When I'm 65 | Full Documentary

when i'm 65 is made possible by the non-profit investor protection trust and the investor protection institute with contributions from the alabama securities commission the iowa insurance division the michigan department of licensing and regulatory affairs and the pennsylvania department of banking and securities since 1993 the investor protection trust has worked with the states to provide the objective investor education needed by all americans to make informed investment decisions do you think you'll ever be able to retire as of now for me being so young it's very blurry at the moment it seems fairly far off for me as well so i just figure i'll be working for quite a while [Music] congratulations with advancements in medical science and nutrition life expectancy particularly for young people is going up considerably which is a really good news but not everything's great you know there's always some negative and that is that you have to fund retirement for a longer period of time the golden years post-professional career retirement whatever you want to call it we're all facing it we're also living longer well into our 80s and 90s the golden years stretching into golden decades it's good news we're going to live longer but then we have to recognize we either have to work more or save more and therefore reduce our standard of living the 65 retirement age for social security was put in place in 1933 when retirement lasted you know eight or ten years barely this idea that we think we can work from 22 to 62 which is 40 years and then support ourselves for at least 20 years which is the average the arithmetic doesn't work i mean we're not too far from a day where maybe every year that you live you have to fund this year plus plus another year in the future and i think most people have this point of view they'll just keep their fingers crossed and one day they'll wake up and you know they'll be healthy wealthy and wise it's not like you can just show up you know at 65 and sort of figure oh what am i going to do about this the next 30 years you know you need to be figuring it out all along people aren't thinking about it at all they're busy with their lives they're focused on other things and then on the other end of the spectrum are the people that just feel overwhelmed by it and don't know what to do given the fact that we're saving for something that might be 40 years in the future most of us have absolutely no idea of what to do for that we don't want to outlive our money i mean people have this palpable fear in their eyes about doing that and i don't spend it all in one place things weren't always this complicated most of us remember our parents or grandparents waxing dreamily about their pension they're in retirement people did it when i was a boy but for 30 years the idea of the pension has been just that an idea instead employers have offered up defined contribution plans for the more familiar sounding 401ks and iras i think the change from sort of the golden watch type pension to having people save for their own future has really just shifted a lot of the burden on to individuals and their families since pensions are an increasingly endangered species what we're left with is the diy retirement do it yourself an economically secure retirement beginning and ending with the person in the mirror the analogy with the cars is jumping all these parts in your driveway saying here's a manual on how to assemble it do it and by the way if it doesn't work it's your problem and you can go wrong at each stage you are responsible to join a plan or not how much to contribute which investments to make to grow your nest egg how big of a nest egg you'll need what to do with that nest egg when you move from job to job and then finally when you reach retirement how much to withdraw each year so you can enjoy living on that money and yet also not run out of it for as long as you continue to live is it any wonder that 21 of americans think winning the lottery is their best chance at saving enough for retirement in the old pension system individuals didn't have to make any of these decisions you were automatically enrolled your company set the contribution rate made the investment decisions and at the end of your career they didn't hand you a million dollars they provided you with a paycheck for the rest of your life but things aren't quite so easy anymore whether you're ready to retire next year or 40 years from now each generation faces unique retirement challenges boomers grew up in a time of great prosperity made them very carefree financially but it hasn't served them very well because they're not savers at all they grew up in the era where it was easy to get a credit card easy to go in debt and easy to second mortgage your home and so here's a generation with big aspirations for all the wonderful things they want to do in their retirement but the truth of it is that many of us as boomers just can't afford it the gen x generation have been kind of taking notes so they're a little more responsible when it comes to saving and so they've also set a little bit more modest expectations for retirement they don't necessarily assume that they're going to retire young and then you know live for decades comfortably they imagine they're going to have to have roommates or relocate to a less expensive part of the country and then you've got the millennials they're watching their own baby boomer parents uh hit hardships financially and so they're a little bit more cautious and they lived through this you know economic volatility of the last decade and it wasn't quite as much of a whiplash as the depression back in the 20th century the 1930s but it got people's attention baby boomers saw their 401ks plummet courtesy of the 2008 crash and now they have little time to catch up the often cynical gen xers they've seen so many market downturns that true to their nature they're skeptical of the whole darn system and for millennials many are joining the workforce at a time when jobs are hard to find by historical standards they're also sporting crushing student loan debt and a severe distrust of the market any savings they do have is in cash and probably in the mattress but with our current retirement system we have little choice but to use the market to try to maximize our savings to reach a financially secure retirement i think that boomers did see the rug pulled out a little bit and i don't think it's too late to make choices and get going but again you need to be more aggressive than you ever dreamed of i mean many of us were expecting that we were going to retire soon and i think we're not going to retire probably in the same way or as quickly as we had planned it used to be when people retired oh they could i could do this i can do it it doesn't work like that anymore i'm not doing as good as i should but i want my kids to do a lot better and i want them to think about their retirement because that's nothing i ever thought about these are big questions and for the most part our decision as a society has been to say well let's hope that individuals think about them but it's questionable just how much we are able to think about them in 2013 the median household approaching retirement had one hundred and eleven thousand dollars in 401k and ira balances sounds like a lot what it means is less than four hundred dollars each month to supplement social security americans are dramatically under prepared for retirement and it's really a crisis it's scary it's problematic and we have to do something about it when it comes to retirement many americans find themselves behind the eight ball how are we falling so far behind you know where you're going all it takes is a little advice and a lot of planning there are lots of human irrationalities one of those is the belief that people have in our ability to make decisions behavioral economists like dan ariely study how we as humans actually make financial decisions for better or for worse in style economics we think about people as perfectly able people can think about all the options think about the long term and always always always make the right decisions the behavioral economics perspective is kind of sad we're all fallible we don't know how to make decisions we're easily confused it's a sad view of human nature but the fact is it's a more accurate view of human nature evolutionarily our brains are wired to run from a bear or a lion not planning far into the future oh man i love northrop government and it turns out stress and emotions cloud our decision-making abilities what the heck is going on down here the more decisions we have to make the worse we do yes okay long term many complicated decisions stress emotions sound familiar with our current retirement system and our genetics retirement planning is the perfect disaster it's pretty much game over for everyone else this is probably the toughest thing for people to do it's about now versus later and now versus later is something that we fail all the time right it's about um overeating eating is fun now not healthy later exercising not so much fun now good for later and retirement is not just now versus later it's now in very very much later not only are we unable to plan far into the future humans are also very susceptible to temptations in the now we have all of these pulls at our attention right now all of these things that grasp us and make us want to do the thing now spend money on the new car spend money on the slightly bigger house on the nicer appliance etc and by the way each of those things just feels more emotionally arousing more exciting than the idea of putting money away for this long period of time in the future there's one more element that is very important to realize which is that the environment that we're part of is actually fighting against us imagine that life is a battle on your wallet every store wants some of your wallet every coffee shop wants you to spend money every advertisement while you spend some money and do they care about your retirement no they want you to spend now the idea that people would be able to make the right decisions about retirement for me is equivalent to the idea that i will give you donuts and sausages and bacon and whatever you want every day and expect you to resist all of those temptations it's just not going to work america resisted very few temptations in the early 2000s thanks to cheap credit and ballooning home values that we used as an atm then came a major wake-up call the 2008 market crash i mean this is volatility we haven't seen of course since way before you and i were born so there's a great quote it's only when the tide goes out that we see who's been swimming naked and i think that's really apparent with the financial crisis once interest rates went way down once it became harder to borrow money then it became more apparent who was in a good situation who was not it was already difficult for our caveman brains to scrimp now for the distant future but in today's economy the battle in your wallet is often not for luxuries but for necessities it's awfully tempting to say well you know i need all my money today for the kids dental bills or fixing the car or something along that line you know finding that extra money to put out for the future when the needs are important today is really really tough for many workers so even though it is very tempting not to save right now that is probably one of the biggest mistakes that an individual can make now we need to think about other approaches to help people save for retirement because without it devastation would come and it will be too late to fix anything behavioral economists not only look at how we make decisions but how can we be nudged into making better decisions and now when we say better decisions it means better in terms of what someone says they would want to do but don't often do so they want to diet more they want to save more well why are people making these sorts of decisions and is there any way that we can get in there and potentially change the decision making context or change the decision maker themselves we can also think about how do we design the world for people like us not for people who are hyper russian the key to saving lies in understanding human behavior our aversion to decision-making and taking advantage of our natural inertia one of the things that we have learned is that when people are faced with a decision especially if they think it's an important decision and they don't know exactly what course of action to take they do nothing they say well you know i'll decide on this on thursday and thursday never happens one of the biggest problems with the 401k system is that people just aren't signing up maybe you start a new job and you're kind of not sure what the budget's going to be and so you just put off making that decision but then inertia takes hold and you just never get around to signing up nearly a decade ago david c john and colleagues introduced policy to harness the power of our natural inertia the automatic 401k for employers who offered it it meant employees would be automatically enrolled in a 401k plan and the impact of the automatic 401k is striking in the traditional 401ks where you must choose to participate 20 will sign up in the first year and three years down the line 65 percent are enrolled with the automatic 401k you're defaulted into the program 90 or enrolled from the start and three years down the line participation goes up to 98 percent unless you decide not to save you're in the program people actually participate they recognize they need to save they recognize they need the guidance and they started to save earlier than they would have otherwise employees are still offered the same options to save or not to save but by framing the choice that you're saving unless you decide not to participation rates increase from 65 percent to 98 and with retirement saving it is crucial to get people to the table and saving as early as possible the most important ingredient to growing your investments is time so the earlier you start saving for retirement the better the magic of compound interest letting time do the work by investing as early as possible say a millennial puts away money for retirement starting at age 22 and quits contributing at age 30. compare that to a gen xer who starts saving at 40 and keeps contributing to the age of 67. the younger saver earns a hundred thousand dollars more by the age of 67 but has put in two-thirds less money and imagine the added benefit if the millennial had kept contributing past age 30. the bottom line is the earlier you start the less you actually have to scrimp to meet your retirement goals a 25 year old can get away with contributing 10 per year a 35 year old 15 and waiting until 45 years old will have you saving almost 30 of your salary we're not built to think about 40 and 50 years from now and unless as a society we build structures that force that conversation and make it easy to act on that conversation we're never going to solve this problem automatic 401ks have gotten many americans to the table and saving earlier than they would have on their own but for half the american workforce saving for retirement is still just out of reach so we still have a substantial proportion of the population who don't have the opportunity to save one way or the other and that's a very serious problem as it stands 75 million americans lack access to a company-sponsored retirement savings program and the data are just completely clear less than five percent of people who lack a workplace plan go and open an ira on their own five percent the majority are literally not saving who makes up the 75 million self-employed small business employees and part-timers 53 million americans today work freelance or are self-employed these folks are often on their own but for small business employees there have been some attempts to bring them to the table offer every american access to an automatic ira on the job so they can save at work just like everybody in this chamber can the automatic ira brings a low-cost simple system for small businesses for whom 401ks may seem too expensive and complex both senator mccain and then senator obama included auto iras in their 2008 presidential campaigns and each year president obama includes it in his federal budget it's a simple proposition but it's a big deal despite support the automatic ira is still just an attractive idea languishing in the halls of congress the federal government is the right place to do this and for a while i think state governments were just kind of waiting for the federal government at some point we got tired of waiting and we felt that it was time to time to act in early 2015 with state senator daniel biss as its lead sponsor illinois became the first state to enact the automatic ira into law illinois secure choice enrolls small business employees by default into iras through payroll deduction giving them access to an affordable retirement savings account and the behavioral benefits of automatic enrollment this is a bill that addresses problems in the long term allows people now to start saving for later and so that creates some urgency we've got a crisis today and any solution is going to literally over over the course of decades roll out and so that you know when you're in that situation you have to act fast and this is just the beginning in 2015 30 more states are developing their own versions of the automatic ira states are recognizing that it could be in their financial interest to address this problem head-on they recognized that if they had a substantial population of people who are just retiring on social security or social security and not much more than that they would have a lot of additional calls for taxpayer-funded expenses for health care housing libraries home health care costs things along that line and if we can fix our retirement security system so that people are independent secure living in dignity and not relying upon the state that's not only the right thing to do for people which it is but it's also enormously beneficial to the state's bottom line in a very rare occurrence in today's political landscape automatic iras are gaining traction in red and blue states alike so we have conservatives and liberals who come together and recognize that at least in this one tiny little area of public policy we can actually get along and move towards practical solutions some people will say well hold on where's where's that money going on my paycheck for and we'll opt out and that's fine but the great majority of people will say okay now i'm saving for retirement good news [Music] but what of the 53 million freelancers and self-employed people shut out of the auto ira world that's one-third of the american workforce and growing gen x trudged the path in brushing off the traditional careers of their parents either by choice or by necessity and millennials are running with it today almost 40 percent of millennials are freelance or self-employed and i think one of the things that we're all starting to feel and look at is that we're feeling insecure we're seeing that all the risk is being born by the workforce in terms of having these gig like jobs but we have to start to think about what are going to be the new ways that we can protect people so that they don't bear this kind of risk if workers with company-sponsored retirement plans have a difficult time overcoming their caveman brains and saving for retirement what chance do freelancers have with 40 of millennials working freelance and growing this generational cohort is transforming the financial services industry through the best way they know how technology i think millennials are very used to getting things done quickly and there's an app for that financial technology is making it easier for us to stay on top of our finances from online banking apps to budgeting apps to even checking how your savings compares to your college graduating class and i think that is really reshaping financial services in a pretty big way what you're seeing is you know it starts with millennials but then that that kind of trend is is going to generation x and even into the baby boomers [Music] saving funds in a 401k or ira is just one challenge of many to attaining a financially secure retirement despite our savings shortfall this diy retirement system now has over 10 trillion dollars in assets and the financial industry they're standing at the ready marketing promises of helping you grow your nest egg we all know it's coming the retirement you want but choosing the right investments is often both complicated and risky most of us have absolutely no idea i mean we hear about all kinds of things but we also hear all kinds of dangers and fraud and things along that line when it comes down to it we don't have a crystal ball the main thing that works though is to diversify your risk there are one-size-fits-all funds out there known as target date funds diversified and tailored to your age and risk tolerance some workers attempt to cobble together their own diversified retirement plan but for many diving into the turbulent waters of the stock market is stressful enough and so they leave the investment decisions to a financial advisor when i was 22 when i first started i was not saving i worked for a company that had a pension plan and i don't even know that i was aware of that i was working working for money i didn't think of retirement at all but has happened to many gen xers and baby boomers tom's company rescinded the pension benefit and cashed out his pension in a lump sum so it went from you know the company's kind of taking care of you and you don't even have to think about it to transition to now i've really got to think about it so i went over to my financial advisor and said here's my money where should it go and he put it in managed funds all of my friends say well i'm in good shape i have this guy that can help me and my blood pressure starts to rise investors face a very confusing array of individuals and most of them they sort of look alike they sound alike however that's not the case at all investors need to understand those who are the product sellers they are almost like your corner grocery butcher will have lots of opinions and will sell meat all day long as opposed to your nutritionist who exists to give you advice on what's best for your health product seller or advice giver who helps guide your investments advice givers are known as fiduciaries by law they're supposed to have your best financial interests at heart for product sellers the standard they're held to is called suitability meaning the product seller can't make investments on your behalf that are wildly inappropriate given your financial profile otherwise product sellers are free to pursue what is best for their bottom line rather than yours [Music] people are faced with the wild wild west they are faced with very unregulated professionals and what that investment advisor wants to do is get your money in the accounts for which they earn a commission for tom bell he started to notice that his nest egg just wasn't growing as he had hoped or expected true to his gen x nature self-reliant and skeptical of quote-unquote experts tom took the diy approach and started researching on his own i started reading and i learned about fees and how much the managed funds were paying compared to how much index funds were paying but not once was anything mentioned about the fees and i didn't think that i didn't know to look at fees or not look at fees you know i just saw mutual funds are mutual funds this is his job tell me what to do high fees don't necessarily lead to higher returns and can sometimes lead to the opposite as the law currently stands advisors are not required to disclose any conflicts of interest meaning they can and often do steer you away from lower cost higher earning funds to products that earn them a commission what we sometimes believe it to be true that the more you pay the more you get the exact opposite is true when it comes to investing the more you pay the less you get these high fees are coming out of your nest egg and over time what could have been a large nest egg can be whittle down to a small one that small chunk that they're taking year after year after year is going to be how much by the time i retire it's maddening is what it is and this bad advice stemming from conflicts of interest costs americans an estimated 17 billion dollars a year out of their retirement savings and there's no regulation that prevents them from steering you into accounts that serve their needs and their company's needs and doesn't serve your needs there is nothing that prevents them from doing that if consumers ever needed protection for something through federal regulation our retirement nest egg seems like a no-brainer the fees they're paying for services as well as whether potential conflicts of interest exist with respect to investment services the department of labor gave it a shot but lobbyists for the financial industry nearly killed the proposal until it got the attention of the white house you should have the peace of mind of knowing that the advice you're getting for investing those dollars is sound and that's what this new rule would do and for outstanding financial advisors out there it levels the playing field so they can do what they know is the right thing to do putting their clients first while this isn't a law there's movement on this issue which advocates see as a great benefit to the american worker preparing for an economically secure retirement with its many obstacles and pitfalls can feel like you're living inside an arcade game and if you can make it through you'll arrive at retirement age with a big pot of gold and for most americans this is the largest pot of gold they've ever seen i think we've spent a lot of time from a policy side getting people to save and figuring out what's the way to make that happen and we've spent almost no time thinking about how to help people when they actually need to withdraw the money so you retire with what may be more money than you ever had in your life and people don't recognize that this becomes income and it has to last for however long your retirement lasts we don't know how long we're going to have to stretch this money out do you know your number the problem starts early on setting your retirement goal as attaining a giant lump sum of liquid funds what we're finding out is that that's actually slightly problematic because people see a number like 200 000 and they think it's a huge amount of money that seems like that's enough to fund retirement but when you start breaking that out in terms of how much it'll actually get us month by month in retirement it doesn't look as good anymore seeing your retirement account balance as a lump sum can lure people into dipping into that account before retirement it might be to pay for important stuff such as education or health care but sometimes it just gets frittered away i personally cashed out a 401k plan when i was 30. like hello but you think oh you know i really needed it at that time you know it wasn't much so i didn't think there was any harm in cashing it out i think that happens too frequently chipping away at that nest egg especially from a young age can lead to compounded losses while you're nickel and diming your retirement savings today you're also losing out on all the growth the magic of compounding brings cheating your future self out of thousands of dollars in retirement savings the time these withdrawals can seem like small bits out of a giant lump sum of cash but when explained in terms of affecting your monthly income in retirement the difference is stark many financial institutions are starting to see the merit in reframing retirement account funds in this way and report both your balance and your balance as a stream of income this is just simple disclosure that can have a huge effect on people because it reminds them that this is the real purpose of retirement savings it's not to have this monster lump sum it's to have the security of the income towards the end of your life that's the goal for retirement savings after all to maintain a stream of income to support you for the rest of your life but it's also the next challenge it can be hard to predict how much you'll need to live in retirement and with people living longer today it's even harder to know how long your money will have to last if you keep your portfolio in stocks and bonds you're constantly guessing about your own longevity how long am i going to live and that's a question a lot of people have and you know it's a hard question to answer there's a lot of popularity around the old four percent adage it assumes that your nest egg is continuing to grow at more than four percent so if you keep your withdrawal percentage a little lower than the total return you're getting on the money still in your retirement account you're going to be fine you're not going to spend it down but getting a four percent return isn't as simple as it once was and with today's anemic interest rates all but requires you to keep funds in the stock market exposing older people to risk they can't handle you gotta own stock the simple fact is that if you're going to run out of money it's going to be towards the end of your life and this is not the time to make incredibly complex financial decisions especially given the fact that by definition you don't have a whole lot to deal with consider the group often called the silent generation the cohort before the baby boomers they enjoyed a pension and with a pension this group didn't have to make all these decisions where to invest or how much to withdraw they also didn't get handed a million dollars instead the silent generation lived out their golden years receiving a steady paycheck for the rest of their lives social security functions the same way you're paid a guaranteed benefit for the rest of your life so we'd stand to reason that the ideal would be to apply the pension paycheck model to the system most prevalent for today's retirement 401ks and iras but it requires yet another financial industry product annuities an annuity you buy for yourself as retirement approaches or early in your retirement is like an instant pension plan for yourself in its simplest form an annuity is an insurance product you take a certain amount of money give it to the insurance company and the insurance company gives you a paycheck every month for as long as you live the funds are out of the stock market and unlike the traditional four percent withdrawal your savings are safe from fluctuations in the market you don't have to check your you know investments looking you know at the market every day like how much am i going to be able to afford to take out so that i don't run out of money you know and so if the market's down it causes a lot of anxiety if you buy the annuity you know that problem is solved for you in a world of economic instability and no guarantees here's what you can count on still consumers remain skeptical of annuities a financial product that can seem frustratingly complex and one that requires a long commitment i think people are afraid to lock up money they they think they don't have enough in the first place if i have a hundred thousand dollars at current rate i'll get roughly fifty five hundred maybe six thousand dollars a year so it's five hundred dollars a month and people look at this they say hundred thousand dollars five hundred bucks a month what happens if i walk in front of a bus tomorrow is it gone well what if you live to be 90 and you don't want your kids to have to pay for you so there's lots of good reasons to do it but you know people don't do it as much as they should annuities are a controversial subject and like every investment vehicle they have their pros and cons you never annuitize all of your investment income for retirement but you want to use that annuity for guaranteed income to supplement social security look at how much you're going to need to live on your basic household budget how much is going to come from reliable annuity sources like social security and then buy an annuity that will give you monthly income that fills that gap and with that you've created your own pension designed as a paycheck for the rest of your life insulated from the fluctuations of the stock market and let's face it we're going to have more economic crashes in the future they're a fact of life just like hurricanes so doing something like this would make a lot more sense than the current system of just sort of hoping that things will work out [Music] for many particularly baby boomers it's simply too late they've saved what they've saved it's not enough and they have little time to make it up so what else can we do social security is today and always has been a rob peter the paypal principal it is a ponzi scheme we are headed for a fiscal cliff here every one of those programs is going broke i've never seen an area where there's been more misinformation and misunderstanding than social security social security is not going away it's here now it's going to be here for the millennials 30 years from now it's not going away but with pensions all but faded away social security and its guaranteed lifetime benefit plays an important role for most retirees but it's facing a long-term financing problem and as most americans rely on that benefit it needs to be shored up if we do nothing today we can pay full benefits as promised through 2033 at which point the benefits would have to be cut by 25 this is the most important component of retirement income for most people so i think we need to maintain current benefit levels which means we need additional financing social security was not meant to fund a 20 or 25 year retirement so no wonder the system is in financial straits but fixing the financial stresses of social security are really very very easy if you locked 15 congressmen in a room for an hour lock the door lots of coffee no bathroom break they would come up with a financial fix for social security in about 45 minutes everybody knows what would do it it is simply a matter of political will one way to get more money in is just to raise the tax rate by raising the social security tax one and a half percent on both the employer and employees side full benefits can be paid for the next 75 years you could also increase the the cap on the earnings subject to taxation right now the social security tax is applied to incomes up to about a hundred and eighteen thousand five hundred dollars any income above that is simply not taxed for social security they're not contributing to the system you would jack up the wage base to which the social security fica tax applies it's solvent immediately [Music] so social security can be fixed for a price if there is the political will those nearing retirement also may have the chance to get more out of this government mandated lifetime benefit most of us know that at age 62 we can claim social security but did you know that the longer you wait the higher the benefit the numbers are astounding if you take it at age 70 instead of at 62 monthly benefits are 76 higher people who start their benefits too early when they're in good health they're reasonably well off and they could wait until 66 or 70 are leaving higher lifetime benefits that they could get by waiting for a few years past age 62. and i hope everybody looks into this and finds out more about it because this is one of the most important retirement decisions anybody can make and a lot of people are not getting it right and for many delaying collecting social security means delaying retirement i think what has happened in terms of looking at retirement today particularly for boomers is that you know it used to be you had social security you had your own personal savings and and maybe you had a pension whatever now work is part of your retirement it is a working retirement many boomers want to keep working but may be ready to ditch the 40-hour grind phased retirement programs allow workers to gradually scale back hours heading into full retirement making it easier for many to work longer federal employees now have this benefit and several private companies are following suit this allows companies to hold on to decades of institutional knowledge while the phased retiree can scale back hours but keep steady income and health benefits i've been working at hermann miller for 33 years it can be quite a physically demanding job you're constantly on the move we can walk 20 plus thousand steps a day herman miller the legendary furniture company began to offer a phased retirement program three years ago sally meyer a divorced mother of six has been able to scale back to 20 hours per week as you get older you kind of get a little bit tired it's kind of nice that i don't have to work a full week herman miller however may be alone among companies to offer a phased retirement program to employees on the manufacturing floor if i was to retire right now i would be somewhat concerned but being able to continue working for a few more years i can postpone collecting my social security so that will be much better plus i can add on a little more to my 401k and then i'll be in a real good position to fully retire [Music] but for many still working longer in their career is simply not an option alfreda diggs worked for 39 years in the juvenile justice system at 61 she got hurt on the job an injury that forced her to retire early and at first i thought well okay i'll get my retirement money i'll be fine don't work like that i started living off of my retirement money in two years i didn't have a dime i was broke at age 63 despite her injuries alfreda looked for a job and like many older adults she had a difficult time getting back into the workforce i even went to the employment office and i put an application online i never heard back from them at that point i didn't know what i was going to do while at a food bank alfreda saw a flyer for the senior community service employment program csep a job training program for older adults offered by state agencies and non-profits in alfreda's case at the detroit area agency on aging so when i came down here and applied about a month later i got a phone call and then within the next week or so i was working through the csep program alfreda took computer training classes and eventually signed up to become a certified home healthcare aide through the red cross the money that i make now supplements my social security and i'm not rich by any you know by any stretch of the imagination but i'm surviving i don't have to go to the food pantry anymore and i thank god for that don't worry about it i put it with my stuff okay i want to keep working as long as i can and i plan to start saving some more money just i know i'm not going to be able to save the kind of money that i saved but still put a little money aside but what if you can't keep working or have simply had enough here is another option for most americans particularly middle-income people the greatest source of accumulating wealth is the home they own i think the house is a major retirement asset the problem is today people haven't used it basically they keep hold of their house i think that it provides some security in case something goes wrong later in life and i think implicitly they also want to leave it to their kids but with today's retirement savings shortfall many will have to start looking at tapping home equity to bridge the gap in retirement savings we've all heard of downsizing but there's another option reverse mortgages you deserve to enjoy life again with a reverse mortgage these had a bad reputation after some people were swindled but with new government protections reverse mortgages are back i believe this is going to be a core part of how we address the retirement partner first the house is the biggest asset the typical american family has at retirement and it's something that can move the needle there for in helping people so you have to look for big things that's one reason that reverse mortgage looks interesting here's how a reverse mortgage works your home has equity right well you can tap into that equity with a monthly installment at a fixed rate like a social security check or you can take a lump sum or get a line of credit in a time of need tapping into your home in order to stay at home for the rest of your life used sensibly it makes a lot of sense yes it can be abused yes it has been abused but properly regulated and monitored they have their role in making retirement more comfortable for somebody who does own a home with substantial equity but staying at home alone is not the goal for some i have no choices but to age and i had watched both of my parents pass away in nursing homes and as a divorced and single woman with no children i thought what will happen to me marianne kilkenny was looking for ways to downsize her home and an alternative to aging alone housing is probably one of the hugest costs anybody outlays and to say how can i take that same amount of retirement money and utilize it some boomers were drawn to communal living in the 1960s and now the arrangement looks attractive again as people enter retirement i think that shared housing and looking at how far our money in retirement goes is most definitely a solution and the other piece of it is i feel much safer here than i did when i lived and it wasn't like it was a bad neighborhood but i also lived by myself the benefits of shared housing go beyond financial people are checking in to see how you're doing i mean there's a lot to be said for you know somebody saying how's your day something as simplistic as that one of the things about aging is that we oftentimes would like assistance in many of the things that we used to do in a relatively easy way whether it's shoveling snow raking the leaves being able to read something from a package you know where does that assistance come from is the question we have my eyes it says all right for women like marianne that assistance can come from living in a shared house with one in three baby boomers single aging in community is a growing trend that many will be looking towards huge the fact that we talk about shared living as a new thing i find kind of humorous in that it isn't really a new thing it's how families lived for centuries and now we're saying it's something new it's just we're with a chosen family boomer gen xer millennial thank you all maybe it all begins by accepting that one day we will be 65. [Music] you know it's such a weird thing right because we've it is you still right it's some version of you like that you will eventually you know whose skin you will eventually step into it's a sort of a dependent and it's up to us now to make sacrifices so that they can be taken care of so that they can live potentially a better life or worse depending on what we do right now we know that there are all these times where we make sacrifices for other people right so we make sacrifices for our children for our spouses and for our aging parents and what my colleagues and i have tried to suggest is that our future selves should be considered along similar dimensions to those people hal's research has shown that we don't actually feel emotionally connected to our future self it's too abstract and so we don't think of our future selves as someone to take care of but his research has also looked at ways to foster more emotional connection to our future selves we've actually shown people age-progressed images of their selves now it is emotional so we've actually found that seeing these age-progressed images of ourselves does make us feel more emotionally connected to those distant selves but you also see sort of from an anecdotal perspective when i've shown these images to our research participants they say things like my god that looks like my grandmother or that looks like my grandfather it does seem to be sort of an emotional experience for people as they see these images so the bottom line is that if they are emotionally connected to us then we'll be more motivated to make sacrifices today to ensure their later well-being years ago maybe our grandparents era 65 year olds generally looked old thought old acted old they were old not today you know i mean the average age of the rolling stones is in the 70s you know they're older than our supreme court true to their advertised nature baby boomers are blazing a trail for the generations behind them showing both what do-it-yourself retirement can look like and exposing the fractures in the system along the way baby boomers are a generation of firsts you know as women we went to work first the first huge group of people to look at retirement and say do i have enough money we did lots of lots of things not all of which everybody was positive about but we're the first we're on the forefront of really making some significant changes they're thinking of it as a time where they have more freedom but it's it's not freedom necessarily to sit on the beach and read a book it's freedom to be involved in their community it's freedom to start a company it's freedom to work at a part-time job that they've always thought about it's freedom to pursue their hobbies and interests that they've never had time for this is where we all want to get an economically secure retirement with the freedom to live out whatever our own vision of retirement is i think the word retirement won't be this big wall that you know with you jump over it and you know you're done and people don't ever see you anymore and you're off in retirement land it's really been an opportunity for people to sort of shift and say you know what is it that i'd really like to be doing and particularly for boomers people in their you know late 50s 60s it's it's a time where you want to say you know what's life all about what is it that's going to bring meaning to my life at 60 you can conceivably be doing something completely different for the next 15 years you can start over in a new career people 60 years old are the new middle age and i plan to be here until i'm an old age so i do what i need to do even if i retire i would still volunteer to help a senior or if i can help some young people i would do that successful pitcher retirement for me no mortgage no debt i've got three kids one now one lives in minneapolis i don't know where the next two are going to leave so i want to be able to travel from city to city without a lot of worries of only be able to make maybe one trip a year to see each one of them i don't plan on being bored i just want to keep my lifestyle the way it is now and with the annuities that i have it will cover what my paychecks have been of course there won't be any increases for raises or anything but that's what i guess what my social security will be the last 30 years of this diy retirement experiment have been a rough ride but understanding our behavioral economics and advancing public policy are helping us get there we are seeing this as a worldwide phenomenon we are seeing literally in every continent in the world governments recognizing that people are living longer and that they need to deal with this issue after a lifetime of hard work you should be able to retire with dignity and a sense of security we have a big task ahead of us to do this right and it has to be done right i'm cautiously optimistic in the sense that this is not a science problem we know how to solve it it's an engineering problem [Music] and that's always good knowing that you can solve it 65 may be some blurry destination in the distance or something approaching in sharper focus quite soon but through planning luck or both many of us can get there to enjoy our own vision of a successful retirement [Music] so [Music] when i'm 65 is made possible by the non-profit investor protection trust and the investor protection institute with contributions from the alabama securities commission the iowa insurance division the michigan department of licensing and regulatory affairs and the pennsylvania department of banking and securities since 1993 the investor protection trust has worked with the states to provide the objective investor education needed by all americans to make informed investment decisions you

Channel: Detroit Public TV

Views: 503,751

Keywords: detroit public tv, detroit pbs, wtvs

Id: MfUm1E1ZQtU

Length: 56min 46sec (3406 seconds)

Published: Thu Apr 15 2021

Reddit Comments

[u/Hermes-T8]

65 is wayyy too old especially in commercial construction.

[u/rackleyjamari]

The formula is simple: spend less than what you earn, invest the difference, rinse & repeat.