Retirement Planning Advice For Teens To 50+Play
Many people in the workforce used to look forward to the many benefits of retirement – having the time to spend with loved ones, to travel, or just relax. However, due to a changing economy, as more baby boomers age out of the work force, the reality of retired life doesn’t always match up to previous expectations.
NPR Correspondent Ina Jaffe covers aging and retirement issues for NPR and recently reported a three-part series called “Rethinking Retirement” for All Things Considered. Ina talks with Here & Now's Jeremy Hobson to recap her findings from the series, and to discuss the truths, myths and reality of retirement these days.
Jeremy Hobson and Robin Young then turn to retirement expert Teresa Ghilarducci to discuss how people can plan for retirement so they have enough money. According to Federal Reserve data, about half of all Americans have set aside no money for retirement.
Ghilarducci, a professor of economics at the New School for Social Research, is author of "When I'm Sixty-Four: The Plot against Pensions and the Plan to Save Them."
- NPR Series: "Rethinking Retirement: The Changing Work Landscape"
Ina Jaffe on how retirement is changing
"That old idea that you stop working completely after working full-time for years and years and years, and then you hang out with your grandchildren or play golf or something-- that really is a myth. That is going away. And the reasons are both good and bad. In this last recession, baby boomers who are reaching retirement age, they really took a beating. They were much more likely to be among the long-term unemployed, so they had to dip into their retirement savings, their homes lost value. Even people who weren't hit that badly simply weren't able to save enough. So people are still working because they need the money. On the positive side, people are living longer, many are staying healthier longer, and they want to keep working. They enjoy the job, or at least they enjoy being around their co-workers, and they don't see any reason why they should stop because they've reached some arbitrary age.
Jaffe on people's motivation for staying at work
"It's really kind of simple. They enjoy it, and they feel they still have something to contribute. That's over and above the fact that the money always helps. There's an interesting program present at some companies that I've reported on: it's called 'gradual retirement' or 'phased retirement.' This is a formal deal that some companies have where retired workers can come back for up to 1,000 hours per year, and do some of the things they used to do before. It's formalized. They have a program for it. I went to the aerospace corporation here in Southern California. They do a lot of very technical work for the DoD and NASA on spacecraft and satellites. I met a 73-year-old physicist who feels he still has something to contribute. Clients still ask for him by name, according to his supervisor. It's not just the physicists and engineers and things like that. Even the clerical workers, the head of human relations there said that a retired clerical worker comes and does the orientation for new workers every Monday."
Teresa Ghilarducci on people who can't afford to retire
"There are always very highly educated, professional, dedicated, hearty souls who've stayed longer in the workforce. Your grandma would have a story about somebody who worked longer. But the trends are showing that the huge increase in service sector jobs are sweeping up older people that don't have enough money. We're seeing a lot of debt among the near-retirees, people in their mid-60s. We'd never seen that before. And we're also seeing that their retirement income is a lot less secure than it used to be because we've shifted from pensions to the do-it-yourself 401(k) model."
Ghilarducci on what Americans should be doing to save for retirement
"If you're a human being with a job, make sure you take advantage of all the saving opportunities you have at work. It's usually subsidized by the employer, because they'll put something in even if they don't have to. I can't say that enough: The retirement plans that employers might have are all voluntary, and they could cut it at any moment. If you're lucky — and half the workers have something at work — participate. ... If you are saving in your 401k or in your IRA, be a smart investor and run — don't walk, but run away from active funds. And get an index fund. And I don't work for Vanguard, but they're the king of index funds. There are a lot of other companies, like Fidelity, that provide index funds, but nobody will sell it to you. You have to buy it."
- Ina Jaffe, national desk correspondent based at NPR West. She tweets @InaJaffeNPR.
- Teresa Ghilarducci, professor of economics at the New School for Social Research. She's author of "When I'm Sixty-Four: The Plot Against Pensions and the Plan to Save Them." She tweets @tghilarducci.
This segment aired on April 3, 2014.