At the same time, retirement ages have sunken. So suddenly there were people living longer, on the government's payroll. Some people would then draw the conclusion: "If people live longer, they should work longer," but many elderly people are too tired, and to weak too work after a life span of just working. As the "baby-boom" generation begins retiring, around 2010, America will have a greater proportion of elderly citizens than it ever has. Approximately 24 million people over the age of 70 live in the United States today.
According to the Society of Actuaries, baby boomers can expect to live well into their 80,s and many will live well into there 100’s and beyond. That means someone who quits working at 65 may be looking at spending 35 years in retirement.” (www.aol.sageonline.com) The worst news about the increase in life expectancy is that people are not saving enough to maintain their high standards of living and they must adjust accordingly. So what are these people supposed to do? First, people must save as much money immediately and let go of the old notion of retirement. The basic fact is that “Social Security currently makes up about 40% of a retirees income, it is now up to the individual investor to generate the remaining 60% in order to maintain the standard of living they are accustomed to.” (Prosser 12) Some of the old rules of saving for retirement still apply, Michael McDonald, vice president of a national brokerage firm says the 60 t... ... middle of paper ... ...ill accumulate interest.
Because of this new trend, many countries have come to rely on these older employees emerging in the workforce. According to the AARP 20% of America's workforce is expected to be over the age of 55 by the year 2015, with an increase of 50% happening in 2014. This increase of people over the age of 55 in the workforce will naturally lead to a decrease in younger employees, aged 25-54 ( McMahan 50). Because of a longer life expectancy in the United States, our aging population will in turn create an aging workforce. Beginning in 1948 employees over the age of 55 steadily decreased until 1993 and up until the Great Recession beginning in 2007.
Thirty percent of the Federal workforce will be eligible to retire in five years and an additional twenty percent will most likely volunteer for early retirement. However, that is not to say that fifty percent of the workforce will leave at once. But it does mean that federal agencies must start planning for the workforce of the future. (Department of the Office of Personnel Management, 2005, p. 2) Nationwide, "people 50 years and older account for 85 percent of the projected workforce growth between 1990 and 2005." (Schermerhorn, Hunt, & Osborn, 2003, Ch.
On these assumptions, the pension would provide $48,750 a year, until it runs out at age 85. If the staring amount was $1 million, we end up with $65,000 over the same period. Sobering, isn’t it? Age 65, $750,000 pension lump sum Pension payout - $37,500 a year, over 20 years to age 85 Interest at 3% p.a. adds another $11,250 Total - $48,750 a year The illustrations I have provided here are just to give you an idea of the numbers and aren’t meant to be a perfect prescription for retirement.
Survivor’s benefits provided a monthly payment starting in 1940, when these benefits were added as part of the Social Security Act. The new LSDB were created to help families when regular survivor’s benefits were not payable. The new LSDB also stated that if no family members were still alive the benefits could also be paid to anyone who assists with funeral and burial costs. At this time, LSDB were 6x the persons primary insurance amount, which is the monthly benefit amount for the worker at full retirement age. Under this 6x rule, the minimum payment ever made was $63.75 and the maximum payment made was $273.60 (DeWitt, 2006).
Therefore, people are living as retirees for a larger portion of life. In particular, people can expect to live four to five years longer after retirement than they were in 1950 (Board of Trustees, 2010, Table V.A). This difference is further expected to increase another two years by 2050. Because more people are entering their retirement years and people are living in retirement longer, these longer periods spent living in the retirement years lead to more nuances in how people retire (Ekerdt, 2010). These patterns include such increasingly popular trends as un-retirement and bridge retirement (Alley & Crimmins, 2007; Maestas and Caws, 2007; Wang, Adams, Beehr, & Shultz, 2009; Quinn, 2010; Wang, 2013).
I plan to graduate at age 22 and start working immediately after graduation which would put my retirement age 60. My investment portfolio before retirement is to be somewhat diversified with a heavy emphasis on high investment stocks and the real estate market. I plan to travel out of the country about once a year and locally (out of the state but driving distance) several times a year. I did a sensitivity analysis on 10 different factors of my retirement plan. Four out of the seven factors are based upon the current economic and political climate.
To understand this phenomenon, we should think about the future including career, family, money, and health in our 20’s, 30’s, 40’s, and 50’s beyond. First of all, our income curve will be sharply up and down after college, but it should be a great time in our early career. According to the article “How Much More Money Does a College Graduate Make Than Just a High School Graduate?” by Karen Farnen, people who have a high school diploma only earned $652 per week as full-time workers. At the same time, bachelor's degree graduates earned an average of $1,066 per week as full-time workers. Those statistics show that there is a huge difference between bachelor's degree graduates and high school graduates of $414 per week, or $21,528 annually.
The population growth of Americans age 65 and older is 112% in the years between 1995 and 2040. The population growth in age 20-64 is 24%. The population growth in ages under 20, is 5%. What these numbers essentially represent is a cause problem with age differences in the future. Soon, less workers will be in the job force trying to supply more retirees with Social Security.