"Retirement age uncertainty increases the savings needed for success"

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AlohaJoe
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"Retirement age uncertainty increases the savings needed for success"

Post by AlohaJoe » Sun Oct 07, 2018 11:40 pm

David Blanchett of Morningstar Research has a newish paper, The Retirement Mirage, about the uncertainty of when we'll actually retire and its impact on retirement planning. On this forum, KlangFool is an especially vocal reminder of this, but Blanchett brings some data & pretty pictures to the argument.
Gallup surveys³ show that people on average retire about four years earlier than expected
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about 48% of people retire earlier than expected
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Based on the data, Blanchett finds that 61 years old is the "magic" retirement age. If you say you're going to retire after 61, you'll probably retire earlier than expected. If you say you'll retire before 61, you'll probably retire later than expected.
In other words, actual retirement ages pull toward 61, with each retirement year planned before or after age 61 resulting in a half-year’s difference in actual retirement age. For example, someone who plans to retire at age 69 will likely retire at age 65 (69 – 61 = 8 × 0.5 = 4; 69 – 4 = 65).
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What does it all mean? If you're making a plan based on working to age 65, then you won't have enough money when you find yourself retired at age 63. (Or more, accurately, you chance of failure increases.)
In other words, retirement savers who think they have a 90%-plus chance at meeting their goals might actually have more like a 65% probability of success, something they and their advisors won’t likely be comfortable with
This uncertainty means that if you build a plan based on working to, say, age 65 you probably need to save 20% more than expected to account for the reality that you are likely to retire at age 63.

Image

While each individual's position is unique, Blanchett also found that there are no systematic factors that predict retiring unexpectedly early.
We investigated whether certain worker characteristics foretold unexpected early retirement. The rich HRS data set allowed us to test more than a dozen factors, including general personal characteristics such as gender, marital status, and education, along with factors that might be expected to lead to retiring early, such as job stress level, how physical a job is, and whether health problems limit someone’s work.
To make this actionable: Blanchett's findings suggest that it would be prudent for people to use age 61 as their retirement date when deciding how much to save -- and what their asset allocation should be if they subscribe to glidepaths or are building a bond ladder. If you end up working longer than that -- then treat it the same way as if the market has better returns than the 3% or 5% or whatever that you have in your plan -- as an unexpected bonus.
Last edited by AlohaJoe on Sun Oct 07, 2018 11:53 pm, edited 1 time in total.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by SevenBridgesRoad » Sun Oct 07, 2018 11:48 pm

I'm average then. Just made it. Retired two weeks ago at...61. 62nd birthday next week.
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Re: "Retirement age uncertainty increases the savings needed for success"

Post by willthrill81 » Mon Oct 08, 2018 12:08 am

I largely agree with the premise of the OP, though I think that the 'risk of failure' is overblown, as is usually the case in such discussions, because virtually no one paying this close of attention to their financial situation is actually going to run out of money. They will simply have to reduce their spending, perhaps significantly. Even average retirees with much smaller than typical Boglehead sized portfolios don't regularly spend them down much.

Planning on retiring at age 65 can work, but you shouldn't plan on just barely making it work by that time. Sequence of returns risk is frequently discussed here as it applies to the withdrawal phase, but it is also a very real threat in the accumulation phase. The last decade's returns leading up to retirement are nearly as important as the first decade's returns after retirement. What if your last decade of accumulation results in a real growth rate close to zero (e.g. 2000-2009)? The perennial answer given is "keep on working," but Blanchett's research flies in the face of this recommendation. You might be able to work a few more years, but at that age, the odds rapidly turn against you.
AlohaJoe wrote:
Sun Oct 07, 2018 11:40 pm
To make this actionable: Blanchett's findings suggest that it would be prudent for people to use age 61 as their retirement date when deciding how much to save -- and what their asset allocation should be if they subscribe to glidepaths or are building a bond ladder. If you end up working longer than that -- then treat it the same way as if the market has better returns than the 3% or 5% or whatever that you have in your plan -- as an unexpected bonus.
I entirely agree. I have often said here that I think that the typical Boglehead should plan on being able to retire, whether they do or not, by age 60, preferably earlier. You just don't know if your career will come to an unexpected end, the market's returns are poor, etc. For this reason, I'm planning on being able to retire comfortably no later than age 55.
Last edited by willthrill81 on Mon Oct 08, 2018 9:19 am, edited 1 time in total.
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Re: "Retirement age uncertainty increases the savings needed for success"

Post by randomguy » Mon Oct 08, 2018 12:14 am

AlohaJoe wrote:
Sun Oct 07, 2018 11:40 pm
To make this actionable: Blanchett's findings suggest that it would be prudent for people to use age 61 at their retirement date when deciding how much to save -- and what their asset allocation should be if they subscribe to glidepaths or are building a bond ladder. If you end up working longer than that -- then treat it the same way as if the market has better returns than the 3% or 5% or whatever that you have in your plan -- as an unexpected bonus.
No what you should do is add 4 years to your retirement age. If you want to retire at 65, you should plan on retiring at 69. And then when you retire 4 years early, you will be right on schedule:) Why do people who plan on working later actually work later? I would assume things like layoffs and health issues are independant of my plans so it seems like a big factor is need and desire. Notice how during a period of poor market returns retirement age driftd up? People didn't get healthier and their weren't less layoffs or age discrimination. They needed the cash.

I am not shocked that half the people retire early. They make conservative plans (6% returns instead of historical 8%) and when they get average or above average returns, they drop out early. Seems pretty logical. And 10% not having the money (or a job they decide they like) and sticking around also seems pretty reasonable. My understanding of the stats(I think it was a different source) was that about half of the early retirements were due to health problems and layoffs. The other half is people deciding they have enough.
The question is how conservative are you going. Imagine you plan on working til 65 and historical your portfolio returns 8%. Are you going to plan on 61 and 6%? On average you are going to end up with an absurd amount of cash if you do that in the average cases. Sure you could retire at 61 instead of 65 but that is not a great outcome as you passed up the chance to spend that money earlier when you wanted and instead oversaved. I am not sure you can plan accurately enough for the differennces between 61 and 65 to matter.

There isn't a great solution to the problem of dealing with the unknowns other than being flexible. I would like to retire with 100k. I am ok with 60k. and 150k would be ok also. Hitting the lower goals by the early 50s is a great place to be. If I don't get the top goal by the time I retire, I will be ok.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by bantam222 » Mon Oct 08, 2018 12:36 am

We need insights into why they are retiring earlier than planned.

Are they finding they have more money than expected or expenses are lower than anticipated?

Or are they getting pushed out of work due to health or bad luck and being forced to retire due to no other options?

If it’s the former there shouldn’t be a big problem. People should be able to take this update into into account when they are deciding to pull the trigger or not. If it’s the later, people could get squeezed and into hard spots

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by AlohaJoe » Mon Oct 08, 2018 2:17 am

bantam222 wrote:
Mon Oct 08, 2018 12:36 am
We need insights into why they are retiring earlier than planned.
There are already lots of insights around this but it is less definitive than you might expect. For instance, the Society of Actuaries found in 2013
Even though retirement was voluntary, most of the participants retired in response to health issues, challenges in their workplace, or the need for family caregiving. They did not retire primarily to have free time to pursue a hobby or start a business, although most of them were enjoying frequent travel. They described workplace difficulties such as jobs that were physically difficult, messages from their employer that they perceived as “encouraging” them to retire, and challenges in working with younger supervisors, among others. Typically, the retirement decision is assumed to consist of a clear distinction between voluntary and involuntary retirement. The stories in these focus groups indicate that much so-called voluntary retirement is actually the result of a “push”, and that the distinction between voluntary and involuntary retirement is not necessarily clear-cut for middle-income retirees. Results may or may not be different for retirees with higher income and asset levels
Another 2016 survey found that 25% of respondents strongly agreed that they had been pushed into retirement. But even there you have confounding issues. What counts as "pushed" when someone replies to that survey? As the SOA shows it isn't clear-cut. And it goes the other way, too. If you just don't like working for a 25-year old boss who expects you to be in the office until 6pm like he is...is that really pushed?

A 2002 study found that 30% who retired early cited their health as the reason.

But, again, keep in mind that none of this is black & white. Someone who likes their job but it is relatively poor health is going to downplay health issues. Someone who doesn't like their job is more likely to exaggerate health issues. You can imagine that someone could look at their finances, decide they don't really like their job any more, and the bum knee isn't getting any better around the warehouse, so they decide to quit. Was health the reason? Could they have worked another 12 months if they absolutely had to? If someone is in poor health and they decide they're not going to be taking lots of international vacations and, as such, The Number is now quite a bit lower...are they retiring because they hit their number? Or because of health? Or a little bit of both?

I imagine, like most things in life, it is more a question of multiple factors each playing some part.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by grok87 » Mon Oct 08, 2018 5:52 am

Good article.
I like the idea of assuming age 61 for retirement to help in planning. Personally i am going with 62 as that makes it easy to factor in Social Security -since that is the earliest age one can draw social security benefits. Note: i think for most people starting Social Security at age 62 is not the best idea. In practice i plan to wait till full retirement age or maybe even age 70.
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Re: "Retirement age uncertainty increases the savings needed for success"

Post by Stormbringer » Mon Oct 08, 2018 6:54 am

"Compound interest is the most powerful force in the universe." - Albert Einstein

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by intangiblemoney » Mon Oct 08, 2018 6:56 am

In most cases people will simply adjust to whatever amount of money they end up having at their retirement date. After all, what else is there left to do? Your ending retirement balance will dictate your allowable lifestyle, which would dictate if you need to go bag groceries or if you can hit the golf ball and fly to Europe every year.

Most people won't give up working until they are at least somewhat comfortable that their nest egg can last for them, given all the variable that come into play.

But sure, over saving due to the ultimate uncertainty of a retirement date (depending on your health and vocation) is never an unwise thing to strive to do.
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Re: "Retirement age uncertainty increases the savings needed for success"

Post by AtlasShrugged? » Mon Oct 08, 2018 7:11 am

Even though retirement was voluntary, most of the participants retired in response to health issues, challenges in their workplace, or the need for family caregiving.
This does not sound voluntary to me: health issues, workplace challenges [e.g. you are over 50 and have a target on your back], or caregiving.

That age 61 average is scary (to me).
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Re: "Retirement age uncertainty increases the savings needed for success"

Post by Jack FFR1846 » Mon Oct 08, 2018 7:18 am

It would be interesting to see a study on exactly why people retire earlier than expected. I've already been hit once by megacorp tech implementing their (nobody over 50 works here) policy. I know for sure I'm not the only one, for a fact at my former employer. I'm an example of someone planning for a lower % of assets spend once retired, shooting for a solid 2%, which I'm very close to. But with life happening (older parent with kids not done with college) and sitting at that magic 61 age already, I guess I'll help to break the data. I do feel good that I know when my current megacorp tech decides to jettison me for being born in the 50's, I'll be able to shrug and respond "meh".
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Re: "Retirement age uncertainty increases the savings needed for success"

Post by moehoward » Mon Oct 08, 2018 7:35 am

intangiblemoney wrote:
Mon Oct 08, 2018 6:56 am
In most cases people will simply adjust to whatever amount of money they end up having at their retirement date. After all, what else is there left to do? Your ending retirement balance will dictate your allowable lifestyle, which would dictate if you need to go bag groceries or if you can hit the golf ball and fly to Europe every year.

Most people won't give up working until they are at least somewhat comfortable that their nest egg can last for them, given all the variable that come into play.

But sure, over saving due to the ultimate uncertainty of a retirement date (depending on your health and vocation) is never an unwise thing to strive to do.
I think you got it right. My wife and I retired at 62 but we actually planned 60. I just wanted to have more money on the nest egg pile. We have plenty of money now but our health has been good up to now and I consulted part time the last 3 years. I think the biggest problem for a lot of people is having no plan at all. Most on this blog (like me) have a spreadsheet that started a long time ago and ends somewhere around 95.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by livesoft » Mon Oct 08, 2018 8:04 am

The comments in this thread are actually more interesting than the article was, so thanks to all for responding.

I think many, if not most, people, get an external stimulus to retire no matter what their plan might be. People tend to like the status quo and it requires a push to change their inertia and their everyday lives. So while they may have an age in mind, the push could come before that age or no push until after that age.
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Re: "Retirement age uncertainty increases the savings needed for success"

Post by Retired2013 » Mon Oct 08, 2018 8:53 am

I'll bet many have to factor in healthcare premiums. If your not 65 and eligible for Medicare, then do you have a Megacorp that has retiree medical?
Age 63.5 and Cobra also works. From 2014 on, ACA. I'm one of those.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by annielouise » Mon Oct 08, 2018 9:14 am

My 2 ¢:

I think it is common for BHs (and researchers) to look for logical reasons for why people do things. But most people are monkey see, monkey do. My guess is that most people retire because their friends, family, and coworkers retired at that age. If you ask them afterwards, they try to come up with a reason, but the reasons they give are bogus.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by smitcat » Mon Oct 08, 2018 9:18 am

Interesting stats but they miss that fact that most folks nearing these retirement ages have little or nothing saved.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by The Wizard » Mon Oct 08, 2018 9:51 am

I'm not sure if I really "planned" to retire at a particular age, but I *actually* retired 5-1/2 years ago at age 63.
For 5-10 years prior to that, I certainly monitored my growing accumulation and I increased my savings rate nicely in 2007 after my youngest finished college.

I was probably in the Green Zone financially for retirement a few years before I actually did it.
I should read the linked article and see what else I have to say...
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Re: "Retirement age uncertainty increases the savings needed for success"

Post by SeekingAPlan » Mon Oct 08, 2018 10:50 am

I worked in IT (software dev, database & analysis) for 38 years until I got laid off this summer at just under age 60.

My plan would have been to retire at age 67. However, at my main 4 companies in that 38 years I only saw one person survive long enough to have an option to retire. He was offered a choice to retire or be laid off with everyone else -- so not really a voluntary retirement. All the companies were either sold or chose to outsource the IT functions resulting in 100% job loss for employees.

My last job had turned into a very miserable work environment which likely would have caused me to quit earlier than my target retirement age had I not been laid off. At 56 I had multiple offers and was back at work after only 4 weeks. At 60 & 4 months into my job search, I would have to say I am very likely "retired". This time, my high school graduation year seems to be a mandatory part of all job applications. In a few cases, networking with much younger former co-workers has gotten me around this screen out. However, in those places, mandatory disclosure of salary history and years of experience eliminated me from having a shot. The HR people were shockingly honest about it. They had assumed I would be younger & less experienced because my friends are and, of course, my resume does not scream that I am 60 years old (shows about 13yrs of experience & no college degree date). They are seeking candidates about 28-35 years old and no more. It does not matter if you are willing to work for less than you made in the past. They want to replace the baby boomers (if they have any) not hire more.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by dknightd » Mon Oct 08, 2018 11:31 am

When I was 30, I planned to retire at 65. Then SS rules changed, so I figured 66 and 8 months.
But as each year past I aimed for an earlier year.
I'm in a job it would be hard to fire me from, and, I could probably do for ever.
I decided to retire at 61. For me it made sense
Last edited by dknightd on Mon Oct 08, 2018 11:56 am, edited 1 time in total.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by The Wizard » Mon Oct 08, 2018 11:51 am

Ok, I finished reading the linked PDF file.
The author seems to be confusing, or equating, Financial Independence with Retirement.

There are certainly cases where people are forced into unemployment/retirement due to layoff or health problems.

But there are also many cases of people who are FI and just haven't chosen to quit working yet:

1) I visited an old friend my age who's a university professor last Friday. He's FI with a good TIAA DC plan and thinks he might quit professing by age 70 or so.

2) And my hometown family practice physician from the 1960s is still plying the doctor trade in his late 80s, per the weekly paper.
He's likely been FI for a while.

So bottom line, I don't find this paper to be too useful...
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Re: "Retirement age uncertainty increases the savings needed for success"

Post by 2015 » Mon Oct 08, 2018 12:20 pm

This isn't new news to me. Years ago (perhaps even a decade ago) Scott Burns referred to one's fifties as the "50's mine field", meaning in one's 50's one is more likely to suffer a serious health condition or job loss from which he/she cannot recover. I used to laugh at the plans of many to "work longer" to shore up their retirement when statistics flew in the face of this possibility. It's not at all surprising to me that a "new" study would corroborate this.

Reading Burns' column years ago radically altered (for the better) my plans to achieve financial independence as quickly as possible. As a result, I retired a full seven years ahead of schedule. Best thing I've ever done.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by willthrill81 » Mon Oct 08, 2018 2:35 pm

The Wizard wrote:
Mon Oct 08, 2018 11:51 am
Ok, I finished reading the linked PDF file.
The author seems to be confusing, or equating, Financial Independence with Retirement.
Sounds like Suze Orman in her interview with Paula Pant on the Afford Anything podcast.
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Re: "Retirement age uncertainty increases the savings needed for success"

Post by Turbo29 » Mon Oct 08, 2018 8:24 pm

annielouise wrote:
Mon Oct 08, 2018 9:14 am
My 2 ¢:

I think it is common for BHs (and researchers) to look for logical reasons for why people do things. But most people are monkey see, monkey do. My guess is that most people retire because their friends, family, and coworkers retired at that age. If you ask them afterwards, they try to come up with a reason, but the reasons they give are bogus.
Actually split brain studies on people who have had the communication between the two halves of their brain severed seem to indicate that everyone tends to make up reasons for what they do.
Gazzaniga developed what he calls the interpreter theory to explain why people — including split-brain patients — have a unified sense of self and mental life3. It grew out of tasks in which he asked a split-brain person to explain in words, which uses the left hemisphere, an action that had been directed to and carried out only by the right one. “The left hemisphere made up a post hoc answer that fit the situation.” In one of Gazzaniga's favourite examples, he flashed the word 'smile' to a patient's right hemisphere and the word 'face' to the left hemisphere, and asked the patient to draw what he'd seen. “His right hand drew a smiling face,” Gazzaniga recalled. “'Why did you do that?' I asked. He said, 'What do you want, a sad face? Who wants a sad face around?'.” The left-brain interpreter, Gazzaniga says, is what everyone uses to seek explanations for events, triage the barrage of incoming information and construct narratives that help to make sense of the world
https://www.nature.com/news/the-split-b ... es-1.10213

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by annielouise » Tue Oct 09, 2018 7:20 am

Turbo29 wrote:
Mon Oct 08, 2018 8:24 pm
annielouise wrote:
Mon Oct 08, 2018 9:14 am
My 2 ¢:

I think it is common for BHs (and researchers) to look for logical reasons for why people do things. But most people are monkey see, monkey do. My guess is that most people retire because their friends, family, and coworkers retired at that age. If you ask them afterwards, they try to come up with a reason, but the reasons they give are bogus.
Actually split brain studies on people who have had the communication between the two halves of their brain severed seem to indicate that everyone tends to make up reasons for what they do.
Gazzaniga developed what he calls the interpreter theory to explain why people — including split-brain patients — have a unified sense of self and mental life3. It grew out of tasks in which he asked a split-brain person to explain in words, which uses the left hemisphere, an action that had been directed to and carried out only by the right one. “The left hemisphere made up a post hoc answer that fit the situation.” In one of Gazzaniga's favourite examples, he flashed the word 'smile' to a patient's right hemisphere and the word 'face' to the left hemisphere, and asked the patient to draw what he'd seen. “His right hand drew a smiling face,” Gazzaniga recalled. “'Why did you do that?' I asked. He said, 'What do you want, a sad face? Who wants a sad face around?'.” The left-brain interpreter, Gazzaniga says, is what everyone uses to seek explanations for events, triage the barrage of incoming information and construct narratives that help to make sense of the world
https://www.nature.com/news/the-split-b ... es-1.10213
Yeah, my "most people" was a non controversial way to say "all people". :wink:

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by intangiblemoney » Tue Oct 16, 2018 6:02 pm

moehoward wrote:
Mon Oct 08, 2018 7:35 am
intangiblemoney wrote:
Mon Oct 08, 2018 6:56 am
In most cases people will simply adjust to whatever amount of money they end up having at their retirement date. After all, what else is there left to do? Your ending retirement balance will dictate your allowable lifestyle, which would dictate if you need to go bag groceries or if you can hit the golf ball and fly to Europe every year.

Most people won't give up working until they are at least somewhat comfortable that their nest egg can last for them, given all the variable that come into play.

But sure, over saving due to the ultimate uncertainty of a retirement date (depending on your health and vocation) is never an unwise thing to strive to do.
I think you got it right. My wife and I retired at 62 but we actually planned 60. I just wanted to have more money on the nest egg pile. We have plenty of money now but our health has been good up to now and I consulted part time the last 3 years. I think the biggest problem for a lot of people is having no plan at all. Most on this blog (like me) have a spreadsheet that started a long time ago and ends somewhere around 95.
Absolutely agree that the biggest problem out there is people not having a plan to begin with. "Failing to plan is planning to fail."
Intangible assets > tangible assets

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by GAAP » Wed Oct 17, 2018 10:32 am

AlohaJoe wrote:
Sun Oct 07, 2018 11:40 pm
To make this actionable: Blanchett's findings suggest that it would be prudent for people to use age 61 as their retirement date when deciding how much to save -- and what their asset allocation should be if they subscribe to glidepaths or are building a bond ladder. If you end up working longer than that -- then treat it the same way as if the market has better returns than the 3% or 5% or whatever that you have in your plan -- as an unexpected bonus.
I never chose a retirement age to plan my savings. I just saved as much as I could, as early as I could -- and never stopped.

I have a tool for estimating the impacts of retirement at different ages -- but never "planned" on an age. I didn't really expect to do so before 65, other than as a stretch goal. However, with MegaCorp offering a very good early-out package, I may retire before age 60. The ability to make that choice is due to my historical savings method, not any particular planned date.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by Watty » Wed Oct 17, 2018 10:50 am

SeekingAPlan wrote:
Mon Oct 08, 2018 10:50 am
I worked in IT (software dev, database & analysis) for 38 years until I got laid off this summer at just under age 60.

My plan would have been to retire at age 67. However, at my main 4 companies in that 38 years I only saw one person survive long enough to have an option to retire. He was offered a choice to retire or be laid off with everyone else -- so not really a voluntary retirement. All the companies were either sold or chose to outsource the IT functions resulting in 100% job loss for employees.
I retired out of IT as a software developer about three years ago from a fairly large company with about 150 people in the IT department. The company has been around in one form or another since at least the 1960's.

The amazing thing was that I was the very first person who had voluntarily retired from the IT department.

There had been a few people that retired after being laid off but no one had actually voluntarily retired.

I did not hear the details but apparently after I give my notice upper IT management had a quick meeting to decide what was appropriate for them to do when someone retired since it had never happened before. (A going away lunch and a gift.)

I always knew that if I was laid off in my 50s or 60s that getting another IT job would be rough so I had always used the age of 60 as my target date. I retired just before I turned 59.

For the last few years I was sort of hoping that I would be laid off and get a nice severance package but that did not happen.

Since then there have been two more people who retired out of that IT department. Part of this is before the 1970's and 80's there really was not a lot of people working in IT so the people that graduated college and started working in IT then are just now reaching retirement age.

I have read some articles that talked about a Silver Tsunami of IT people retiring soon especially in middle and upper IT management as the first wave of IT workers reach retirement age. This is especially true in corporate IT where workers tend to be older. There is already a shortage of IT workers and people starting to retire could increase that.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by Garco » Wed Oct 17, 2018 11:13 am

I think a lot of random and nonrandom factors come into play in determining actual retirement age. In my profession (academia) it is rare for people to voluntarily retire early. The question for those who have successful careers and perhaps also "tenure," is whether to retire at full Social Security age (66 or 67) or later (very few stay past 70, sometimes because the colleges have mandatory retirement age). Frankly, the pay in academia generally isn't high enough for people to "get rich quick." But the fringe benefits are typically very good -- health care, good retirement plans, etc. And for some the pay itself can be quite good, based on merit and competitive career moves.

In my own case, it's partly because we had our children "late" (in our 30's) that we retired later. Having a secure income and excellent fringe benefits made it easy to continue working til 70.
Last edited by Garco on Wed Oct 17, 2018 11:37 am, edited 3 times in total.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by willthrill81 » Wed Oct 17, 2018 11:15 am

Watty wrote:
Wed Oct 17, 2018 10:50 am
I have read some articles that talked about a Silver Tsunami of IT people retiring soon especially in middle and upper IT management as the first wave of IT workers reach retirement age. This is especially true in corporate IT where workers tend to be older. There is already a shortage of IT workers and people starting to retire could increase that.
The same situation is true in academia, particularly in certain areas. In business colleges, for instance, it's typical for at least 30% of the professors to be age 65 or older. Given the nature of their work and the type of person usually attracted to the profession, many work well into their 70s. But when the pace of them retiring picks up, which is already beginning, it's going to put these colleges in a real crunch because the supply of new Ph.D.s can barely keep up with the existing turnover.
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Re: "Retirement age uncertainty increases the savings needed for success"

Post by Portfolio7 » Wed Oct 17, 2018 11:18 am

My projections from the time I was in my late 20's suggested about age 50-55 w/o kids, age 55-60 with kids. We had kids. Pension slashed. Age 60.

I have a simple algorithm that calculates roughly what we need to retire at a given age for 100% income replacement, and I charted that against our actual net worth over time, projected forwards at my past return rates, adjusted for AA shifts to a more conservative portfolio. It's a big X as you might suspect. The lines cross at age 61. I have a couple other charts that are more aimed at specific targets, and they cluster around age 60 to 62.

However, I have the age 50 and US employee issue at Megacorp. Still working, but who knows how much longer. Surviving this long was a bit surprising, but I kept getting commitments that I knew meant I was good for another year or two. I am not seeing that same level of commitment any longer, so I have updated my resume/cv and plan to start my job search in the next couple weeks. Luckily I am in position to take lower pay if I think I'll really like a particular job.

Rather than save more (about 12% of earnings currently) we plan to retire as much debt as we can. It should be possible to pay off everything but the mortgage, and it might be possible to get that paid off too, in about ten years.
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Re: "Retirement age uncertainty increases the savings needed for success"

Post by Chief_Engineer » Wed Oct 17, 2018 2:39 pm

Watty wrote:
Wed Oct 17, 2018 10:50 am
it's going to put these colleges in a real crunch because the supply of new Ph.D.s can barely keep up with the existing turnover.
Where have you heard this? My experience is the opposite. There are far more PhDs produced every year than could possibly find academic posts. There are 100s of applicants for every tenure-track opening. So many are instead accepting post-docs or adjunct positions or leaving academia entirely.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by randomguy » Wed Oct 17, 2018 2:51 pm

Chief_Engineer wrote:
Wed Oct 17, 2018 2:39 pm
Watty wrote:
Wed Oct 17, 2018 10:50 am
it's going to put these colleges in a real crunch because the supply of new Ph.D.s can barely keep up with the existing turnover.
Where have you heard this? My experience is the opposite. There are far more PhDs produced every year than could possibly find academic posts. There are 100s of applicants for every tenure-track opening. So many are instead accepting post-docs or adjunct positions or leaving academia entirely.
I think this (and most of the predictions ) are field specific. We have a surplus of liberal arts type PhDs. Not as much in sciences. See https://www.insidehighered.com/news/201 ... professors . My understanding Biz schools are in the middle. It is also important to remember that these type of trends can creep up on you and you can go from a surplus to a shortgage in a hurry. If say 30% of your employees are 55-70, you can end up with big spikes when they are all retiree in the same decade or so.

Now to some extent shortages of employees are a made up problem. Raise wages and those shortgages tend to disappear quickly.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by Chief_Engineer » Wed Oct 17, 2018 3:11 pm

randomguy wrote:
Wed Oct 17, 2018 2:51 pm
I think this (and most of the predictions ) are field specific. We have a surplus of liberal arts type PhDs. Not as much in sciences. See https://www.insidehighered.com/news/201 ... professors . My understanding Biz schools are in the middle. It is also important to remember that these type of trends can creep up on you and you can go from a surplus to a shortgage in a hurry. If say 30% of your employees are 55-70, you can end up with big spikes when they are all retiree in the same decade or so.

Now to some extent shortages of employees are a made up problem. Raise wages and those shortgages tend to disappear quickly.
Interesting. Thank you.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by willthrill81 » Wed Oct 17, 2018 3:23 pm

Chief_Engineer wrote:
Wed Oct 17, 2018 2:39 pm
Watty wrote:
Wed Oct 17, 2018 10:50 am
it's going to put these colleges in a real crunch because the supply of new Ph.D.s can barely keep up with the existing turnover.
Where have you heard this? My experience is the opposite. There are far more PhDs produced every year than could possibly find academic posts. There are 100s of applicants for every tenure-track opening. So many are instead accepting post-docs or adjunct positions or leaving academia entirely.
I haven't heard it. I've witnessed it at multiple universities. And if you'll carefully note how I phrased it, I said "in certain areas," then went on to elaborate on business colleges specifically. There is a surplus of Ph.D.s trying to enter academic in the humanities, for instance. Many more people want to be English professors than accounting professors, for instance. BTW, a newly minted graduate with a Ph.D. in accounting will likely start at $150k salary plus good benefits at a public institution.
randomguy wrote:
Wed Oct 17, 2018 2:51 pm
I think this (and most of the predictions ) are field specific. We have a surplus of liberal arts type PhDs. Not as much in sciences. See https://www.insidehighered.com/news/201 ... professors . My understanding Biz schools are in the middle. It is also important to remember that these type of trends can creep up on you and you can go from a surplus to a shortgage in a hurry. If say 30% of your employees are 55-70, you can end up with big spikes when they are all retiree in the same decade or so.
Precisely. There are many deans wringing their hands over this.
randomguy wrote:
Wed Oct 17, 2018 2:51 pm
Now to some extent shortages of employees are a made up problem. Raise wages and those shortgages tend to disappear quickly.
Partially so, but it's more difficult to fill shortages when it takes 4-5 years of post graduate work and living in poverty to get there, and then half of those who start the process never finish. Another issue, one that has been plaguing the sciences for years now, is that the private sector can be far more lucrative than academia. And yet another problem is that if newly minted Ph.D.s go into the private sector, their research skills as determined by the number of peer-reviewed journal articles and other scholarly works they produce tend to degrade, sometimes very quickly. For those in this situation, going back into academia later on, even in the midst of a shortage, can be difficult.
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Re: "Retirement age uncertainty increases the savings needed for success"

Post by Ron Scott » Wed Oct 17, 2018 6:24 pm

randomguy wrote:
Wed Oct 17, 2018 2:51 pm

Now to some extent shortages of employees are a made up problem. Raise wages and those shortgages tend to disappear quickly.
For the past 15 years or so I had a very difficult time filling advanced- and management-level statistician positions. We hired english-speaking immigrants and attracted people by letting them live wherever and telecommute. Salary plus bonus ranged from $175 to $500+. Getting good people has been getting harder all around in my experience.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by Dottie57 » Wed Oct 17, 2018 6:41 pm

SevenBridgesRoad wrote:
Sun Oct 07, 2018 11:48 pm
I'm average then. Just made it. Retired two weeks ago at...61. 62nd birthday next week.

I always planned to retire somwhere between 65 and 70. Early retirement package allong with goo returns durn last 10 years allowed me to retire at 61. So I guess I am just average.
Last edited by Dottie57 on Wed Oct 17, 2018 6:59 pm, edited 1 time in total.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by Artsdoctor » Wed Oct 17, 2018 6:48 pm

Blanchett has always done great research. I'm going to disagree slightly with his premise slightly, though, because the uncertainty surrounding healthcare insurance has only increased over time. What was considered relatively stable 2 years ago, would not be considered as stable now; this might make it less attractive for people--who have a choice--to retire early. Even if someone were forced to retire from a job for health reasons, they may need to find a job that provides some sort of health coverage if individual plans are not available for them (perhaps because of cost or pre-existing illness).

It can go either way. You can save more in preparation to retire early, only to find that you'll need to work for a health plan.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by TN_Boy » Wed Oct 17, 2018 7:59 pm

The Wizard wrote:
Mon Oct 08, 2018 11:51 am
Ok, I finished reading the linked PDF file.
The author seems to be confusing, or equating, Financial Independence with Retirement.

There are certainly cases where people are forced into unemployment/retirement due to layoff or health problems.

But there are also many cases of people who are FI and just haven't chosen to quit working yet:

1) I visited an old friend my age who's a university professor last Friday. He's FI with a good TIAA DC plan and thinks he might quit professing by age 70 or so.

2) And my hometown family practice physician from the 1960s is still plying the doctor trade in his late 80s, per the weekly paper.
He's likely been FI for a while.

So bottom line, I don't find this paper to be too useful...
Your 1) I found amusing. I have a friend who is a college professor. Had you asked him 5 years ago how long he'd keep on teaching, he'd have given you the same answer your professor friend gave you -- maybe until 70! Fast forward to now, and changes in his department, funding issues, dealing with the bureaucracy .... now he is saying likely to retire at age .... oh, 61 or 62.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by MathWizard » Wed Oct 17, 2018 8:07 pm

Ron Scott wrote:
Wed Oct 17, 2018 6:24 pm
randomguy wrote:
Wed Oct 17, 2018 2:51 pm

Now to some extent shortages of employees are a made up problem. Raise wages and those shortgages tend to disappear quickly.
For the past 15 years or so I had a very difficult time filling advanced- and management-level statistician positions. We hired english-speaking immigrants and attracted people by letting them live wherever and telecommute. Salary plus bonus ranged from $175 to $500+. Getting good people has been getting harder all around in my experience.
Gee, I at least pay over one thousand.

Seriously, assuming this is in K, where is this, in a HCOL area like Manhattan?

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by randomguy » Wed Oct 17, 2018 8:33 pm

Ron Scott wrote:
Wed Oct 17, 2018 6:24 pm
randomguy wrote:
Wed Oct 17, 2018 2:51 pm

Now to some extent shortages of employees are a made up problem. Raise wages and those shortgages tend to disappear quickly.
For the past 15 years or so I had a very difficult time filling advanced- and management-level statistician positions. We hired english-speaking immigrants and attracted people by letting them live wherever and telecommute. Salary plus bonus ranged from $175 to $500+. Getting good people has been getting harder all around in my experience.
And what happens when you offer say 750 instead of 500? Do you still have problems finding good people:) Getting good people at the price you want can be hard. If you can afford a higher price is another issue. Obviously this issue is a bit more complicated the longer it takes someone to adapt. If I am a 19 year old mathematical genius and your career path is likely to pay 500 while say being a software develop pays 200, you will find a enough of the people on the edge will switch to the higher paying choice. But it might take 20 years for them to work their way through the system. On the other hand if you are paying 150 while software pays 200, it goes the other way.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by randomguy » Wed Oct 17, 2018 8:39 pm

willthrill81 wrote:
Wed Oct 17, 2018 3:23 pm

randomguy wrote:
Wed Oct 17, 2018 2:51 pm
Now to some extent shortages of employees are a made up problem. Raise wages and those shortgages tend to disappear quickly.
Partially so, but it's more difficult to fill shortages when it takes 4-5 years of post graduate work and living in poverty to get there, and then half of those who start the process never finish. Another issue, one that has been plaguing the sciences for years now, is that the private sector can be far more lucrative than academia. And yet another problem is that if newly minted Ph.D.s go into the private sector, their research skills as determined by the number of peer-reviewed journal articles and other scholarly works they produce tend to degrade, sometimes very quickly. For those in this situation, going back into academia later on, even in the midst of a shortage, can be difficult.
Sure and every year there is a new crop to harvest so you don't have to wait 4-5+ years. And as I said the problem is wages. If academia was paying the same as the private sector, you would find a ton of people preferring the academic lifestyle. Not as many are willing to work for 1/3rd+ less in wages though. If you aren't willing to pay market rates for something, filling positions can be really hard.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by The Wizard » Wed Oct 17, 2018 9:13 pm

TN_Boy wrote:
Wed Oct 17, 2018 7:59 pm

...Your 1) I found amusing. I have a friend who is a college professor. Had you asked him 5 years ago how long he'd keep on teaching, he'd have given you the same answer your professor friend gave you -- maybe until 70! Fast forward to now, and changes in his department, funding issues, dealing with the bureaucracy .... now he is saying likely to retire at age .... oh, 61 or 62.
Ok, but in my case, my professor friend and I are the same age (68), so that's different...
Attempted new signature...

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by Ron Scott » Wed Oct 17, 2018 9:37 pm

MathWizard wrote:
Wed Oct 17, 2018 8:07 pm
Ron Scott wrote:
Wed Oct 17, 2018 6:24 pm
randomguy wrote:
Wed Oct 17, 2018 2:51 pm

Now to some extent shortages of employees are a made up problem. Raise wages and those shortgages tend to disappear quickly.
For the past 15 years or so I had a very difficult time filling advanced- and management-level statistician positions. We hired english-speaking immigrants and attracted people by letting them live wherever and telecommute. Salary plus bonus ranged from $175 to $500+. Getting good people has been getting harder all around in my experience.
Gee, I at least pay over one thousand.

Seriously, assuming this is in K, where is this, in a HCOL area like Manhattan?
Yes, but that’s the home office. We have been willing to allow people to work from their homes and have staff through the US. We also have industry experience requirements and that cuts the pool too, so we’re not looking for recent grads.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by Ron Scott » Wed Oct 17, 2018 9:58 pm

randomguy wrote:
Wed Oct 17, 2018 8:33 pm
Ron Scott wrote:
Wed Oct 17, 2018 6:24 pm
randomguy wrote:
Wed Oct 17, 2018 2:51 pm

Now to some extent shortages of employees are a made up problem. Raise wages and those shortgages tend to disappear quickly.
For the past 15 years or so I had a very difficult time filling advanced- and management-level statistician positions. We hired english-speaking immigrants and attracted people by letting them live wherever and telecommute. Salary plus bonus ranged from $175 to $500+. Getting good people has been getting harder all around in my experience.
And what happens when you offer say 750 instead of 500? Do you still have problems finding good people:) Getting good people at the price you want can be hard. If you can afford a higher price is another issue. Obviously this issue is a bit more complicated the longer it takes someone to adapt. If I am a 19 year old mathematical genius and your career path is likely to pay 500 while say being a software develop pays 200, you will find a enough of the people on the edge will switch to the higher paying choice. But it might take 20 years for them to work their way through the system. On the other hand if you are paying 150 while software pays 200, it goes the other way.
Corporations have to deal with compression problems too. But the company is on the high end of the comp scale for competitive purposes. We are known as being a good place to work and have a strong position in the industry, but we”re really picky. Hiring the wrong people and having to remove-and-replace has been a corporate no-no for years as it’s one of the most costly mistakes we can make.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by willthrill81 » Wed Oct 17, 2018 10:16 pm

randomguy wrote:
Wed Oct 17, 2018 8:39 pm
willthrill81 wrote:
Wed Oct 17, 2018 3:23 pm

randomguy wrote:
Wed Oct 17, 2018 2:51 pm
Now to some extent shortages of employees are a made up problem. Raise wages and those shortgages tend to disappear quickly.
Partially so, but it's more difficult to fill shortages when it takes 4-5 years of post graduate work and living in poverty to get there, and then half of those who start the process never finish. Another issue, one that has been plaguing the sciences for years now, is that the private sector can be far more lucrative than academia. And yet another problem is that if newly minted Ph.D.s go into the private sector, their research skills as determined by the number of peer-reviewed journal articles and other scholarly works they produce tend to degrade, sometimes very quickly. For those in this situation, going back into academia later on, even in the midst of a shortage, can be difficult.
Sure and every year there is a new crop to harvest so you don't have to wait 4-5+ years. And as I said the problem is wages. If academia was paying the same as the private sector, you would find a ton of people preferring the academic lifestyle. Not as many are willing to work for 1/3rd+ less in wages though. If you aren't willing to pay market rates for something, filling positions can be really hard.
Possibly. The reduced pay is, IMHO, more than compensated by the lifestyle. And the 4-5 year lag would indeed be a problem because the current supply of newly minted Ph.D.s in most business disciplines is barely capable of keeping up with current demand. If that demand suddenly increases by 30%, for instance, it will take at least 4-5 years to catch up and probably a lot longer since most Ph.D. programs don't have enough slack to suddenly increase their size by 30%. But that's probably a good source of job security for those already in the field.
Last edited by willthrill81 on Thu Oct 18, 2018 9:52 am, edited 1 time in total.
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Re: "Retirement age uncertainty increases the savings needed for success"

Post by TN_Boy » Thu Oct 18, 2018 8:48 am

The Wizard wrote:
Wed Oct 17, 2018 9:13 pm
TN_Boy wrote:
Wed Oct 17, 2018 7:59 pm

...Your 1) I found amusing. I have a friend who is a college professor. Had you asked him 5 years ago how long he'd keep on teaching, he'd have given you the same answer your professor friend gave you -- maybe until 70! Fast forward to now, and changes in his department, funding issues, dealing with the bureaucracy .... now he is saying likely to retire at age .... oh, 61 or 62.
Ok, but in my case, my professor friend and I are the same age (68), so that's different...
I just found it an interesting example of how retirement plans change, plus the fact his new planned retirement age what the OP's cited paper lists as the "magic" retirement age. The friend in question, of course, is/will be prepared.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by randomguy » Thu Oct 18, 2018 10:32 am

willthrill81 wrote:
Wed Oct 17, 2018 10:16 pm
Possibly. The reduced pay is, IMHO, more than compensated by the lifestyle.
Yes (and at this point of life I would agree with you) but if most PhDs graduates felt the same way they would be taking academic jobs whenever possible and not leaving for higher paying industry jobs.

I am being very simplistic in saying you just have to pay more. It can take a several years for things to work out and people have to have confidence that it is a long term opportunity at the employee end and at the employer end you need to keep pay low enough so that hiring people is profitable. But in general whenever you hear someone saying they can't hire some one, it is left unspoken that they only want to pay X amount and the qualified people want x+5.

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by smitcat » Sun Oct 21, 2018 12:08 pm

Ron Scott wrote:
Wed Oct 17, 2018 9:37 pm
MathWizard wrote:
Wed Oct 17, 2018 8:07 pm
Ron Scott wrote:
Wed Oct 17, 2018 6:24 pm
randomguy wrote:
Wed Oct 17, 2018 2:51 pm

Now to some extent shortages of employees are a made up problem. Raise wages and those shortgages tend to disappear quickly.
For the past 15 years or so I had a very difficult time filling advanced- and management-level statistician positions. We hired english-speaking immigrants and attracted people by letting them live wherever and telecommute. Salary plus bonus ranged from $175 to $500+. Getting good people has been getting harder all around in my experience.
Gee, I at least pay over one thousand.

Seriously, assuming this is in K, where is this, in a HCOL area like Manhattan?
Yes, but that’s the home office. We have been willing to allow people to work from their homes and have staff through the US. We also have industry experience requirements and that cuts the pool too, so we’re not looking for recent grads.
I am confused - you keep saying 'we' but i thought you were already retired?

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Re: "Retirement age uncertainty increases the savings needed for success"

Post by Ron Scott » Sun Oct 21, 2018 4:37 pm

smitcat wrote:
Sun Oct 21, 2018 12:08 pm
Ron Scott wrote:
Wed Oct 17, 2018 9:37 pm
MathWizard wrote:
Wed Oct 17, 2018 8:07 pm
Ron Scott wrote:
Wed Oct 17, 2018 6:24 pm
randomguy wrote:
Wed Oct 17, 2018 2:51 pm

Now to some extent shortages of employees are a made up problem. Raise wages and those shortgages tend to disappear quickly.
For the past 15 years or so I had a very difficult time filling advanced- and management-level statistician positions. We hired english-speaking immigrants and attracted people by letting them live wherever and telecommute. Salary plus bonus ranged from $175 to $500+. Getting good people has been getting harder all around in my experience.
Gee, I at least pay over one thousand.

Seriously, assuming this is in K, where is this, in a HCOL area like Manhattan?
Yes, but that’s the home office. We have been willing to allow people to work from their homes and have staff through the US. We also have industry experience requirements and that cuts the pool too, so we’re not looking for recent grads.
I am confused - you keep saying 'we' but i thought you were already retired?
Old habits (plus a lot of stock).

Confusion solved!
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

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