Struggling to retire

October 9, 2015

retire-youngMore than ever before, I see our generation struggling with retirement: questions of when to retire and how are front and center for at least a dozen people I know. Many want to retire young. And from what I can see, it’s harder in Silicon Valley than it is in other parts of the country.

For one thing, it’s expensive to live here. Most people can not afford to live here in retirement, not unless they hit it big with tech stock. For another, so many in our cohort have retired young that we feel like we’re missing something if we don’t do the same.

I saw this in a dear friend I knew years ago. They hit it big with a big-name startup and retired in their mid-40s. That was pretty young for a retiree. It’s still young. At that age, I was still building my career, but they were ready to call it quits, even with their kids’ college educations to pay for. It was a long time ago, when money went further here, so even with a couple kids in college they could live well. They did volunteer work for a global cause they believed in and traveled among the high and mighty.  The future looked bright.

But then, the stock market plunged, they got caught on margin and just like that, their “fortune” was gone. Poof! In an instant, they knew they had to go back to work in their early 50s. But they didn’t want to. They wanted to be retired.

Magical thinking

Let’s push pause for a moment.  From my current vantage point, I have to wonder why they felt so entitled to retire young.  Most people are still working in their early 50s, but my friend resented having to return to work.  Part of this, I’m certain, was the company they kept in Silicon Valley, people who had more money than they knew what to do with.

But another part of it was magical thinking. Most people do not retire at 45 today. Or 55. And frankly, far fewer than ever before retire at the “usual” age of 65 because the world is far more expensive than it was when that arbitrary date was set.Still, like my friend, they reach a point where they don’t want to work any more and will try to find a way to retire.


“And then a miracle happens and I get a big return on my insufficient 401k!”

Now, my friend did go back to work. Had to, even though their long absence from the job market meant underemployment this time around. They worked for maybe a decade, then at age 60, they quit their executive job and retired again. Their financial plan was to draw $3,000 a month from insufficient savings and Social Security. That would take them to about age 75, at which time they’d become a “ward of the state” of California. Yes, honestly. Using California programs for lower income residents, they would survive here in Silicon Valley, or so they thought. Of course, as time went by and the Valley became more and more expensive, their $3,000 a month wouldn’t have allowed them any kind of lifestyle at all. Their plan hadn’t accounted for that.

The flaws of such a retirement plan seem obvious to me and probably to you.  It’s pretty clear that they should have continued to work to bring in some income that would provide more security and a better quality of life.

My friend felt “entitled” to early retirement and contorted their life to fit that paradigm. Many others are straining and struggling to do the same thing: retire “early” by today’s standards, rather than continue to bring in income.

I was lucky. I had no intention of leaving the work world when, surprise!  I remarried and was able to retire before I was 60. Even with an investment in two homes and decent savings, I’d probably still be working today, at something.  That entitled feeling my friend had? I can’t relate to it. Because I have always wanted a life in which I could do the things I want to do that cost money, like travel often.  I wanted to live in the San Francisco Bay area. I know I could have retired young and lived well in my hometown on the savings I had, but it held no appeal. I never wanted to feel deprived and I was willing to do what it took to live the way I wanted to.

Retirement realities

These are individual decisions. My way is not the only way. Some people do just fine on a limited income.

But some do not. Some use magical thinking to push themselves into early retirement. Like my friend.

So, what happened to my friend?  Well, they ended up marrying someone who could carry the freight in retirement.

You’re probably thinking my friend is a woman. Nope. My friend is a man who is now approaching 80, long past his “ward of the state” age. Thanks to his wife, his retirement lifestyle and scenario is a lot different than his original plan.

But not everyone will meet a mate like that. There are other realities, too. The stock market will not always go up. The real estate market will not always be in a boom. The cost of living has never gone down, as far as I know.

Retirement plans have to be realistic. And super-conservative. Plan for the worst-case return because more often than not these days, it’s happened.

It must have been easier for our parents, who could retire with the proverbial gold watch and pension after 30 years with the same company. That’s not the paradigm today.

If you’re thinking about retirement, good for you! But let my friend’s story be a cautionary tale: steer clear of magical thinking.

31 comments on “Struggling to retire
  1. pia says:

    Many of my friends were laid off as their companies basically “cleaned house” of the more expensive workers—and those people were generally over 50. Nobody would hire them; they would come in second in the interview rounds—the people the company wanted to hire but didn’t want to invest time in them when they could hire a 30something for cheaper and know they would probably or maybe stay.

    We lived in a very pricey area—Manhattan—and again not everyone had an apartment they could sell.

    Most people don’t want to blow through their IRA’s (the ones that were a 401K but had to be rolled over….) and take early social security. But how many “consultants,” “coaches” and “bloggers” make enough money to live off?

    I’m the first to admit that I’m lucky. I have certain talents that allow me to keep money coming on. I lost a great deal in 2008–2009 due to my own stupidity—listening to a stockbroker for the first and last time.
    I always thought “margin” was the dirtiest of words, I don’t do debt, and I relearned to trust my gut. But I couldn’t have done those things if I hadn’t been trained from an early age in how the stock market works and watched my father make lose and make more fortunes than I could have imagined had I not seen it for myself.

    I love to work and plan on writing until I drop. But that’s who I am—and I can’t speak for anyone else.
    This is a harsh world we live in.
    People can’t take money out from their own IRA’s before 59.5 (I think) without significant tax consequences. People with arthritis etc can’t stand on their feet all day at those stores everybody believes to be a fallback—and really? $10 an hour? When a person lives in an expensive part of the country, and wants to keep some money for old age—then they begin to doubt they will get there.
    I had a luxury apartment to sell–without a dishwasher, washer and dryer but renovated, beautiful and in a top building. I chose well and on purpose when I was in my 40’s because I knew the things that could happen.
    When it stopped working for me I sold it as I had planned to.
    My friend didn’t have an apartment to sell. I bought a house. She bought a house. But I didn’t have to go into my “old age” money; she for whatever reasons thought you could take money from your IRA and not pay taxes if you bought a house. There had been a highly publicized program—its demise, not publicized. Yes it was her mistake but she had worked all her life to be kicked to the gutter at 59. For years she didn’t even take vacations.
    You could say she felt entitled but she had been a single mother–her worthless high earning ex-husband found ways not to pay the child support—-who worked hard and only made “big” money the last two or three years before she was laid off. Everyone loves her. If she were just ten years younger she would be hired in a snap, but…..

  2. I am lucky that I have a defined pension. I can retire at 55 and collect 70% of my salary and have medical. I am looking at doing part time work (subbing in schools) to keep me active and bring in some more money. At 62, I can draw partial Social Security and plus I have a 401K/457 plus an annuity I started.

    The funny thing is I didn’t plan any of this. My friends who planned everything are in rockier boats.

    • hillsmom says:

      I happened to listen to Suze Orman on PBS where she said it was better to wait than to take early Social Security. This was because one would get a guaranteed percentage of more SS income which sounded pretty smart to me. Now I don’t know if that is still a sure thing, especially in the current political climate. However, it’s something for you to investigate. Of course, this is assuming that you are able to wait.

  3. Michele says:

    I retired at 54. I am not rich. We certainly made compromises- sold the big house etc. and we live very cheaply. I decided my time was worth more than having lots of stuff. I am able to make a much smaller income by various freelancing jobs- it is enough. You do need to plan wisely, live carefully and have your goals and needs in mind.

  4. Hi Carol! Yes retirement can be a tricky thing because as you say, so many people don’t seem to have thought it through very well at all. As self-employed people my husband and I have spent a lot of time thinking about it and are well aware of the tradeoffs that it requires. We actually consider ourselves semi-retired and plan to stay that way through what I call “right-sizing”…that is deciding what is REALLY important to us now and in the future and planning for it and making tradeoffs as necessary. Your words of advice are very good and I hope they get everything thinking about this subject in a realistic way. ~Kathy

  5. Emma says:

    What a fascinating topic! I’ve actually never thought of retirement. I am a musician and run an online coaching practise both of which I intend to continue until I draw my last breath. After working in various jobs that were unfulfilling in my 20s I decided to create a job for myself that I would not need to retire from. I guess I’m lucky to be a citizen of Finland , a country that has a very high standard of living and good state pensions. I am also one of those people who gets by happily with very little. Interesting food for thought though. Have a great day!

  6. We’re definitely holding off on the retirement thing. Partly because my husband loves his work so much he says they’ll have to take him out of there feet first. And I’m a writer and already doing what folks retire to do, namely writing fiction books. I just have to get them to sell, but that’s coming. I would like to travel more often, but that, too, will happen. And I would like to get more money in my paltry IRA, but again, bit by bit, I’m working on it.
    But planning is key. Entitlement is stupid. And there is being grateful for my life now, since there is no guarantee I’ll be alive tomorrow.

  7. I know so many people without a net…young might mean 78 or 80.

  8. Barbara says:

    It depends upon what folks mean by retirement. It’s so important to remain productive no matter what age you are. Traveling more sounds wonderful. Volunteering and serving others or retiring from a career that doesn’t suit you anymore to do something you love where you can help others… even better. Times are hard nowadays, but if you can define your gifts the opportunities are there. 🙂

  9. It is just as expensive in the NJ/NY area to live. Taxes are exorbitant. We cannot sell our home. It’s been up for over a year and we keep reducing the price. It’s maddening.

    My husband lost his job a few years back when the company was downsizing. I thought it was age discrimination. He freelances now and teaches as well. I’m doing my best to bring in income, plus I’m on disability. Things are tight. We’ll manage but it’s scary. His dad retired at 57! I’ll be 57 in February and can’t imagine it.

  10. Lisa says:

    I love how you always tackle difficult subject matter in your posts. This is particularly good because as you point out, this generation is not able to be dependent on being taken care of by the government and pensions like previous ones were. It isn’t a pleasant subject to think about, but living within your means and saving money every month is the wise path.

  11. Anita Irlen says:

    Thanks, a good cautionary tale. Entitlement seems to be all over the place these days. It’s with the rich, it’s with the poor, and it’s with the middle class who resent both the rich and the poor. It exists in cultures and countries. I really don’t understand why human beings believe that anything is “coming to us” or that we necessarily “deserve” anything besides the most basic of human rights.

  12. Very interesting article. really enjoyed all of the comments as well. I’ve been saving for retirement since 16 (25 now) and I’ve always been looking towards the future. I want to “retire” from my desk job to pursue a more fulfilling field that probably won’t pay as much. The house should be payed off by then. We also have a rental unit on the house. Definitely makes me put things into perspective.

  13. Lindsey says:

    Great post. It is important to think about retirement planning even at a young age. When I retire, I don’t plan to live off of my 401(k) or savings, I will most likely find a passion to help support myself. It is more retiring from the typical 9-5!

  14. Wow, such an insightful post! My husband and I are in our early 30’s and always conscious about saving for retirement. I think it’s great to have a goal, but not an unrealistic goal. Unfortunately I think too many millennials aren’t planning for retirement at all.

  15. Patty Gale says:

    Very interesting. There are a lot of coaches, consultants and bloggers who do make a full time income. I’ve been doing it for almost 15 years. Left corporate America in 2001 to be home with my baby daughter. Will everyone? No, but people have to be teachable and open to new ways of earning an income as well as recurring income (MLM’s and direct sales excluded). There are lots of opportunities if people would take the time to learn new skills.

  16. I think we fit the semi-retired status too – we know we will have to compromise on some areas of life and luxuries, but the life we have now is well balanced and we can afford to maintain it for the years ahead. Neither of us wanted to work ourselves into an early grave and we don’t appear to have any hopes of being funded by a rich relative either (darn!) Your cautionary tale is a good one – don’t expect to have your lifestyle funded by someone else!

  17. jennyb says:

    I was made redundant from my job 3 years go and due to the number of staff all laid off from the government at the same time (14,000 just in my city), it was impossible to get a job, especially if you weren’t that young. I studied home staging and have now started the business. I get jobs but nowhere near what I’d like to have a desired income. Luckily I have plenty of superannuation (I think you guys call it 401K or something) and I supplement money I make with that which I receive as a pension. If I didn’t have that, I would’ve had to sell my house. It was a very scary time for me for a while. Being single made it that much harder, having to make decisions on my own, only one wage in the household to pay the mortgage, etc.
    I hope young people are making their plans much earlier.

  18. Luke says:

    Great post! With the rising cost of everything nowadays and seems like we’re heading towards the work towards you die sort of policy! I think semi-retirement is a good idea, gradually phasing out the work you do, personally I could never imagine doing nothing, I’d get bored!

  19. Jessica says:

    Sigh…I would love to retire early! Though I still have a few decades left in the workforce, even the thought of retiring early seems impossible. Most of my income goes towards my student loan payments and I am able to save only a minimal amount each month towards retirement.

  20. With the baby boomers approaching retirement, this is going to be a really big issue. I’m all for magical thinking – but not when it comes to this. Want to retire early? Work your ass off and save while you’re young!

  21. Carol,
    Thank you for telling the truth about retirement and entitlement. I don’t ever see myself retiring. One, I can’t afford to and two, I can still do fun things AND provide for myself. It makes me feel like I’m truly a productive member of society. I know lots of entitled people and in many cases, their money has not been a blessing.

  22. Becki S says:

    Good article. We are in our early 20s so retirement is a long way off, and honestly most days I wonder what in the world I would do with all the free time 😉 I’m sure that thinking will change once we have kiddos and have been in the work force for longer!

  23. Great post!

    I just moved out of the Bay Area to start my business and travel full time.

    I do think it’s important to have a solid plan in place for retirement, and I think too many people have a devil-may-care attitude about setting aside money for retirement. I also agree that there seem to be a lot more people looking to retire younger and younger.

    I would argue that the “entitlement” in part comes from the grind of working in the Bay Area. When I was still in my previous job, I was putting in 60+ hours per week, and that was common for those in my field in Silicon Valley and San Francisco. While I know everyone’s job isn’t like this, I saw a ton of people across all tech jobs pulling similar hours. There’s a burnout that comes from working 60+ hours per week for someone else’s dream. It was a huge motivation in my leaving my job to go into business for myself, and I think it drives people to retire earlier as well. You’re not really living your life when you’re working 60+ hours a week for someone else, so I understand that drive to retire young and finally start living.

  24. DT says:

    I’m glad I saw this post— it’s really insightful!
    — DT | Here I Scribble

  25. Kathleen says:

    Hi, this post was in the TOP SIX most clicked on Fridays Blog Booster Party #27 and will be featured this week. We look forward to seeing more of your good posts.

  26. sherill says:

    Hi, retirement is something that we should give some thoughts. I think semi retirement is best to prepare ourselves for the right time to really retire. Thanks for sharing a very informative post.

  27. Jennifer says:

    I have definite plans to retire early (and by early, I probably mean 60, which is in 5 years.) And the first thing I plan to do is sell my home move out CT, which is very expensive to live in. I am a little jealous of the younger generation, though. With their loyalty fixed to an Ideal, not to a Company, they have no problems doing mini-retirements. They work for a few years, pay off their debt (all by living at home) save some money and then quit their job. It will last a few months or years, depending on how long the money lasts. I’ve seen some go and travel and a couple of others who go and volunteer, but the key is they are doing what they want and not what they feel obligated to do.

  28. Interesting post on a subject that touches us all. I agree with almost all of your analysis, except I don’t think it was necessarily easier for our parents. Not everybody had a pension. I remember my aunt taking care of my grandmother, all the way to the end, because she had no place else to go. And I know my own dad didn’t retire until he was 72 … couldn’t afford it.

1 Pings/Trackbacks for "Struggling to retire"
  1. […] Here in California, I see a lot of folks struggling to retire young. I do mean struggling, and young is a relative term these days. I wrote about this not too long ago. Even if you’re not ready to retire yet, the day will come, and faster than you think. Check it out and learn from their lessons. […]

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