across other blogs which are aimed at this huge, growing community. So I hope to deliver a good place to meet and also some interesting, and perhaps from time to time, helpful content. There will be much that is financial in nature, but much also that is non-financial. Consider glancing at our archive to see our topics thus far.

Here is a partial list of what I believe:

  1. Time is short, and it goes fast. It is far too valuable to trade for dollars.
  2. The above is true even if you do not know everything you will do in retirement or how you will finance it.
  3. What is valuable is family and friends. And, of course, health….but little else.
  4. If it comes down to retire first and then figure out the details OR figure out the details first and then retire — I recommend the former, retire first. (See #1 above).
  5. The secret to health and longevity, is about “eating, moving, and sleeping well” in combination. Look it up.