When Should One Retire? As the U.S. economy falters and 401(k)s dwindle, more people are deciding to delay retirement. Few people want to think about exactly how long they will live. Retirement consultants say that it's necessary, however.
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When Should One Retire?

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When Should One Retire?

When Should One Retire?

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From the studios of NPR West, this is Day to Day, I'm Alex Chadwick.


And I'm Madeleine Brand. Coming up, the end of things for you. Not you necessarily, Alex. Why you should be asking yourself this very uncomfortable question, how long am I going to live?

CHADWICK: Because it matters a lot for how you will live. This is where we are starting today. Many people's plans for their later lives are getting stopped and turned over by the new economy. The housing crisis, the credit crunch, the stock market, dwindling retirement accounts. Suddenly, retirement is not so sure a thing.

BRAND: That is the case for Frank Newton from Santa Barbara, California. He is 61 years old. He had planned to quit working, well, right about now. Instead, he's working two jobs.

CHADWICK: Frank lost his PR job after the hospital where he worked abolished the department, cost savings.

BRAND: He went back to school to get his teaching certificate. Local schools were actually shrinking, though, and he got laid off.

CHADWICK: So, back to school again, this time for accounting, which is what he does now, and he works part time at a local paper. And those retirement plans, hmmm.

Mr. FRANK NEWTON (Accountant, Santa Barbara): My dream was pretty simple. I wanted to travel, going around with my wife to a lot of parks and other places around the US and maybe in Canada and Mexico, and a related dream was to get a little place to retire down in Mexico.

CHADWICK: When did it become apparent to you, I am not actually going to be able to retire when I thought I would?

Mr. NEWTON: I would say even 10 years ago, it dawned on me clearly that this was going to be an uphill battle. And so I started taking college classes at the local community college to try and teach myself new skills.

CHADWICK: And so what are your plans now?

Mr. NEWTON: Maybe do some part time things just to keep some extra cash coming in. Social security is not going to work. The other thing I was hoping for was that the property that I own, I have a small house, would help me financially as I get older, but the housing market is now going downhill. So it's difficult to find a secure, stable economic position.

CHADWICK: Do you remember when you were a kid, and what your expectations of retirement were then?

Mr. NEWTON: When I was young, in 50s and 60s, people in their 70s were really old, and I guess I had sort of a vision of people playing canasta and lawn bowling and simple things like that. So my sense of what it's like to be old has changed.

CHADWICK: I know that our ideas about old age have changed, but it's that our ideas about, you would be able to retire, that things would be OK.

Mr. NEWTON: What I didn't anticipate was how the economy would change so much. When I was growing up, it seemed like, well, there would be a continuation of the same kind of living situation. Gasoline wouldn't be horrendously expensive, and housing wouldn't be horrendously expensive and getting medical care wouldn't be horrendously difficult. And so the retirement situation that I see for myself is very different from what I saw for my uncles and aunts back in the 60s.

CHADWICK: If you look ahead now, when you talk with your wife, how do you imagine your retirement?

Mr. NEWTON: We think we'll probably keep working regularly until we're about age 70. And then beyond that, not totally retire even then. Maybe for a few more years, try and find some part time work. I don't see retirement any more as where you kick back and relax. Unless, you know, if I had a couple of million bucks, maybe I could live like that. But no, I don't see a point where I'm just going to be totally uninvolved. I think we're going to have to stay active and do things to keep ourselves financially viable. It's not so simple anymore being elderly.

CHADWICK: I wonder if you don't feel something else about this. Because it's not just that the world has changed and continues to change, it's that there was some kind of understanding of social contract, wasn't there? That is, you've played by the rules. You've done what you should do to prepare as well as you can, and here you are, at the point where you're supposed to be able to play canasta, if you want to do that all day long, or lawn bowl whatever the other ideas we had about retirement. And that's gone.

Mr. NEWTON: It is gone. I think the anger that I had I've resolved within myself in the last five or six years. I think there used to be a sense that there was a positive relationship between a corporation and its workers. There is no sense of loyalty anymore to working for any particular company. The sense of, perhaps, support as you get older has vanished. I'm looking now, not to anything outside myself, but to just my own skills, my own resources. I'm not counting on anybody to help me anymore.

CHADWICK: Frank Newton in Santa Barbra, California. Thank you for this conversation.

Mr. NEWTON: OK. Thank you.

CHADWICK: And good luck to you.

Mr. NEWTON: I appreciate it.

CHADWICK: Here are some concrete numbers to show why Frank Newton has a lot of company in his generation. This is why people are delaying retirement.

BRAND: Housing prices have dropped 13 percent since last year. Blue chip stocks are down 15 percent since October. Now, a million more people in their late 50s and early 60s are working, according to the U.S. Labor Department, than were on the job last year.

CHADWICK: As baby boomers like Frank plan for retirement in a rocky economy, there is also an unknowable X factor that makes it hard to know when to stop working. From South Orange, New Jersey, Nancy Solomon reports.

NANCY SOLOMON: Much of retirement planning is a pretty simple equation. There's your income plus your assets minus your expenses with an average rate of inflation figured in. And then there is one last calculation. How long are you going to live.

Ms. SUSAN LUBIN (Financial Planner): Oh! That's a big question. If we knew how long we were going to live, I'd be out of a job.

SOLOMON: Susan Lubin (ph) is a financial planner in Summit, New Jersey. She says clients often haven't given their own mortality much thought.

Ms. LUBIN: When they come to me, they are thinking of retirement, retirement, and they aren't thinking about, when will I die. People really do have to face that issue and decide how important that is to them in the whole planning scheme.

SOLOMON: Lubin recommends her clients plan on having enough money to live to 100. But that can mean working longer, saving more, and not drawing social security until they are eligible for the maximum payment. But not all her clients want to keep working.

Ms. DEBORAH BOGSTALL (Retiree): If I waited until 65, I'm sure that would get me into my 90's, but I didn't even consider that.

SOLOMON: Instead, Deborah Bogstall (ph) of West Orange, New Jersey has a plan to get her to age 85. That will allow her to retire in five years, at 62, from her job in marketing at a major packaged foods corporation. Her daughters are grown. She's single, and looks forward to having more time to explore the world around her.

Ms. BOGSTALL: Maybe 85 isn't enough planning, but I'll have rich daughters by then who can supplement my measly income, my social security, if necessary. They've already offered.

Mr. MIKE GRECO (Financial Planner): When it comes to retirement, the worst case scenario is clearly outliving your money.

SOLOMON: Mike Greco, a financial planner in Maplewood, New Jersey, says his younger clients tend not to want think about how long they'll live and are reluctant to plan for a long life, while those in their 60s tend to view longevity more positively and worry about not having enough money to get there.

Mr. GRECO: Sometimes we encounter a ton of resistance in people willing to go through the planning process. Money is a scary thing to a lot of people, and even some of our existing clients would prefer not to hear that they need to do X,Y, and Z to be able to retire at 65.

Ms. PAMELA DOUGLAS (Retiree): I have probably been more anxious that I have ever been in my entire life.

SOLOMON: Pamela Douglas (ph) is planning to retire this year, at age 61. She has worked 25 years in the state court system, making her eligible for an early and generous pension. She and her husband recently bought property in North Carolina and plan to move there to lower the high cost of living they face in New Jersey. She says longevity wasn't at the top of the list, but it was a factor.

Ms. DOUGLAS: I just assume I'm going to live until I'm probably about 83 to 85.

SOLOMON: That's a pretty exact estimate there. How did you arrive at that?

Ms. DOUGLAS: Well, my parents, my mother died at 83, and my father died at 86. Of course, I have the potential to live to be older than that. Although I have to say, I'm not sure why people want to live to be so much older than that.

SOLOMON: Douglas and her husband used that age estimate to calculate how to maximize their social security payout. Social security allows you to retire a few years early in exchange for a smaller monthly check. Conversely, you can keep working til you're 70 and get a larger check. Douglas figured she and her husband did best by taking the middle route. They plan to start collecting social security at age 66.

Of course, many people don't have that flexibility, nor are they comfortable making a guess about when they'll die. So, absent a crystal ball, they have to balance how soon they want to retire against the truly unknowable, how long they'll live. For NPR News, I'm Nancy Solomon in South Orange, New Jersey.

BRAND: One more item on this subject, now. Alice Furlaud is still not retired. She's a long-time contributing writer for NPR, and now, she has an idea that may keep her going even longer.

ALICE FURLAUD: I'm often disconcerted, having survived into senior citizenship, to find that youngsters of 40 or less don't know names, which, to me are, household words. Not long ago, I called a Washington florist to order some flowers for a friend who lives in nearby Bethesda on MacArthur Boulevard. When I gave the address to the florist employee, she asked me to spell it. I told her it was spelled the same as the general it's named after. That didn't help. This woman had never heard of General MacArthur!

One doesn't have to be very aged to have these experiences. Back in the 1960s, I knew a lovely girl of about 25 who laughed heartily at me when I mentioned the Duke of Windsor. Clearly, she thought I was a culture snob for mentioning this obscure jazz pianist or whoever he was. She was a wild and wooly hippie, but she had graduated from college.

Now, it's not that these names are necessities of an educated life, but they're part of a background of my life. So it hurts me when they're ignored, but the young may well despise us elders for not knowing their household names. I heard somewhere they like Beyonce, but whether she or he is a French singer or a marathon runner, I don't know. And what's the difference between hip-hop, which sounds pleasantly like bunny rabbits, and rapping, which sounds angry? I'm an ignoramus about those things. So anything about the ancient times I knew can be learned on a computer by any young person who's interested.

But one thing Google can't offer them is first-hand accounts of events in the past from people living right in their neighborhoods. Why, weekly workshops could be set up just for this purpose. The young could teach us elders what it means to be cool. A friend of mine could tell about being an Army second lieutenant in World War Two. He was badly wounded in the Battle of the Bulge. I could describe my war work at age 12, working in a hospital cafeteria after school. I arranged trays with dishes of ice cream, which melted before they were carried up to the patients. And speaking of memory, these youngsters had better catch our acts before we get too forgetful.

BRAND: Alice Furlaud, plotting her return to the workforce from her home on Cape Cod.

CHADWICK: And stay with us on Day to Day from NPR News.

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