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Retirement Plan A: Work longer

That's not possible for everyone, so what's Plan B? (Please don't say it's winning the lottery.)

By MSN Money Partner May 27, 2011 11:00AM

This guest post comes from "MJP" at Go To Retirement.


Retirement surveys seem to be everywhere. Many organizations are very interested in asking baby boomers about their retirement goals and/or about how well they have prepared for retirement. Recently, the Transamerica Center for Retirement Studies released the results of its survey of 4,080 U.S. workers.


Not surprisingly, the news is not good.


Here is the data that I found the most interesting:

  • 40% of those surveyed say they expect to work longer and retire later as a result of the recession.
  • 39% plan to retire after age 70 or not at all. (Wow!)
  • 54% plan to "work in retirement" (after age 65), the most common reason being economic necessity.
  • 70% say that even if they worked full time until age 65, they would not have enough money to retire. (Also, 59% of those who make more than $100,000 say this. Incredible!)

Taking the results as a whole, it is clear that retirement Plan A for a large percentage of U.S. workers is "keep working," with economic need being the driving force.


OK, if that is Plan A, what is Plan B? Winning the lottery? Post continues after video.

I am empathetic to anyone who suffered severe losses in the market downturn. It happened to a lot of us. I also understand working longer as Plan A because that is what many financial planners recommend.


For folks who are forced to work into their late 60s and beyond, Plan A can collapse in a hurry, for health reasons or just because there are not enough jobs available to older workers. (Age discrimination still exists everywhere.)


The only retirement Plan B that may be available to those who plan to work forever is to do a slash-and-burn job on their current spending and standard of living. Downsize now, sell a car, cut discretionary costs, get the adult kids off the payroll, and aggressively save the surplus.


Spending those last-minute savings early in retirement may also allow those workers to delay claiming Social Security benefits until age 66 or even age 70, adding 8% to their benefit for each year of delay.


I suppose the bottom line message is simply this: Plan A may work, but given the uncertainties of employment as an older worker, you also need a Plan B.


So what is your Plan B?


More on Go To Retirement and MSN Money:

May 27, 2011 2:22PM

Well I guess when I'm living on the street because I'm old, broke, and discriminated against because of my age; I can comfort myself in the knowledge that the politicians and bankers are enjoying a lavish retirement........

Aug 18, 2011 12:03PM
No one is going to hire a person in their 60's for any type of respectable job. They will not even hire people in their 50"s today. What gives the multi-millionaire congressman the right to tell us we can not retire until we're 69 or 70, when they will be retiring on our dollar at an early age with a huge pension. Another issue is the baby boomers had a lot of workers who never went to college and took up jobs in the ever dwindling manufacturing sector. These people deserve the social security payments the way they were told the payments would be made. No one knew about mutual funds, and 401k's did not exist in the late 50's, early 60's, so many of us did not get a jump start to our financial future like people can get today. There are more college grads today then 40-50 years ago, and they have the immediate opportunity to invest in funds.
May 27, 2011 3:15PM
Why can't you afford retirement? Do you have to live in a big house by yourself? Do you have to go out and eat every night? My estate is about $165,000. I make less than $2000 a month. My retirement will amount to about $1500 a month. This will require that I earn about $500 a month and I hope that won't be too hard. When I'm in my late 60s or early 70s I will start withdrawing my 401Ks and IRAs and won't need to earn any money. I don't know if I'll retire at 62 but I feel I need to be ready. I'm healthy and able-bodied but there's no guarantee there will be full time jobs. I hate working anyway and luxury isn't worth it.
Aug 18, 2011 4:40AM
How sad that after a lifetime of following the rules and working hard, we may not be able to enjoy that "happy ending" we should be looking forward to!
Aug 18, 2011 1:02PM
Articles like this crack me up.  With millions more jobs set to be outsourced most of us will be through working after age 50 unless you count some low paying service job as a second career.  We all should have learned by now by playing by the rules and paying into a bankrupt/corrupted economic and political system is a sure fire way to the poor house. At the end of a working career expect your 401k to be insufficient, Social Security to reduce benefits and raise the retirement age, and high inflation to erode other personal savings. Now, is the time to plan around our failed safety nets since our political and corporate leaders could care less about us.
Aug 18, 2011 1:10PM

The major problem with retirement is, other than social security, most folks don't have a defined benefit plan.  Many companies have scrapped their pension plans for 401k plans.  Folks if you can't see that 401k plans are nothing more than a retirement supplement your fooling yourselfs.   It is rare for a 401k plan to sustain a retiree on it's own.  In fact I have personally never heard of one doing so though perhaps some lucky soul, during the height of economic stability, may have had a winfall on his 401k plan.  The fact remains 401k plans are not designed to be your only source of retirement.  Yet companies promote and push these plans when they advertise for employees.  I retired after 30 years of working and my defined pension sustains me.  It does not make me rich but it sustains me.  When I was very young my father tought me a very strong lesson.  My father, God rest his soul, told me that when looking for a job always choose the company with the best benefits.  Dad said pay would come later but benefits is where the true stability was at.  I took my Dad's lessons and applied them to my life.  What concerns me about today's society is that no one wants to offer a defined pension anymore.  If that trend continues then companies need to stop advertising their 401k plans as if thats some good deal for their employees.  Most folks will never be able to retire based solely on 401k contributions.  So thats why folks, in this article, have said they plan to work till they die or become disabled.  It seems that is what society wants.  Society don't want the poor or middle class to ever retire.  If you don't strike it rich then work till you die is the message they are sending.  Good Day, Joe.

Jul 5, 2011 7:05PM
I think Gertrude has it right. I have about the same income and savings that she does and live quite comfortably. I think the people that need a million dollars to retire on are being unrealistic, or they can't afford to pay for the debt that they have. Retirement is a big part of my life especially the things that I didn't have time for while I was working. I eat when I want to, sleep when I want, wear shorts and a tee shirt. I am comfortable, stress free, and don't have to answer to anyone. You know what it feels like to sleep in on Sunday, well retirement is like that every day. 
Jun 19, 2011 4:44PM
I retired at 64  to care for elderly parent; went back to work three months later.   Suspended my SS payments and worked for seven months.  Had to retire again to care for parent.  (Huge penalty for working last year from SS; lowered my income by $350 a month.)   Unable to get a job now.   Haven't worked for a year, am now 66.   Have no credit card debt but do have few medical bills.  Had to give my car back to lender.    Have no idea how I can sustain with no savings.  There must be somewhere I can live on $1,300 a month, just haven't found it yet.  I really want a job.  The hiring process has changed dramatically.  I'm trying to find a job in area where I have worked for past 45 years but having no luck.   Age discrimination is a reality.   My hope is to earn enough so that I can pay the additional $1,000+ monthly for my dad's homecare.   I was able to get a loan modification for him from Bank of America last year.  I was thrilled that I was able to do this and appreciate Bank of America's help very much.   He now has $500 in his budget for homecare each month.   However, that doesn't cover many hours if you are going out to homecare agencies, adult daycare, private CNA's, etc.  In looking for a good place for him, I was appalled at some of the costs.    I could have accomplished a direct admittance into a nursing home in Florida for him.    It has 179 Medicaid beds out of maybe 225.   They take all of his income, we submit the Medicaid application, and they get $4,600 additional when that is approved.    His income is $2,094 a month, plus the $4,600.   You do the math.  This is why Medicare is broke.   This happens everywhere, but is big business in Florida because there are so many seniors there.   Assisted living is not covered by Medicare and is also $4,000 to $6,000 a month.  The only people who can afford it are those with government pensions.  Yes, these are the plum jobs as we all know, and all these former highly paid government workers are double-dipping until they decide not to work anymore.   Wake up America.   You can't stop the aging process.   We need to figure out how we are going to take care of this problem.   What galls me the most is that everyone feels free to run up the credit cards and file bankruptcy.   The feeling is that "everyone does it."   Wow, that blows my mind.
May 27, 2011 3:01PM
For the most part, the 401k has been underwhelming for most people.
Aug 18, 2011 4:38AM
I feel for your plight, gj12711, but don't lump all government workers together. I can retire this December after 26+ years in the postal service. You know what that gets me?  Approximately $870 a month, before deductions for health and life insurance, and taxes.  I have contributed to Social Security since I was 16 years old - 40 years of contributions! Yes, postal employees hired after 1984 are no longer under Civil Service retirement, they contribute to Social Security like everyone else. So I will not be double dipping. But I cannot collect on that for a few more years. As much as I love my home and my little town, I will definitely have to sell my house and move to a less expensive area. My only other retirement fund comes from what I contributed to my TSP -- the government version of a 401K. I have about $167,000 in there.   So this is one government worker who will retire only to immediately be looking for another job.
Aug 18, 2011 1:21PM
To Genxregonemad66:  It is a sad situation sir and much of what your saying is true.  No one seems to care about the working poor and middle class anymore.  They say we live longer so raise social security age to 70!  I see no real statistics to back this up and if they are what is the quality of life we are living.  I mean to live to age 70 in a nursing home aided by science is not realy living is it?  Yet they, the republicans primarily, want to raise the social security age to 70?  LIfe expectancy based on life quality has not dramatically increased and thats how the retirement age should be configured.  But it is like beating your head against the wall.  Nobody listens and nobody cares.  We send billions in foreign aid to countries that hate us, we don't have an adequate plan for dealing with China or India and where on earth can our kids find a good job with good benefits these days?  It's sad that your right and I hope someday it turns around. I know your more pessimistic but I have to have hope for our kid's sake.  Good Day, Joe.
Aug 18, 2011 3:11PM
At an average total compensation to each of our elected representatives of ~$250K/yr, who here thinks these schmucks know how we live and can accurately represent us in national politics?

Do you want to fix Soc. Sec.?  It's simple:  substitute Soc. Sec. for the congressional pensions of our elected reps.

Do you want to fix Medicare/Medicaid?  It's simple:  (you guessed it) make Medicare/medicaid the health care plan for our elected reps.

Do you want to fix unemployment?  It's simple:  mandate congressional pay at the median of their electorate...OK I'm willing to go up to 2x median plus allowances for business expenses but w/their base pay at ~$175K/yr (yup they average $75K/yr which is 2x our median total compensation just in each of their expense accounts) that's over 5x our median total compensation.

The basic UzWideShut plan is to eliminate the ruling elite concept and make our elected reps live like we do.  Do you think that will fix problems we have to struggle with everyday?  I do.

Aug 18, 2011 12:33PM

Moegreen very good point- 401Ks and other type of investments did not really pick up steam until the mid 80s;  many Baby Boomers had parents (like myself) who absolutely did not trust  Wall Street (The Great Depression survivors) so it took some time before Baby Boomers got on board with investments.

I'm surprised I got negative hits on my suggestion of having interests/hobbies/money earning strategies post retirement.  I have seen so many people who have no direction post retirement.  Hobbies and interests can become money earning techniques while having fun.  Retirement does not mean doing nothing and traveling all the time. 

I enjoy writing.  I want to prospect gold bearing areas I know exist in the Southwest;  and I can keep my nursing skills current by taking courses and working casual at a clinic.  Activity keeps you young and healthy.

Aug 18, 2011 9:37AM


Some of the extreme Tea Party members want Social Security and Medicare abolished.  Though some of the moderate Tea Party members take a milder stand for political reasons have no doubt that they themselves would like to see the same outcome.

That's one thing you should look at seriously in 2012 relating to GOP/Tea Party candidates:  they do not have any love for Social Security and Medicare.  None at all.

Let's take Medicare-post retirement, medical costs climb and without Medicare most could not retire because the cost of medical insurance would be prohibitive.

Social Security-one of the legs of retirement, Social Security, pension and 4% from a stock option/401K program.  The contribution from Social Security adds to the total-without, most could not retire with just a pension and 4% from their 401K.

Stock option/401K- most people are lucky to have 300K saved;  very few have a million, fewer have over a million.  The reality is that most do not start saving until in their mid 30s.  4%  a year from 300K is not enough to live on.  Most have a lot less saved.

Abolishing Social Security and Medicare equals no retirement for the average person.  Keep that in mind before voting Tea Party clowns in office in 2012.

Aug 18, 2011 3:20PM

Wow this is a real interesting convo. Very interesting. I think part of what is happening right now is we are an aging nation. I was once younger and believed certain things I was told. By Government, the private sector, "the American Dream." Somewhere along that line the "dream" became making money and perhaps crushing the other guy to do it. By any means possible. If not with a stick then with a vote, politics, and yes....greed and money itself.


I was raised like most of us to believe we could be "anything" we wanted if we all just tried hard enough and long enough. Really? That is not true, and we have a nation of people getting older and wiser who see that now. Perhaps some point of life is to strive for it, but somehow this became about accumulating wealth. I am not sure how that is a value or a virtue. Unless you bring others up with you. And I don't think that means riding down the road in a Rolls-Royce while you smirk at those you employ for minimum wage and no benefits.


Now we have older politicians and pundits telling us it is all our fault if we aren't "prepared" for retirement in a way which is unrealistic, and if we lose what we have, well, tough. That's our fault, too. People raising kids, paying bills, going to work, and we are told to "live within our means" or our debt is our fault, and yet right after 9/11 the President Of The United States said "don't let them win. Go shopping!" So tell me, are we supposed to spend and borrow to help an economy which barely helps us and keeps us walking on egg shells, or save and be frugal to be "prepared" for our future and retirement?  Seems the relative few of us who can do both well blame most of us who can't for our situation. And that is complete B.S. And even when we think we can I think it has now been proven it's a bit of a house of cards unless you are truly wealthy. Because if you are wealthy at least living on the street isn't likely in your sunset years. No, money isn't everything. But try telling that to those who have little, or none at all. So much for gratitude to our fellow Americans for obeying our laws, loving our country, fighting our wars, and then being spit on because most of us are indeed average. Oh lord, guess we should have worked harder or gotten a Phd! Complete B.S.


Good luck all, especially those facing some hard cold realities about retirement and what life has turned out to be. It is said in a poll of the rich they hold teaching "fiscal responsibility" to their kids above and before all. God, school, values, hard work, education, compassion? Maybe? But before all


God Bless America...



Aug 18, 2011 1:10PM
At this rate, I haven't really decided, but I think my Plan B is to just. Die.
Aug 18, 2011 4:50AM

Being in my mid 40's with a modest but substantial savings I have started to think of retirement, but I also think I would like to work, yes...maybe until I die. I enjoy time off, but like my mother who is a healthy, active still working 68 year old woman whom people think is 50 (such is her good health) I think "what would I do?" Sure the life of leisure and travel and not working sounds great....but not for 20 years! However, you never know...


Taking from my mothers example, she has been one of those dreaded "public employees" for the last 30 years. Her pension isn't matured yet, but she has paid into it and deserves every penny she gets. If she ever stops working! From witnessing her career which does not pay handsomely, I would say she is getting a fair but still meager shake for retirement. But the best thing she has gotten out of being a civil servant so far as I can see is job security, so long as she does a good job. And she does even more so now, with years of experience behind her. But for many of us that job security is not part of the deal. Which is a shame for many, but not our fault tbh.


As for myself I never had kids because I am not able to. Never have been, and nor was adoption ever an option for me. I quickly came to accept this, even if women in my life couldn't...and so although coming close, I never married. Now in my mid 40's I actually think about it again, however. With the "family" years behind me and lot's of single, divorced, and widowed women out there who have "been there, done that" so far as kids and family are concerned, the world of relationships has opened up to me, or just being single. It's pretty great.


So what does all this have to do with retirement? Well, the fact I never "bought in" to the idea of owning a home, having the best car, keeping up with the neighbors, sending my kids to college, or any of that. I've never had to. And it does something to your thinking I believe to be able to relax and realize "all I have to take care of is me." And if you do that long enough, you realize you can. And god willing stay healthy, active, and vital the very best you can. Like my good 'ol mom. Just "keep it simple," as they say. You'll be ok


As for myself I will have SS, Medicare (or private insurance), my savings, and I am definitely going to start to invest money in the market. Too late? Nope, I plan on working and having a decent income for at least the next 25 years. And if I hit any bumps in the road, well, it's just me and maybe a future wife. That is something I can handle. Live a decent, healthy life the best you can, work and be happy. That is 90% of happiness if you are fortunate enough to do so. At any age.


Also for those of you who think you might struggle to make ends meet in retirement, consider this: Mexico! That's right, you can retire pretty well there as a renter for around $1,500 a month. With two people around $2,000 a month if you budget, and $2,500 quite comfortably for two. And people even retire there with only their SS payments and still live decently, if frugally. You won't be eating dog food or living on the streets, that's for sure. And lot's of Americans retire there, so you won't be alone. Something to think about, and it could be quite an adventure when you least expect one in life.  



Aug 18, 2011 2:33PM

It continues to amaze me that pundits of the current economic situation are suggesting that people in their early sixties, continue to work until they are 70, or even more insane, into their 80's. This is not going to happen.


We age just as we have for the past several centuries. We can extend our lives by a couple of years now, but either our bodies or brains cease to function 100%, from our early 60's. We come apart by inches each day, week after week, and month after month. You'll die long before you ever tap into your retirement plan--that's nice for your heirs.


If you haven't any choice, then sure, keep working 'til you drop. Or, retire late, then die a couple of months later. Or, you may retire at 62 - 65-years. If you take the average paid out in social security, you'll find that on average, each qualified American SS recipient, takes about 18-months of their SS payout. Some die before ever tapping SS, and many die shortly thereafter.


Your government wants you to die sooner, rather than later. Don't take the bait. Sell whatever you must, downsize, move to a cheaper location, whatever; plan to enjoy each day that you have left, and with no regrets.Martini glass

Aug 18, 2011 11:47AM
So Plan A is to work Longer, and Plan B is to downsize and refer to Plan A. Some Option.
Aug 18, 2011 1:45PM
Worked 'til the day B4 I turned 70. Plan B kicked in, moved to Costa Rica. Wished I'd started with Plan B and just skipped Plan A at 62.
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