In this bleak economy, it’s no wonder people aren’t socking away enough to secure their retirements. A May study conducted by the financial trade organization LIMRA found that 49 percent of Americans aren’t putting away anything for retirement — a dangerous move in today’s world. As life spans increase, pension funds reduce payouts, and the Social Security system falters, people will need more and more savings to meet their basic retirement needs. To make sure they have enough funds, they’ll need to come up with a retirement plan early in their careers.
The Fiscal Times spoke to three baby boomers, newly retired or nearing retirement, who made a few mistakes along the way. Here’s what they’d do differently if they could plan their retirement all over again:
Name: P.J. Nunn
Employment status: Still working as a freelance publicist
Expected retirement age: Unknown
P.J. Nunn, 55, a freelance publicist who helps arrange book tours for authors, and her husband — a freelance minister who will be turning 60 later this year — hadn't done anything, before last year, to prepare for their financial future. "My husband and I mentioned the topic in passing only a few times, saying we'd set up a retirement fund when we could afford it," she remarks. But they never got around to it — until they saw what Nunn’s parents went through.
Last December, her 77-year-old father became seriously ill not long after her 74-year-old mother suffered a massive stroke. “My siblings and I soon learned that the types of medical help available to low-income seniors varied according to the type of retirement plan they had,” Nunn says — and none of her father’s options were very good. After consulting with a social worker, they decided to use all of her father's savings to pay for his medical expenses. But soon after, he took a turn for the worse — and passed away in late March of this year. His wife, Nunn’s mother, was left without enough money to continue living on her own, so she had to move in with Nunn's brother.
Now, Nunn wishes she had started thinking about her retirement much earlier."Until a couple of years ago, retirement seemed to be in the distant future, not something I needed to be concerned with," Nunn says. "I hope I can keep working for at least another 10 years, maybe longer. But at the same time, I'd like to work because it's what I choose to do, not because I have no choice." To help shore up her options, she and her husband opened a 401(k) in June of this year.
“We contribute 20 percent of my husband's paycheck, which is the maximum the plan allows,” she explains. Meanwhile, she's "scrambling," as she puts it, to expand her business enough so that she can start contributing to the fund herself — and urging her children to start 401(k)s of their own.
Name: Rob Drury
Employment status: Retired early from his position as an Air Force operations specialist
Expected retirement age: 70
Rob Drury got his wake-up call much earlier than P.J. Nunn, at age 37. After 12 and a half years of active duty with the U.S. Air Force, and nine years of reserve service, Drury — who was a Space & Missile operations specialist — was involuntarily discharged after being passed over for promotion to major. Forced to leave the service seven and a half years short of retirement meant he wouldn’t be eligible to receive any pension money. But since he’d been counting on a military retirement — and assuming he’d get about $4,000 — he hadn't saved any money for old age; he'd put all of his "retirement eggs in the government retirement basket,” as he says.
After his rude awakening, he took a temporary reserve staff position at the U.S. Space Operations Center in Colorado Springs and began saving immediately. He now has invested in three different kinds of IRAs and in mutual funds. If he could do it all over again, he says, "I would have started saving early in life, not blindly relying on other sources for my retirement planning.” He volunteers for the Association of Christian Financial Advisors and advises clients according to a philosophy derived from personal experience. "I now operate from a risk management perspective," he says. "It’s essential to plan for lifelong income and long-term care, and to keep your timeline and goals realistic so you don’t make the mistake of retiring too early."
Name: Jo Carroll Barham
Employment status: Still working as an independent anesthesiologist
Expected retirement age: 71
Jo Carroll Barham, a 69-year-old independent contractor who provides anesthesia services in Houston, TX — a job she’s been doing since 1973 — describes her retirement planning as “minimal at best.” Early in her career, she opened a “Keogh” retirement plan — an option for the self-employed and small businesses owners and an alternative to an IRA — and made the maximum allowable contributions she was allowed. But because she chose to put the money she invested into stocks and bonds, her account was “at the mercy of the market,” as she puts it.
After the financial crisis of 2008, her savings looked paltry. About a year ago, realizing that her retirement money was woefully inadequate, she began working with a financial planner. She and her advisor discussed IRAs and insurance plans, as she is now heading into her retirement years with greater peace. Her advice to those who are younger? “People should pursue comprehensive financial planning as soon as they begin working,” she says.