How the He!! Am I Going To Retire Now?

The day the DOW fell over 500 points (there have been many more bad days since) my first thought was, wow am I glad I shifted all my 401(k) money into money markets and out of stocks. And my second thought was a little more empathetic – wow I bet there are a lot of people out there that are wondering “How the hell am I going to retire now?” It’s a scary thought.

2011 has not been a great year for the stock market so far and if you have been holding stocks since the year 2000, and most people preparing for retirement have done just that, then you are still down big time.

In 2002, around six in 10 Americans believed they would have enough money to retire. Since then there’s been a dramatic drop in the number who say they have enough money to quit that 9 to 5 existence, that is from the ones who still have a job (the laid offs may already be reluctantly retired). In the latest survey by Gallup in April, only about four in 10 Americans say they will have enough to retire when the time comes. I have a feeling that is an overestimate and that today those numbers are worse. I don’t have statistics on Europe and Japan but I am guessing that they don’t feel much more optimistic.

I spend a lot of time perusing the financial news on the Internet. I tend to wake up early (one of the curses/benefits of getting older). Because I am retired and I write about retirement I read anything I come across on this topic. There aren’t a lot of Pollyannas out there anymore. Most of the news is pretty grim (Like the song says: Life is bare, gloom and misery everywhere, Stormy Weather). Here are some examples of my Internet readings from just the last few days.

From a BusinessWeek article:

Recession Keeps Older Workers from Retirement – The recession spooked many older workers into deferring retirement, and the current job market is reinforcing that trend. For those in their 50s and early 60s the doubts start after opening the quarterly 401(k) statement. 

From CNN Money:

We could very well see lots more turmoil in the financial markets and further declines in stock prices.

Letter to editor Yahoo Finance:

We have seen our personal savings and wealth, our real-estate values, our retirements devalued and even destroyed.

Yahoo finance:

Nothing kills retirement like a cratering 401(k) — when the value of savings meant to fund life after people stop working plummets. 

Losing money you have invested for retirement is a problem of course, but one we can recover from if we have a couple of decades left before we need the money. If our hoped-for retirement is just around the corner then these kinds of loses can be demoralizing and devastating.

And from Yahoo Finance, this was labeled “On the positive side”:

Working into the traditional retirement years allows savings to compound longer. Workers are healthier and better educated than earlier generations, and it’s easier to toil away in an economy dominated by high-tech gear rather than the assembly line.

Now this sounds like a reasonable (“positive”) option. Just work longer. We are healthy and don’t have to do those manual, assembly line jobs anymore. There is basically one problem with this (ignoring the fact for now that I have been working for the last 40 years and am quite curious to find out what life would be like without continuing to be a wage slave).

When I had my last contract with Boeing sent to India where people would work for a fraction of what I was getting (thus starting me on this retirement oddessy), there were 100 people laid off at the same time as I. Most of them were in their 20s and early 30s and I was in my 50s. The idea of fighting for a job with these smart, hungry, intelligent, energetic, young people makes me tired just thinking about it. Sure we seniors could work forever – if someone was willing to give us a job.

Aside: Weren’t real slaves allowed a gentle retirement once they had served their masters for their whole lives? Looks like we aren’t going to be given that opportunity.

Here is something that should warm the cockles of all perspective retirees.

CBS MoneyWatch Headline:

How to Retire on $60,000 a Year – Added to social security you would need somewhere between $660,000 and $825,000 in retirement savings

Nowadays most people, especially those without jobs, would love $60,000 a year just to LIVE on. And of course, after all the gyrations of the stock market, I am sure we all have “between $660,000 and $825,000 in retirement savings”. So it’s all good, right?

Heard on NPR radio:

45.8 million Americans are relying on Food stamps.

I don’t know about you but this number just blows my mind. That is 15% of the population. I wonder how many of those getting food stamps have “between $660,000 and $825,000 in retirement savings”.  A lot of the people relying on food stamps in America are still working. They just aren’t making enough to feed themselves or their families. But I’m sure they are all saving enough for retirement, right?

What’s a poor old geezer to do?

Here are a few thoughts about what to do to deal with these dire straits. From a headline from a CNN.com article: Donald Trump Suggests Leaving the Country... And from an email to a financial website: Moving far away seems like the better option. Maybe they have something there.

So for anyone thinking of retirement these Internet articles say that we are basically left with two options:

1. Work until you drop.

2. Get the hell out of Dodge.

Number 1 means that we never stop working. But I am not sure that going from a high pressured computer consultant to becoming a Wal-Mart greeter is the way I want to conclude my sojourn in this life.

Number 2 means we are going to have to look for a place to live out our retirement where we will have enough so that cat food is not part of our daily diet. That could mean a cheaper part of the U.S. or it could mean leaving the U.S. all together.

So I went with door number 2.

You of course will have to decide if living and retiring abroad is for you. Are you the type of person who can pull up stakes, say goodbye to friends and family, and your pet gerbil and communicate using Skype? Can you deal with a diet of fresh vegetables and fruits and spicy foods instead of fast food burgers and french fries? Can you survive endless summers or would you long for those icy cold winters? Can you hack learning a foreign language. If the above makes you cringe then maybe living abroad ain’t for you. If it turns you on then you might want to get your passport updated.

Then there is the question of money. I suggest using one of those “retirement calculators” which asks you a bunch of financial questions and then tells you how much you will have to retire on. I like T. Rowe Price’s Retirement Income Calculator. It will ask you lots of questions like date of birth, how  much you have saved, the age you want to retire, estimated Social Security income, and how much you will need per month when you are retired.

I just ran mine and estimated that I would need $4,000 a month to retire in Seattle (that small amount would probably have to include “Cat-Food-Fridays”). When you do this don’t be too shocked. From my answers to the questions the calculator told me that I would have to be content with living on only $2,300 per month. I could almost hear the calculator laughing at me. That would probably mean “Cat-Food-Weekends” too.

When you do the calculations there is only one variable that you now have any control over. Not your age, or you Social Security income, or how much savings you have. Besides the age you want to retire, the only variable that you can change is how much you need to spend per month.

So, if you are like me, and have had enough of “work”, and don’t really like the taste of cat food, then you might consider moving abroad. To a place where the cost of living will allow you to plug in a number that the calculator won’t laugh at. An amount that will let you eat cake; and one which will eliminate any possibilities of “Cat-Food-Fridays” in your future.

Popular places to retire with reasonable costs of living:

Some places that are becoming quite popular with the retire-abroad set are Mexico, Central and South America, the Philippines, Vietnam,  Malaysia, Indonesia, and where I am currently living, Thailand. Read everything you can on the places you are interested in and talk to people who have been there or lived there. Brush up on visa requirements. Then take a visit.

If you decide to live abroad you won’t be alone. It is believed that there are between 4 and 6 million Americans currently living in foreign countries. There are also millions of Europeans and Asians who have also elected to live outside their home countries.

And if you do join us, WELCOME, and enjoy the cake.