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Is Retirement Still a Reality?

Tom Palome is former six-figure-earning marketing executive at Oral-B. Now approaching 80, Tom’s retirement reality is more reminiscent of an eager teen than a comfortable retiree.

Working two part-time jobs- one as a food demonstrator at Sam’s Club, the other manning the grill at the local golf club- Mr. Palome’s weekly salary now is comparable to that of his former hourly wage.

Mr. Palome’s story is a reminder that high income doesn’t guarantee an idealistic retirement, or any retirement for that matter. After putting his kids through college, helping his elderly parents, and paying off his mortgage, Mr. Palome had $90,000 saved for his golden years, much of which took a beating during the 2008 financial crisis, leaving his retirement underfunded- an increasingly growing problem in the United States.

The 2013 Employee Benefit Research Institute’s Retirement Confidence Survey of workers aged 55 and older revealed that 60% of workers have less than $100,000 in retirement savings, 43% have less than $25,000 and 36% have less than $10,000 saved.

With medical bills alone expected to total $215,000 in the last 20 years of a couple’s life, the average retirement nest egg of $44,000 (or $88,000 per couple) is hardly enough to cover even half of their projected medical expenses- let alone housing, food, and other basic necessities.

Why the enormous lack of savings? Many Americans site the fiscal demands of daily life on limited income- in fact 80% of people making less than $50,000 a year say it’s hard to keep up with bills and save for retirement at the same time; but what about former six-figure earners like Mr. Palome?

At Risk Retirement

It turns out that the shortfall in retirement savings isn’t limited to low-income earners. According to a 2014 poll by CBS news, more than 60% of those earning between $50,000 and $100,000 annually have trouble saving for retirement.

So if the reality of retirement is fading for former high earning execs like Mr. Palome, is it even a possibility for the rest of us?

The Changing Landscape of Retirement

Financial planners used to refer to retirement income as a “three-legged stool” comprised of social security, pensions, and personal savings. That stool however, seems to be falling apart just as many near-retirees are positioning themselves to take a seat.

Traditional pensions are on the wane, with just 10 percent of boomer-aged workers expecting income from defined-benefit programs; and according to the annual report by the Social Security and Medicare Trustees, the Social Security trust fund is expected to run dry by 2036 if changes are not made to the system. This leaves retirees with one leg left to stand on, their own retirement savings, which are largely insufficient.

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Couple these income insufficiencies with increased life expectancies, medical costs, and inflation, and it’s no wonder 65 percent of baby boomers expect to remain working in some capacity throughout what would traditionally be considered their retirement years.

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It’s not just today’s retirees and baby boomers adjusting to this new retirement landscape. Even Millennials, anticipating the income realities of retirement from forty years away, are seeing retirement become less and less of a possibility.

Will Retirement Remain Unrealistic?

While Milllennials may have the time to anticipate and prepare for a largely self-sufficient retirement, they are facing another challenge that calls into question their capacity for future retirement- debt.

In early 2014, Yahoo Finance profiled millennial Jessica Michaels- a 28 year old with a six figure salary and zero retirement savings. The reason? $10,000 worth of credit card debt from her years of pre-six figure earnings and $150,000 in student loans. Between debt payments and rent, seventy five percent of Jessica’s paycheck is gone before she has a chance to cover the rest of her monthly expenses, let alone set aside money for retirement.


Unfortunately, Jessica’s struggle is not unique. The median debt load for a student upon graduation is $23,000. According to Nerd Wallet, that $23,300 will cost students $115,000 (in today’s dollars) by the time they retire. Nerd Wallet projects that the resources deferred to debt repayment in lieu of retirement savings will delay the average retirement age for Millennials by over ten years to their early to mid 70s.

Retirement Reality

So what does it take in today’s world to keep retirement a reality?

Staying on Track With Savings. While changes in pensions, employer 401(k) matches, and social security may be uncertain and ever evolving, prioritizing personal savings is sure to remain a key ingredient in a well-funded retirement.

Tools like the Personal Capital investment check up can help individuals better understand their investment portfolios and asset allocation, making sure current savings are on track to meet future retirement needs. Additionally, Personal Capital’s future projection tool can provide individuals with an estimate of how much additional growth they will need to meet their retirement goals.

Reduced Cost of Living. Living within ones means is not only an essential ingredient of fulfilling the retirement reality in an individual’s working years, it’s also a key ingredient of a successful retirement lifestyle. By enjoying a reduced cost of living, retirees use up less of their overall savings, allowing it to last longer and ensure sufficient coverage throughout their golden years.

Diversified Income Streams. In addition to withdrawing from personal savings and collecting on whatever pension and social security is available, retirees can benefit by having diverse streams of income- part-time jobs, owning their own businesses, renting out a room in their home, etc.

Is retirement still a reality? Yes, but it’s a shifting and evolving reality.

To remain realistic, individuals must put themselves in a position of power through sufficient savings- affording themselves options rather than scrambling for contingencies when they hit retirement age.

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1 Comment

  1. David Wendelken

    “The median debt load for a student upon graduation is $23,000. According to Nerd Wallet, that $23,300 will cost students $115,000 (in today’s dollars) by the time they retire. ”

    The median new car price is about $32,000. I sure see a lot of people celebrating a new car on Facebook!

    Yet, somehow, that median student loan debt is considered an insurmountable burden.

    The problem isn’t the $23,000 student loan debt. It’s the new $1,000 fancy smart phone every year and the $150 a month data plan instead of a $19.95 flip phone, plus the $32,000 new car instead of a $13,000 new car or a $9,000 low mileage used car. It’s the $400,000 house instead of the $150,000 house. It’s a host of bad decisions, one after another, that’s crippling their financial future.

    It’s certainly not the $23,000 student loan.