December 14, 2012

Retirement & 2013: What Might Lie Ahead

We are less than 3 weeks from the start of 2013. Was 9/11 really over 11 years ago? Were the early 90's really 20 years ago? I still think of 1993 as quite recent.

Well, no matter how much we might wish that time would move a little more slowly during a satisfying retirement,  a new year will bring new challenges and opportunities, disappointments and joys. Specifically, for those of us retired or soon to be, what are some of the bumps in the road and fresh chances to make a change that might lie ahead of us? I certainly don't have any inside information, but will take a stab:

...Downsizing or moving as housing markets strengthen. One of the goals of many of us is to downsize from our current housing situation. After the kids move out, travel increases, or there is simply a desire to spend less time cleaning and fixing, a smaller home, condo, or apartment beckons us. Unfortunately too many of us have been trapped in place by the real estate collapse of 2008-2010. Our present home won't sell for enough to pay off debts and finance a move to something smaller.

There are finally glimmers of better news. Phoenix, for example, has seen a rebound of almost 20% in prices since hitting rock bottom a few years ago. Other housing markets that took major hits are also reporting a slow but steady climb out of the hole. True, those prices are still well below the boom years just before 2008. But, we know now those astronomical house prices weren't real and couldn't be sustained. 

2013 may see more folks being able to sell what they own and downsize or move.


...Bank fees will increase. Everyone's new favorite villain, mega-banks, are feeling the impact of some recent government regulations designed to reign in some of the worst of the "gambling" that took us all to the brink. While the industry continues to rake in huge sums of money, these new controls mean they are looking for ways to take more from us in the way of new fees and charges.

Read all the statements and on line information you receive from your bank. Don't be surprised when something that was free isn't, or something that was low cost is having a hefty increase. Of course, you can always switch banks but most of them will find a way to grab their pound of flesh.

...More will decide to delay retirement or go back to work. Some of this will be because of economic need. The financial damage done to IRA and 401(k) accounts will not be repaired easily. Others will find their company pensions or promised benefits cut or "restructured."

But, a growing trend is for folks to keep working because they enjoy all that comes with employment besides the paycheck: relationships with co-workers, feeling productive and needed, or having no real plan for retirement. While that last reason is one that can be addressed, some are most content at work and will stay employed well past the usual age to hang it up.

...Increased reliance on technology. This will be impossible to escape. Already many airlines charge extra if you want to make a reservation on the phone with a live agent. Banks are considering charges to use a teller instead of on-line banking. Many banks already charge extra if you want your statements mailed to you, and I'm not aware of any banks that will still return cashed checks each month.

Smart phones are becoming a digital wallet. Your credit cards will exist on your phone instead of in your purse or wallet. You will pay for items at the grocery store or the coffee shop by swiping your phone at the register.

Tablets are rapidly replacing laptop computers, which have already made desktops virtually obsolete. Newspapers and magazines are switching to digital platforms as quickly as they can and charging to access information.

Sign up for Social Security or Medicare, renew your driver's license, even pay that speeding ticket on-line. More books are now sold on-line, in digital form, than the printed versions. Amazon will sell you everything from refrigerators to a bag of kitty litter and ship it to your door. Netflix is moving to the elimination of disc through the mail, preferring all customers stream their movies and TV shows directly to the television.

...Entitlements & retirement age may be changing. While seniors have  very loud and persuasive voice in Washington, there will be no choice but to scale back Social Security and Medicare payments and tighten eligibility. The full retirement age, already set at 67 for younger folks, will likely find its way to 70 over the next decade or two. The deficit and the country's demographics leave politicians little choice. No changes will affect anyone over 55, but younger generations will not see programs that look like ours.

The trend toward taking more personal responsibility for your own satisfying retirement will accelerate. Dependence on government or corporate efforts has proven to be shaky at best. Each one of us is ultimately in charge of how happy we are and how we choose to live.

What do you think might happen? What good, bad, and important trends or events might 2013 bring? Look into your version of a crystal ball and tell us what you see.



33 comments:

  1. Your forecasts seem spot on, Bob, except for the pessimistic thoughts on Social Security. SS doesn't contribute to the national debt, and it needs only a few adjustments to be sustainable for many years into the future. Going to the "chained" cost of living calculation and lifting the cap on contribution levels would do the trick. Raising the full retirement age above 67 is unnecessary and unlikely to happen, I think.

    Medicare is a different story. We can expect some rather drastic changes there.

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    1. I hope you are right about SS but I believe there will be adjustments that not everyone will be happy about. The "fix" isn't tough, it just takes political will which is in very short supply today.

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    2. Steve in Los AngelesFri Dec 14, 09:42:00 PM MST

      In my case, I am planning to wait until age 70 to begin Social Security. I have slightly more than 13 years and two months left to go. I agree that some drastic changes to Medicare will occur. I am doing my best to keep my health care costs low by doing my best to stay healthy, having a good diet, getting plenty of exercise, and avoiding unhealthy behaviors, such as smoking cigarettes. Sadly, there are too many people who have unhealthy habits. They eat too much and/or eat the wrong foods and/or they do not get enough exercise (or very little or no exercise), and/or they smoke cigarettes.

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  2. I have to say, I don't see anything good for our children and grandchildren. I see everything becoming more unaffordable for them. I see climate change making things worse. The increase in technology I see as too distracting for younger folks. Their creativity is being affected in a major way. I see too much reliance on oil which is finite. Sorry to be a negative nancy but that is how I see it.

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    1. You are not alone in your view, Roberta, and you may be absolutely correct. I think our country and culture is entering a "tipping point" phase when the future of our lifestyle will go one way or another.

      I have a bit more faith that the majority of problems will be solved, but I am afraid our golden age is past and isn't likely to return.

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  3. I know our full retirement benefit with Social Security isn't until we are 70. We are hoping to not have to take it until then, but we still have a good 15-18 years left of work. But you are spot on that we will have to take personal responsibility for our own retirements, and downsizing is on our list of things we will do too.

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    1. To be precise, full retirement age is 66 or 67 depending on your birth date. You can delay until you are 70 and get a certain percentage above your "full" payment. For me, leaving all that money on the table for those extra years makes me nervous. I'm starting next May when I turn 64.

      15-18 years still to go? Heavens you are still a youngster!

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  4. A lot to think about here Bob. On the technology front I have been 'preaching' to all my contemporaries for years to stay current. Tech moves so quickly the minute you master one new thing it's obsolete, but if you get more than 2 stages behind you're lost. It's a constant challenge but I don't think we've ever been in this type of situation before where not understanding the latest technology will age you faster than gray hair! I find it stimulating, myself. And enjoy learning all the latest things. Keeps me on my toes.

    As for Medicare...I've felt for years there should be different levels of payment for Medicare. Those in the 2% who have more than enough income to live very comfortably for the rest of their years shouldn't be taking the same amount as those who need it to survive. Social Security should be dispersed at it was originally designed...you get back what you contribute. We should not have to give up our hard earned contribution because the government borrowed from it (us).

    Thought provoking as always Bob.
    b

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    1. "Means-testing" is the Washington jargon for having Medicare premiums adjusted based on income. There could also be a different deductible level based on income. It seems fair and logical to do this.

      I am not aware of any plans to change reimbursements for wealthier folks since that would mean the doctors are the ones who get gypped.

      Thanks, Barb.

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  5. I agree with you on all counts, Bob. I'm grateful not to have to go back to work, but I am trying to keep current in my reading and with technology.

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    1. For about four years I did part time work as a tour guide. The pay was good and the work as simple as could be. But, even though I have lost that $4,000 a year in extra income I do not long for that job back. I am too used to having complete control over my schedule. The time is much more valuable to me.

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  6. Good post, Bob. I would add that costs will be rising for pretty much everyone in two areas (or at least those people that pay the freight for themselves and others in this country):

    1. Taxes - inevitable. Both the Democrats and Republicans have spent us down the river. obama is just the latest and biggest incarnation of that trend.
    2. Healthcare - most people are truly unaware of how much this will be affecting them. For those of us still working it will creep into many areas of our financial lives, causing us to cut back in other areas. The economy overall will be the worse for it.

    The old mantra of "the only constant is change" will certainly hold true in the coming year. Until then, Merry Christmas and Happy Holidays to everyone.

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    1. One of the posts I wrote a year or so ago was "How are we supposed to pay for this?" It was about the impossibly of keeping up with the cost of medical care in this country. That post generated a lot of heated comments.

      Nothing has changed. My individual policy goes up 15%-17% a year, every year. Until mid 2014 when I am eligible for Medicare I am stuck. My wife's individual policy includes a $5,000 deductible and no drug coverage. Her premium increases on average 12% every year. At least for her in 2014 when pre-existing conditions can't be held against someone she will very likely find something better on the marketplace. She is still 7 years from Medicare and we just can't afford 12% increases every year for the next 8 years.

      Health care in this country is a disaster. We want champagne coverage on a beer budget. That doesn't work.

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    2. I am going to play contrarian on both of these issue.

      It is shown that tax rates are the lowest they have been in more than twenty years and yes that includes the prosperous Clinton years. So we are simply coming back to what should have been the normal for us all those years.

      Our healthcare costs are so out of line with the rest of the world that it is insane. We pay almost twice as much as most and then die younger. The secret the rest of the world has learned is single-payer system. Allowing doctors to charge $10k for a twenty minute procedure or for hospitals to give us $40 aspirins don't make us any healthier. Instead of pushing Medicare up two years we should be reducing it by 65 years. But that's just my opinions.

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  7. I agree with Dick on this one. Medicare and Social Security will have two different outcomes. The only reason Social security is in a bind is because three presidents have used it as their personal bank accounts to budget whatever they wanted to cover at the time. Medicare is a different issue and I suspect major changes are in the air. Until we deal with all of the health care issues in the country I see the health care issue overall (with reference to medicare or any other costs) as the primary issue of retirees. Especially those who leave jobs before the officialage of retirement.

    When it comes to technology, while it has its place, I see an awful lot of basic skills being lost as a result. My personal outlook is that to rely on technology instad of using it as a tool is a huge mistake.

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    1. See my comment above about health care costs. We have the most expensive care in the world but don't even rank in the top 20 countries for the health of our citizens. We are over-paying for under-performance.

      I complete agree about technology. Use it, don't let it use you.

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    2. Barb, I am not sure which three Presidents you are referring to when you say they are using SS as their personal bank account. Lyndon Johnson was the first to break into the SS Trust to finance his unpopular Vietnam War. Every president and Congress has used it the same way since, whether Democrat or Republican. That is why I am dead set against given a politician at any level additional revenue to spend. They have proven themselves to all be financial crack addicts, largely selling the country down the river.

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    3. Chuck I understand, but I was primarily talking recent history about bush one and two and clinton..........democratic hippie that I am, the budget could not have been balanced without raiding ss. The best thing anyone can do to ss in my opinion is leave it untouchable except for it's designated purpose.

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    4. Health care is really my only "problem" with raiding the retirement age. People will, in general be able to take early ss, work additonally or use savings. But having to use cobra or high cost interem insurance changes the level of everything.

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  8. Thought provoking post. As a newly retired person, I think you have a good crystal ball. I agree hammondartbiz that Medicare should be looked at; I do have a county pension & could afford to carry regular insurance. Why not let Medicare go to folks who need it, or have those of us who could pay, pay a larger premium? Also, chaining Soc Security to the Consumer Price Index & "means-testing" might provide a more equitable arrangement & keep the fund solvent for longer. I do agree that those getting Social Security should not be punished because the Government could not keep its hands off such a marvelous pile of money.

    It does amuse me (sorta) now to listen to everyone complaining about the boomers & how much we cost, etc. etc. etc. When we were all working (some of us for the government because we thought it was an important job) those who worked for the government were criticized for taking less money, for being stupid to turn down the cash. Now, those same folks are furious because we have pensions. Also, EVERYONE seemed thrilled that all the boomers were contributing to these programs......did it not occur to them that we would be getting returns on those investments?

    About banks-----I switched to a credit union years ago & overall am much happier. I still have to watch fees, etc., but it seems one less hand in the profit stream because they don't have outside shareholders.

    My crystal ball overall agrees with yours; I do find I have to accept that there are things outside my control & enjoy/change what I can.

    oh yeah....I DO have to catch up on the technology wave...I feel WAY behind & I just left work 8 months ago!

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    1. Concerning the criticism of Boomers, it is just an example of the inability of too many folks to engage in long-term thinking. Obviously 78 millions people retiring were going to strain the system. But, we tend to wait until the Titanic has struck the ice berg before looking at the route we are on.

      I should investigate credit unions, now that they have opened their doors to just about everyone. At the moment I manage to avoid all bank fees by keeping enough money in various accounts. But, I am very aware of the changing landscape and expect them to find a way to extract something from me at some point.

      Of course, with an interest rate of 0.04 on my checking account they are already using my money for free!



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  9. All of our problems are solvable. We have had much worse problems in the past than we have now. But we are sending totally incompetent people to Washington. They are all playing some sort of silly game. And the media joins the game and stokes the fire and prevents the American people from pulling together for solutions. I don't know how you get back to putting the interests of the American people before politics. Honest, intelligent people won't run because they know their lives will be ruined. It is all so sad and so unnecessary.

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    1. The scrutiny and costs involved in running for office makes the process something a normally well-adjusted person wouldn't want to go through.

      The answer? I have no idea.

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  10. Honestly, I am much more concerned that this was the second year of crops burning in place last summer. The corn was plowed under as was winter wheat and soy. The farmers in my area do not have feed for their cattle this winter---hay is being stolen all over the midwest. If we continue the heat for two more years, I think farming in this area will be gone (especially with no federal crop insurance).
    We have many more things to worry about then the fiscal cliff.... But....I am trying my new "Bob" mantra...don't worry. It isn't healthy. Just be prepared as you can be and move forward enjoying life. I am not being sarcastic. That post about "worry or not" really hit home!

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    1. A "Bob" mantra...I like it. Worry solves nothing. Even so, you are in a tough situation in the farm/heat situation. I will be watching the Kansas situation closely with you in mind.

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  11. Bob, the cost of living (COLA) index adjustment, if passed (likely) will affect even current retirees. So, those over 55 will not be held harmless, as they promised. Plus, if you are a government retiree (as millions of us are), your pension COLA is tied to the Social Security COLA and so you get a deduction in your retirement pension and your social security.

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    1. Yes, the yearly cost of living adjustment (a whopping 1.7% for 2013) will likely be reduced in future years. You are quite right that those adjustments will affect all of us.

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  12. Bob - I think your list of 2013 issues are pretty accurate. I hope overall we become as civil a society across the board with each other as the people who follow you on this blog are with you and with each other. We seem to be such a polarized society these days and the issues outlined above(and others out there) will require reflection after thoughtful exchanges of different points of view with the hopeful intent to come up with compromises that we can all live with (and give in on some things as well!) and that will help move our country forward in a direction that will serve the needs of ourselves but more importantly our children and future generations.

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    1. If the whole world interacted with such civility and intelligence as the readers of this blog we would be living in a very different way.

      I look at the shooting at the school in Conn. and can't even fathom what that person was thinking or feeling. Luckily, he is aberration and most folks really are quite decent and caring.

      Thanks, Mike.

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  13. Absolutely, check out credit unions for your financial transactions. I handled deposits and simple investments for a homeowners association for 11 years and made detailed analyses of the differences between services of CRs and banks. Over the long term, credit unions paid better rates to members who saved and charged lower fees to those who borrowed. I recommend a switch from a bank to a credit union to any retiree or person approaching retirement.

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    1. I do like the convenience of ATMs from my current big bank and its branches in several other states. But, I will certainly look at the options.

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  14. Great post and discussion. Can't add much, except I agree with Anon. who says that we've had much worse problems in the past, and all our current problems are solvable. If you want to see a nation with real problems, go see Lincoln, which as a movie is a little slow and ponderous but one that brilliantly captures the weighty, even existential issues of the day, and the man who shouldered them.

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    1. Lincoln was excellent. Besides being very well acted with beautiful photography, it showed a side of him that we tend to ignore: he was a politician who knew how to play the game and get things done.

      Our problems are very solvable. I'm just not convinced the people in Washington can see past the next election.

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