The New York Times article “Rethinking Retirement for Longer Lives With Fewer Safety Nets” begins with the tale of a model future retiree: after growing up with parents who did not manage money well, the woman interviewed started saving in her late 20s and still eats homemade peanut butter and jelly sandwiches for lunch. Her fiscal responsibility (and the help of a financial planner) allowed her to weather the unexpected death of her husband and she is on track to retire before she is 65.
While this woman illustrates what is possible with careful reitrement planning, we also know that many of us have not built up our savings nor have we saved by not spending on things like lunch.
The article illuminates something that some people are not aware of—the retirement age was set at 65 in the 1930s when people were expected to need about 10 years of retirement income. Many of us will live longer than that and running out of retirement savings is a frightening prospect.
The article also points out that those who are self-employed have no choice but to take a DIY approach to retirement, however we would say that actually applies to everyone one. As we have mentioned before, you cannot just rely on your 401(k).
The New York Times suggests you either ‘work more, save more or both.’ And there are many options for working more —you can spend more years at your current job or in your current field or retire from one field and choose another. More retirees are working part-time; they may need the money or the part-time work can delay the need to take money from their retirement savings or delay receiving Social Security benefits.
It is important to know how much you have saved and to be realistic about just how long your current retirement nest egg will last. If you already know it won’t last long, save more and plan to work past what used to be traditional retirement age.