Friday, September 21, 2018

Should Women Stay in the Work Force Longer?

There have been a slew of retirements at work announced. My HR consultant retires after today and her colleague in December. Our Building Supervisor retires on October 5th. I can't help myself imagining the future and when I will be my own boss in life. I've flip flopped many times on when that date will be. Technically, I will have access to many of our retirements funds by age 59 and 1/2, seven short years from now. Health insurance for the two of us, and a safety net for DD2 being able to be on our insurance until she's 26 pushes me out at least until January of 2027, eight and 1/2 years. I've settled on retiring the summer I'm 62, after July 1 when potentially a raise would increase, giving me a few pennies and dollars more per month in my pension, making a leap of faith it will still be there.

This article got me thinking though if I am being smart to retire relatively young. How women who-retire with their-husbands often lose out raises a few points about why a women would want to stay in the work force longer. I'm a big fan of economist/writer Liz Weston. She tells it like it is in terms of the earning power women in their 50' and 60's earn, and the opportunity to make some gains from periods of low earnings when out of the workforce or at lower paid, but perhaps more conducive to raising kids jobs in their younger years. Add to this  statistical factors like women living longer typically than men and needing to stretch their retirement earnings out over a longer period of time and retiring at  59 1/2 seems like a poor financial idea. 

My goal still is to retire  after July 1, 2028. I'll be 62 and DH just  a month shy of 
67. With COBRA extending my benefits to see him to medicate, our savings need to be enough to stretch my not tapping into my pension or if still present  social security until I too am 67, which would be another four years and five months. that's my plan, but of course, flexibility to meet reality will be key. I accrue over five weeks vacation plus have a flex day a pay period, so I'm not too worried that I won't get adequate time to spend travelling and DH certainly does not need me to keep him amused. 

For those of you contemplating retirement, what is your target age? What factors are driving that target. If you are already retired, what advice for planning might you give me, or others in my age group?  If you were a stay at home worker, not eligible for your own pension, social security, or retirement, or it is very low, what ideas might you throw in the mix for people t consider exiting the paid work force earlier? I'm sure there is no one right way to retire, but I bet some of you know ways people have gotten it decidedly wrong. 

11 comments:

  1. I read that article a few days ago, and it made a lot of sense to stay in the work force while making potentially higher salary to make up for the lean years at the beginning of work life.

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  2. I can't answer any of those questions, as I opted to leave the work force entirely when my eldest was born, and haven't returned, save a part time gig teaching dance. What I can speak to is that, while I crunched the numbers before my exit, (even though I never planned to return to the work force after having kids), what I failed to take into account was the loss of earning potential in my time out of the work force. Again, it wouldn't have mattered to me, because I wasn't going to hire out my kids' care, but for those who are solely looking at staying home for a time to save on daycare costs, it's something to consider...bear the lower take home pay while you pay the unreasonably high infant care costs, knowing that your earning power should increase with each year in the work force.
    Now, had I never had kids, I would not have left my career, because I enjoyed it. I could picture myself staying until it was a financially optimum time in terms of my retirement plan to retire.

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  3. My husband and I both took early retirement at 56 deciding that time was more precious than extra money. That was 15 years ago and we have no regrets.

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  4. My pensions will be miniscule, as I didn't pay into either for long enough to build a decent amount. My husband's pensions are small, but they just about cover the reduction in his wages caused by semi-retiring in April. Our experience so far is that reducing his hours has been the right choice for us. Our income is very small, but our wants are few, so we manage. Like Mac n' Janet,we feel that time is more precious.

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  5. My target age is probably 70... Sad, but we're in debt... Robb will probably too.

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  6. I'm Canadian so the health care costs aren't so much of an issue for me. I am a career educator. My full pension date is at age 54 in 2031 (31 years in) but I have been contemplating going with a reduced pension at 50 and working at something else part time. Those last few years are prime earning years though so I will have big decisions to make.

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  7. I retired in April at the age of 57. The earliest I could have retired was at age 56. I now wish I would have retired at age 56. As you said, everyone's retirement circumstances are different. My advice is to make sure all bases are covered. Health care, expenses, with room for some fun. As a government retiree, I feel fortunate about the retirement benefits - sort of makes up for some of the aggravation during my work years. But we continue to save/invest as no one knows the future. However, we may actually be less frugal now than when we were working. Of course we have fewer wants and maybe needs too now. Keep plugging away and your retirement will be here before you know it.

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  8. Instead of responding to each comment, here are my thoughts collectively. Retirement, and working out of the house while raising children is highly personal, yet can be a controversial discussion. Economics aside, I do believe there is multiple ways that children can be raised. There are positives and negatives about children being in group care as there are with what experiences children have when families are financially stressed, yet one parent is home. Not all are fortunate enough to have a choice to work or not work. For those that have a choice, understanding what leaving the work world for a period of time may mean to your retirement is crucial. I also think there is a different mindset when a person is dong a job that they love and aligns with their interests, life vision, and passions. Interestingly enough, when I retire, I see myself doing a lot of volunteering for things that are not that much different than much of the paid work I do. For me, retirement will be about travel and time with my family on a schedule I don't have to coordinate with others. The most frustrating thing about deciding to retire is health insurance and coverage. Minimally, I would need to make sure I can access an additional $12,000 a year for each year prior to age 67 I retire, just to pay for similar insurance I have now. Maybe it would decrease a bit once DH hits 67, but not by much. It is a game changer for me in being able to retire at 59 and 1/2 and 62. Thank you all for adding your thoughts.

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    1. EE gads. I think you thought by my saying "hire out my kids' care," I am assigning a moral value on hiring childcare. When you pay somebody to take care of your child, no matter what the reason, you are hiring childcare, be it a daycare center, a live-in nanny, or the teenager down the street. I don't know how else to refer to it financially. My point was: Back in the day, when we crunched the numbers, after we took into account the cost for infant care, my take home pay would have been hilariously low--just above minimum wage--that alone would have made us, (had I been inclined to return to work after giving birth), rethink the decision return. I am sure many other parents have had that same experience. What I failed to take into account, though, was that daycare cost/earning potential would have had an inverse relationship. Had I stayed in the workforce, if all went well, as time went on, daycare costs would have lowered as my children aged, but my earning potential, as well as contributions to my 401K, would have risen, even if the wealth building seemed to go slowly in those first few years. I am sure we were/are not the only couple who failed to consider this. Therefore, I would encourage young parents to not be shortsighted: Do not let the daunting cost of infant care be the deciding factor for not returning to work if you are so inclined to do so. The picture should improve greatly in just less than a decade, and have a huge impact on how much better retirement looks. I see that clearly now! But, again, in our case, it wouldn't have mattered. My choice was to not have kids until I was married. As a married couple, our choice was that if we were to have kids, one parent was going to stay at home. If we felt that we couldn't afford to raise kids on one income, and that includes making sure DH and I (and mainly me, as I am much younger) were provided for in retirement/widowhood, then we would have made the choice to not have kids.

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    2. I wasn't thing you were making a moral statement-just adding my thoughts collectively on all the responses my post had. I also too was adding more to the discussion that for some, health care costs, if only one is eligible for benefits but as was my case, the lower wage earner at the time, might force a family to have both in the work force. My after tax, after child care was laughable, painfully laughable. I wish families truly had more choices other than to just not have kids, or have kids but bleed from child care costs, or have kids, but risk retirement stability. That's what I meant about highly controversial.

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  9. This is a tough one. My husbands health really forced his retirement. My health more or less forced my having a work from home and be self employed. My medical issues forced me to take out a disability for insurance purposes. No one was going to hire me and no company was going to ensure me for a premium we could afford. I had a very smart doctor who insisted on the disability to help pay for the extensive drug treatment I need to live with my disease. I have known people who have what I have who forgo treatment and they die. Insurance is a big factor in retirement. So is trying to keep kids ensured. It is hard to work when your husband does not. Most of the roles that you already take on will not go away and resentment can build. I think retiring closer to your husbands age is important. I think you can do this earlier but you will have to prioritize what you are willing to pay for.

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