If you have not yet considered eventual retirement as a part of your overall career management, I encourage you to start now. We all know that the economy and job market have become seriously more challenging over the past several years. What you might not have thought enough about is whether you need to revamp your career management planning in light of the need to cover your retirement years.
While I tend to be an optimist and take a positive approach to challenging circumstances–and I personally do not expect to retire any time soon–I also like to stay aware of what is happening or might be happening that could affect me when I reach that point. To that end, I read occasional articles and other advice pieces on the subject of retirement preparation and calculation of financial needs to cover that period. An article published in October 2012 (just a few months ago) was the latest to catch my attention.
Concern about Retirement Income
Authors Rich and Fry note in their article, More Americans Worry About Financing Retirement, that “Despite a slowly improving economy and a three-year-old stock market rebound, Americans today are more worried about their retirement finances than they were at the end of the Great Recession in 2009, according to a nationally representative survey of 2,508 adults conducted by the Pew Research Center. About four-in-ten adults (38%) say they are ‘not too’ or ‘not at all’ confident that they will have enough income and assets for their retirement, up from 25% in a Pew Research survey conducted in…2009.”
If you do the math, that means there are still 60% of Americans who feel confident they’ll have enough money to cover their retirement. However, if you’re among the 40% who don’t, that might not make you feel a lot better. Regardless of which group you fall into, though, it’s a good idea–maybe even a great one–to start now in doing serious thinking and planning to address your personal situation.
As important as anything else is the need to keep this subject in mind when you’re looking for a new job, negotiating your salary or taking any other action that could have an impact on your long-term income prospects.
Wait Until Late-Career to Consider Retirement Plans?
As the Pew Research article notes, the age at which we feel most concerned about our retirement income has dropped noticeably over the past 3 years. “In 2009 it was ‘Gloomy Boomers’ in their mid-50s who were the most worried that they would outlive their retirement nest eggs. Today, retirement worries peak among adults in their late 30s—many of whom are the older sons and daughters of the Baby Boom generation….This is also the age group that has suffered the steepest losses in household wealth in recent years.”
Worrying alone isn’t the answer, of course. However, thinking you don’t need to consider retirement plans until you’re, say, 5 or 10 years from retirement age, could land you in trouble a lot sooner than you expect. For example, Social Security payments depend heavily on your most recent years of earnings. If you don’t do your best to maximize your income in earlier years, you might not have enough time to catch up. (For the moment, I’m ignoring the arguments about how long Social Security will be around, etc.)
It’s important to remember, too, that future raises from your present employer are based on a percentage of your current income. If you have or can find any negotiating leverage to boost those a bit, it could pay off more than you think later on and help strengthen the financial aspects of your retirement outlook.
Two separate articles on the RecruitingTrends web site today (April 11) touch on different aspects of the same topic, and it’s something you might want or need to pay attention to–regardless of your age or career situation. Basically it seems that job market improvements are causing difficulties and concerns for employers who fear losing key employees; at the same time, massive numbers of baby boomers have started retiring, a trend that’s expected to continue and maybe even accelerate over time. This could potentially mean better/more opportunities for you going forward, depending on your career field, industry, and so on.
Talent Retention Issues and Employer Actions
According to one of the articles, “2 Out of 3 Companies Trying to Retain Talent,” two-thirds of employers are starting to implement programs to retain as many of their most talented workers as they can (source: an OI Partners’ survey). Here are some of the stats reported by the survey:
- 90% concerned about high-potential employees
- 72% worried about front-line workers (sales and service)
- 60% apprehensive about middle managers
- 45% uneasy about senior-level executives
The article quotes OI Partners’ chair, Steve Ford, as saying that “companies are most concerned about losing employees who they have designated as their future leaders and those who directly work with customers. Job opportunities have already increased for these levels of workers….”
What does this mean for you? If you’re in one of the following careers or occupational fields, you might be particularly marketable and attractive to companies that are looking to hire: operations and production; sales and marketing; customer service; accounting and finance; information services.
Possible Impact of Baby Boomer Retirements
The second article, “SHRM-AARP Poll Shows Organizations are Concerned about Boomer Retirements and Skills Gaps,” mentions Pew Research Center data indicating that over the next 20 years or so, baby boomers will retire at the rate of 10,000 per day! In spite of this fact, about 71% of the companies polled by SHRM/AARP haven’t yet begun serious strategic planning assessment to study the impact they could face from losing employees 50 and older so they can try to figure out what to do about it.
Is your current company doing anything to help prepare? If you’re targeting other companies for your next job, do they have any plans or programs in place? These are potentially significant questions for you to be asking. Preparations could include “increased training (45%); developed succession planning (38%); hired retired employees as consultants or temporary workers (30%); offered flexible work arrangements (27%); and designed part-time positions to attract older workers (24%).”
Talent Retention and Baby Boomer Retirements: What the Future Holds
Those of you who are old enough will remember the following quote from a cartoon character: “We have met the enemy and they are us!” (Walt Kelly, Pogo, 1971) One way of interpreting this is that we can be our own worst enemies. Sometimes that’s because we don’t plan for the future or make plans and don’t take the steps necessary to carry them out. Companies are, after all, made up of individuals, so they’re at least as fallible in this regard as an individual might be. If the talent retention and baby boomer retirement situation gives you an opportunity to enhance your own employment or career situation, make sure you’re ready to take advantage of it.
We’ve probably all seen a variety of jokes based on the “good news-bad news” theme, which has been around a long time. Some of them even lean more than a little toward the depressing or macabre side. As I’ve said before, I’m essentially an optimist (or as I like to call it, a realistic optimist), so I tend to enjoy and pass along those that steer more toward hopeful or genuinely amusing situations. Sometimes that approach requires a fairly large amount of flexibility and imagination. In the case of the subject of retirement planning, even I can’t find something amusing to say about it; hopeful is a bit of a stretch but not totally out of reach. In November I wrote a post called “Recession & Retirement,” and today’s post is by way of revisiting that topic from a slightly different angle.
Good News-Bad News about Retirement
The good news is, people are generally living longer these days. The bad news is, people are living longer! Generations ago, the present concept of retirement didn’t even exist. People basically worked until they physically couldn’t any longer. Current and recent generations, however–which probably includes you–face the prospect of planning for a future when they’re no longer working but still need a decent income to meet expenses and provide a reasonable quality of life (I’m not talking around-the-world trips here).
To quote a recent article by Emily Brandon on U.S. News & World Report, “How Long Should I Work Before Retirement?“: “The age workers expect to retire has increased from an average of 60 in 1995 to 66 in 2011, according to a Gallup poll. The proportion of people aiming to retire early has plummeted from 50 percent in 1995 to 28 percent in 2011.”
Possible Benefits to Delayed Retirement
Yes, there are at least a few, according to Brandon’s article. They include giving your assets more time to grow, taking advantage of tax benefits (IRA contributions, etc.), receiving a larger Social Security check after retirement (if it’s still around when you retire!), and accessing potentially better or more affordable post-retirement health benefits (e.g., Medicare).
Possible Downside to Delayed Retirement
Is there a downside to the idea of delaying retirement in order to minimize the amount you have to save up to cover expenses after you retire? Certainly. For one thing, you might not have the option of delaying it if personal circumstances force you to leave the work force early. In another scenario, you might leave one job for another and find that the new position doesn’t work out, so you’re back in job search mode at an age when circumstances can tend to make reemployment more challenging, especially at or near the level you held when you left.
Like anything else, this is not an easy situation to consider and plan for. Inevitably, you just have to do the best you can, make the wisest career and financial choices you can. Starting now would not be too soon!