There appears to be a long-term trend that is squeezing the work force over the ages of 50.
There are a number of factors that seem to be working against them:
- The eligibility age for Social Security keeps moving upward
- The pandemic has affected workers aged 50 to 59 worse than the general population
- Dramatic changes in technology with older workers having difficulty keeping up
- Pensions are being phased out with retirement savings too low to support early retirement
- Inflation is outpacing income sources, like wage increases, market investments, food, etc
- Reorganizations and layoffs have impacted older workers disproportionately
- In the past, one worker could support two or more in a family. Now it takes two incomes
- As one ages, health issues increases and physically demanding jobs are unavailable
- Without changes by Congress, Social Security’s $2.9 trillion in asset reserves are projected to be gone by 2034.
There are also a few factors that help the age squeeze:
- Higher minimum wages when a lower demanding job is necessary
- Expanded opportunities for remote work have increased the job pool for older workers
- Part-time, seasonal and temporary jobs have also increased for work to fill-in demand
- The ability to obtain on-line certifications can qualify older workers for higher level jobs
Here are some aging history and projections both domestically and internationally:
- Costly retirees far outnumber the younger generations that support retirees
- In the U.S., some states have a pension problem that may not be reconciled when due
- Globally, those 75 and older are the fastest growing group, causing health care issues
- A shrinking workforce with lower wages will cause a shift in quality-of-life concerns
- Average life expectancy in 1900 – 47; 1935 – 60 (when Social Security was implemented); 1970 – 70; 1990 – 75; 2023 projected – 79. Social Security was only to be a supplement to savings, not the only source of income. Life expectancy was never envisioned to be 79.
So, what does the younger generation do over time, to avoid the problems of retirement?
Here are a few thoughts:
- If you have a pension plan, supplement it with your own personal savings plan
- With a 401K plan, maximize the company match. It’s a 100% return-on-investment. Add an additional 1% or 2% above the normal amount as an extra financial hedge
- If you have a two-income household, save or invest half of the lesser pay
- Hold onto your car(s) a few more years. Take fewer vacations. Eat out less. Put the money saved into a reserve account. You may need a 6 months reserve in case of a loss of job.
- Exercise more while eating less weight-gaining snacks. Look at the longer-term impact
- Keep yourself healthy longer. Many careers are cut short by the inability to work
Life seems to have a series of ups and downs. The longer the “ups” the better. Minimize the “downs” through good health, common sense and luck. Plan for the upside, but prepare for the downsides. If you’re over 50, follow my articles on strategies as you age.
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