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Will Your Retirement Dreams Be Delayed?

February 24, 2012 · 94 comments

in Personal Finance

When I first started working at the age of 23, retirement seemed like something that old people did.  I started contributing to a 401k plan with my first paycheck, but retirement seemed so far off that I didn’t put much thought into it.  I didn’t really have a goal of retiring early, I just figured my husband and I would retire at 65 like most people seemed to do.

I am now 21 years into my ‘career’ (working at the same darn job off and on all those years) and working until the age of 65 does not seem very appealing.  However, even though we have diligently saved for retirement each year, our portfolio has not experienced the typical returns that ‘experts’ say you should expect on average each year.

A recent article on Yahoo Finance discussed Five Expenses Keeping You From Retiring.  I went through these expenses and looked at how our personal situation would be affected.

  1. Stock Market Drop.  This obviously affected many people.  It hurt portfolios and people also lost jobs and experienced salary reductions/stagnation.  The stock market drop wasn’t all bad though.  It did allow us to buy stock at lower levels.
  2. Boomerang Kids.  This refers to kids leaving the nest, and then flying right back in due to unemployment or student loan debt.  My kids are still in high school, so this obviously does not apply to us.  However, the article did state that the average cost to raise a child to 18 is $226,920 (so glad that counted that extra twenty bucks) in the United States.  We have 3 kids, so obviously this expense affects our retirement.  Add what we pay for private school into the equation, and kids definitely play a huge role in how long we will have to work.  However, they are worth every penny we spend on them and more, even if it means I have to work until I am 95 years old.
  3. Divorce.  We are not divorced, and don’t ever plan to be.  However, I have seen how divorce can absolutely ruin the finances of couples that were previously very financially stable.
  4. Lifestyle Changes.  The article discusses changes such as taking on a new expensive hobby, or a experiencing a medical problem.   My hobby would definitely be travel, which I can see would be costly.  Being able to afford to travel will definitely add years onto our work life.  Regarding medical issues, life is unpredictable, so we just plan to try and save enough to help cover medical expenses.  It is very hard to know what that amount would be though.  On the flip side, our ‘lifestyle’ will change when our  kids are all done with college (they start rolling off the payroll when we are 48), and our house will be paid off around the same time.  So, assuming our kids don’t boomerang back, our expenses will drop considerably at that point.  This will allow us to save a lot more than we do now, and that money will be put toward ‘earlier’ retirement.
  5. Poor Planning.  We always planned to save for retirement, and we did.  We didn’t plan for poor stock market performance though, and we did end up traveling and spending on some things that we didn’t plan to spend on.  However, we found that spending the money while the kids were still home was worth delaying retirement somewhat, so no regrets there.  Not sure that falls under poor planning as much as just ‘living’ and learning what is important to you along the way.
I would also add the following to the list:
*Unrealistic expectations.  This might fall under ‘poor planning’, but I think some people expect a 12 percent annual return on their investments or possibly expect an inheritance to come through.  Also, younger people will have to consider the possibility that Social Security will no longer being solvent by the time they hit retirement age.  I recommend that everyone should plan to fully fund their own retirement and consider anything received from Social Security as an added bonus.
*Poor Investments.  I think this has greatly affected many people that invested  in real estate.  Those that put their retirement nest eggs into investment properties must really be hurting.  Real estate is just one example of a possible poor investment.  Some invested in businesses that didn’t work out, or were too heavily invested in one company that took a nosedive.   This is why diversification is so very important.
How about your retirement plans?  Did you have a target retirement age in mind when you started working?  Do you think you will retire sooner or later than what you thought?


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{ 11 comments… read them below or add one }

Thad P @ thadthoughts.com February 24, 2012 at 7:15 am

Personally I am reassessing what retirement will mean when I get to 65. Assuming our health is still good, I would want it to be spent doing things that make me feel vital, as if I am making a difference. Will that mean I work past age 65? Perhaps (probably), but it won’t be regretfully.


Financial Samurai February 24, 2012 at 7:36 am

My retirement goal when I started working was always by around 40-45 i.e. 20 years of work, and I’m done As a result, I’ve been very conservative w/ my investments and diversified since graduation.

It’s the online income thing which came out of left field and has allowed me to no longer do a day job and “retire” sooner. Hope the opportunities sticks around for a while!

Best, Sam


Well Heeled Blog February 24, 2012 at 9:58 am

I’d put health issues up there as a challenge to retiring early. With insurance so tied up with employers in this country, it’s hard to see how you can retire in your 40s or 50s even if you have amassed enough savings to live on – unless you are VERY wealthy. One health issue can wipe you out if you don’t have insurance or don’t have multi-millions.


Krantcents February 24, 2012 at 1:12 pm

There is one more, it is you! Not you personally, but the individual has a lot to do with what they achieve or accomplish in their life. You are the navigator/captain, where are you heading?


Jenna, Adaptu Community Manager February 24, 2012 at 6:46 pm

I think family crisis or having your parents move in with you when they retire would also affect when you can retire yourself. Haven’t thought much about retirement but then I’m only 4 years into my career.


Jacq February 24, 2012 at 8:58 pm

I totally never thought about retiring when I started working 30 (yikes!) years ago. I wish I had in hindsight.
One thing that I think is key is that at whatever age we are, we aren’t really good at projecting into the future what kind of lifestyle we’ll want to be living at a future age. Now that I’m 46, I really enjoy staying home (although I’m not right now) and don’t have that urge to travel that many people do. Mind you, I never have. My oldest son and I were discussing this – he has the same ambivalence to travel that I do. We came to the conclusion that we read so much that we sort of travel through our reading material on a daily basis, it’s just through our imaginations rather than in real life.

I’ve also decided that I’d like to be more immune to stock market fluctuations after this last year’s drop. That means investing more conservatively than I have been. So I need more cash than I’d planned and am bumping up my planned savings by a large amount. That means working like a normal person I guess. 😛


Little House February 26, 2012 at 3:04 pm

I’m the worst when it comes to retirement planning. In my 20’s I didn’t have a steady career or income and thought 65 or 70 was eons away. Now I’m pushing 40 and freaking out! I have a plan in place but it’s still a little shaky. I’m pretty sure I’ll be working to 65 or 70 no problem. Thankfully, I like what I do and hopefully won’t burn out along the way!


Kris February 26, 2012 at 10:23 pm

Don’t freak out Little House! You are such a careful planner and you are not a voracious spender by any means.

It is great you love your job and that working another 25 years doesn’t sound too bad. Not many people can say that.


frugalportland February 27, 2012 at 8:10 pm

I track my 401k in Mint and it tells me I’ll be able to retire in 2089. Yeah, my dreams will be delayed!


Anabelle @ CashAdvances US March 27, 2012 at 3:56 am

To my mind, waiting, and working longer is the wiser and more financially responsible choice for most people. A person who retires at 66 will pocket a monthly Social Security check that is one-third higher than if that person was retired at 62. Think about it.


Wayne@credit card rewards programs June 26, 2012 at 11:32 am

To retire at 50 with enough travelling budget-this is my greatest dream. And this dream is also the main reason why as early as 20 I started to list the places where I want to go, how much will it cost and how many days will I be at that place. Thanks for sharing the list from Yahoo Finance, I also went through it and realized that my situation was affected.


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