Now that Labor Day is over, let's get back to what we'll all be doing a lot more of, and longer, than we once expected.
It's almost comical here at the St. Petersburg Times to write that because last Friday more than 200 co-workers took an "enhanced retirement" option and left the building and, for many, their careers for good. We wish them well.
But we also advise those planning to formally "retire" to proceed with great caution.
A barrage of troubling trends is muddying the traditional path — work 40 years and retire for 20 — once followed to blissful American retirement. Here's the short version:
• In relative terms, adults older than 55 are filing for bankruptcy far more often than those younger than 55. Bankruptcy rates, mostly spurred by medical bills, for those older than 75 are skyrocketing — up a shocking 433 percent in the past 18 years even as total bankruptcy filings have declined, reports the Harvard-based Consumer Bankruptcy Project.
• Costs for basics — food, gas, insurance, health care — are rising so fast that more folks must now redo the math to figure out how to make retirement work.
• Face it: You're on your own more these days. Only 20 percent of workers have old-style pension plans that guaranteed a fixed, lifelong monthly payment. That's down from 39 percent in 1980, says the Bureau of Labor Statistics. While that takes pressure off employers to fund retirements, it forces workers to fund their own 401(k) accounts — something many have done poorly, if at all — that are subject to swings in the stock markets.
• People are leaving the work force carrying more debt, including home mortgages that have been refinanced several times. Seniors also are racking up credit card debt thanks to the rampant availability of plastic and the growing need to use credit to cover basic retiree expenses.
• In Florida and elsewhere in the country, retirees find they are unable to tap the equity in their homes as a source of income because dropping home values have erased much, if not all, of that equity. Prospects for home equity to rebuild in the near term are slim.
"Our culture has normalized debt," says Harvard Law professor Elizabeth Warren, who co-authored the Consumer Bankruptcy Project study. "Now, individuals nearing or in retirement are realizing how difficult it can be to manage that debt as they age."
Indeed. In Florida's Middle District bankruptcy court, more than 15,500 area residents and businesses filed for bankruptcy in the second quarter of this year, compared with 9,882 filings in the same period of 2007 and 6,500 in 2006.
I can go on, but you get the drift. Go back to the retirement drawing board. Rethink your strategy.
Today's weak economy and Florida's limp housing market make it tougher to know what to do.
Slowly, people are responding.
An AARP survey this spring shows that 27 percent of workers 45 or older, and 32 percent of those 55-64 said they had pushed back their planned retirement date because of the economic downturn.
Last year, 15.5 percent of Americans 65 or older were in the labor force. That's the highest rate since 1971.
And more of those workers 65 or older are working full time rather than part time.
I don't know if the old maxim "retirement is overrated" is true. As I draw closer, I hope not. But boil down all these vexing trends — with apologies in advance — and here are two simple tips.
Work longer and spend less.
Retire with assets, not debt.
Robert Trigaux can be reached at (727) 893-8405 or [email protected]