June 4, 2017

Retirement & The Middle Class: Still Possible?

First published a few years ago, the discussion about the fate of the American middle class and the growing economic inequality in this country has not gone away, in fact it has intensified. I'd welcome your thoughtful comment on this issue.


There has been a lot written recently about the decline, if not outright impending disappearance, of the middle class in many countries around the world. The original premise was that hard work and perseverance would result in a comfortable lifestyle and a satisfying retirement. That vision included decent retirement funds, health care coverage at an affordable cost, a home, a car or two in the garage, and enough money to send kids to college. It assumed that each generation's standard of living will be better than the one before.

In reality, that picture began to go out of focus at least 15 years ago. The dot.com stock market crash of the late 1990's damaged the hopes and dreams of many. It exposed the true risks of betting that the stock market would always go up and making money was simple. Just as things seemed to getting back on track, the world came crashing down again in 2008. Folks who had pinned their dreams on the value in the homes found themselves upside down, or worse. 

Again, stock performance tanked taking the retirement plans with them. The average middle class person has seen a steady erosion of their financial situation. Some are referring to the past ten years as "the lost decade."  Even while the top few percent of our society are richer and more isolated from reality than ever before, the middle class, and even more so the poor and disadvantaged, have watched the dream turn into a nightmare with few promises of a fix anytime soon. The big squeeze is getting worse.

Some will argue that we are reaping what we sowed. Flipping houses, taking out loans we couldn't repay, running up credit card bills of more than our annual income, saving virtually nothing for retirement, betting that stocks would only go one way....we were acting like children let loose in a candy store, assuming that "they" would be sure we were OK.

Others will say that the system has been tilted in such a way that the rich and powerful have stacked all the cards in their favor. The financial meltdown was caused by their greed and their manipulations. The "main street" middle class person has no chance to get back on top.

I believe that both those views have some validity. Each side must share part of the blame for the mess we are in. Our government has shown, at least to this point, it either has no idea how the "fix" things, or is so dysfunctional it can't.

I will also state that a satisfying retirement is still within reach of the many of us. Am I being foolish or hiding my head in the sand? I don't think so. The research I do before writing certain posts and the tremendous feedback left by readers have increased my sensitivity to the realities that way too many of our fellow citizens face. 

What I have learned in this journey is that we are in the midst of a massive and probably permanent redefinition of some of what we were brought up to believe. The concepts of employment stability and generally benevolent employers, of having protections and safeguards in place against unethical behavior that would prevent large scale damage, and of having affordable health care available to most are no longer givens. In fact, they aren't reality at this moment.

So what does my vision of a middle class retirement look like? Since there is no universal agreement on what constitutes middle class, I suggest we not get hung up on that phrase. Your satisfying retirement is determined more by how you act, react, and what you accomplish than by a textbook term or a particular income.

Having the proper retirement mindset means you are flexible. You may stop working completely at the "normal" age of 65 or you may keep working into your 70's or beyond. You may take on the challenge of starting a new business or company. You may become a consultant to your old industry. You may work part time at a local retail establishment.

You may never work another day in your life, but spend countless hours volunteering to make someone else's life just a bit brighter and less burdensome. You may take care of your grandkids all day so mom and dad can go to work. You may find yourself on a mission trip for a year to Africa. You may be the primary caregiver to your parents.

Whatever shape your retirement takes, it will look very little like what retirement used to be. Relaxing and doing lots of nothing all day while slowly declining in mental and physical ability holds absolutely no appeal. You will do everything in your power to avoid that path.

At the same time, it probably won't look like you thought it would. That isn't necessarily bad, just different. A middle class retirement may still mean travel, an RV, a vacation home...or it may not include any of those things. If you like a life of travel then you will make sacrifices in some other area of your retirement to make that happen.

If you are more of a homebody you will devise a budget that supports you in that decision: maybe lots of flowers in the garden, books on every flat surface, music playing all day, and an inviting place to live. It may be a 300 square foot rented apartment or a 3,000 square foot house. It shouldn't matter. It is where you feel safe and comfortable and "home." You will not let your possessions define you.

Your retirement will accept that you must take on additional responsibility for your future happiness, health, and well-being. You will not expect others to do all the heavy lifting. You will eat right, exercise, eliminate stress, see a doctor when needed, but fight aging and decline with every power you have. You will keep your mind active by constantly taking on new challenges and responsibilities.

A middle class retirement means you are in control of much of the quality of your retired life. Will there be times when you have to pinch pennies, clip coupons, bypass a wanted (or even needed) item? Probably. But, you realize that you have the greatest gift of all: more control over your time and how you spend this irreplaceable asset.

People will continue to aspire to retire (I like rhymes!), but in a way that will be unique to each of us. I can be satisfied with a lot less than I thought I'd need or want just 6 or 7 years ago. At the same time there are parts of my life I need and will fight to maintain: being close to family, volunteering to help those less blessed than I, building my spiritual life, and feeling safe and comfortable inside my home. And that sounds very middle class to me.

How about you?

19 comments:

  1. I totally agree with you that the middle class as we knew it is not what it used to be. However, we are still the majority and leaders. We owe it to our predecessors to be Stewart's of this land, heart and soul of what we strive for in life. I feel blessed to have been raised to believe in God and a higher power, the rewards of working hard and sharing with others. There was a book written years ago "Everything I needed to know I learned in kindergarten" . It's true, the golden rule, great others the way we great ourselves and our world would be so much better! Integrity means to do the right thing always even when no one is watching

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    1. I read that book and remember so many of the author's thoughts were dead on. Another small book that has it figured out is "Don't Sweat the Small Stuff."

      But, you are so right: what we need is to live by the Golden Rule. If all of us treated others they way we want to be treated, life would be so much better. I am not sure that would end the economic assault on the middle class, but it would be helpful to try.

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  2. I agree with you that everyone's retirement will look different - and will be different itself over time. I differ though in that I think it always was that way even though the media image was one size fits all. My grandparents took their boat to Florida each winter where they had bought a mobile home. They mostly fished then turned around and came back to Illinois for the summer and gardened, visited with family, etc. My parents volunteered, took care of grand kids after school, traveled, etc. until they couldn't do those things any more. We knew a man who couldn't afford to live in retirement in the city where he had worked so he moved back to the small town in Texas where he had grown up and met his second wife there and also worked at the golf course. My brother so far is reading, doing home repairs, a bit of volunteering and some travel while his wife has a very busy schedule. They are avoiding the issue of where to live when we can't take care of this big house any more so far. We are just figuring out what our activities will be for the early part of our retirement and have just moved across the country and into an active 55+ community nearer to family as a temporary first stage of retirement while my FIL is alive. We would prefer to be nearer our baby granddaughter but this is our short term choice. The financial part is what I think stresses people when they think about retirement and often rightly so but the activities and lifestyle you create are what will make you satisfied or not with this phase of your life.

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    1. My retirement models followed the traditional path: work until you are asked to leave, move to a retirement community, join a few clubs, play golf, end up in a nursing home. So, watching my own journey unfold in a different way, or reading about your grandparents has been part of a steep learning curve for me, a curve that has played out on these blog pages.

      Stories like yours are so healthful. Retirement is a unique path for each of us, even within a family. And I agree that the financial part of all this is a major stressor, because too much of our financial health is controlled by whichever political group is in Washington at the moment. Long term financial planning is critical; that becomes almost impossible in our short-term thinking environment.

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  3. I think most (not all) of us older Americans are smarter than the media give us credit for, and we are managing to muddle along. How else to explain the hordes of Baby Boomers still retiring to, or vacationing in, Florida and the Carolinas, and Arizona and the Pac. Northwest? How else to explain the record new car sales and the record number of retirees taking cruises and European vacations? Now, the Millennials ... that's a different story.

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    1. As you will probably agree, Tom, the media tends to find a simplistic answer to a problem and jump on that train. Washington tends to find an answer and then look for a problem to attach it to.

      Neither address real life in flyover country (everything more than 50 miles from the coasts). But, I am sure you do agree that our retirement is made more difficult than it need be by uninformed decisions or preconceived notions.

      Those in their 20s, 30's and 40's have a whole other set of problems staring them in the face.

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  4. It's hard to say what your retirement will look like before you retire and as you say everyone is different. One thing I have discovered is that you need way less money to retire than the financial industry says you need. I suppose it is better to be over-prepared rather than under-prepared though being over-prepared means you gave up something you could have done earlier, say vacations or more time with family. You needn't be as fearful of retirement as the financial press seems to say you should be, I retired 2 years ago and they've been the best 2 years of my life.

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    1. Your point is one that can't be stressed enough. A satisfying retirement absolutely does not require one or two million dollars neatly tucked away. Of course, with the average 50 year old American having only $50,000 saved, that approach won't work either. But, we can spend less during retirement, we have the ability to tailor our lifestyle to our resources, and we no longer have to try to keep up the the neighbors.

      I am glad you are off to a great start!

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  5. I retired at 62 in April 2014. I live around 1/3 of the income I made at my last job. A couple of years before retiring I HAD to make some major adjustments on my spending (impulse buyer) and cut debt down to a livable amount, IN CASE I retired. Even with some adjustments to my lifestyle, spending and retirement ideas ... these last 38 months have been the best of my life. FREEDOM beats income any day of the week.

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    1. Yes, freedom, not a particular credit card, is priceless. There are so many free and low cost ways to be satisfied and productive. the biggest problem becomes time management - why are the days so short!

      My wife and I lived on less than 50% of our pre-retirement income for the first ten years and still lived very well. Since then, the outgo has creeped up a bit because we want to do our traveling and exploring while we still have our health. But, if need be, we could chop that in half and still be happy.

      Congrats for taking the steps you needed to before retirement to get your financial house in order. Too many people don't have the will power to do what you did.

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    2. Years prior to retiring I read two books when they came out that really had me take a look at myself and my finances.

      "Your Money or Your Life" by Joe Dominguez & Vicki Robin

      "Get a Life - You Don't Need a Million To Retire Well" by Ralph Warner

      You are right about the days being so short. Time never passed this fast when my working days were filled with meetings and business travel.

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  6. As I stand upon the threshold of retirement, it is reassuring to read people's comments. It seems there are many ways to a satisfying retirement, and I welcome that flexibility. The retirement model of the past would not suit me at all.

    Jude

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    1. Besides having one of the coolest comment names, I have been reading what you have to say long enough, Jude, to be pretty sure you will have no problems. Flexibility is one of the most important keys. Like you, the old model of retirement is not mine.

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  7. Ken and I took some seminars called "Whitehall" in the 80's and 90's that helped us learn to save and get rid of debt. That helped us be ready for retirement when we wanted to. Living in a thrifty manner came naturally to us, as both our families had to stretch the dollars... but as we made more, we did indulge ourselves more.Now that we have less monthly income we spend less! I say life has "Chapters" and I am fininding the retirement chapter is way cool.There are so many FREE ways to enjoy life.. hikes,free movies,free concerts,free days at museums,libraries,hanging outside by our own pool, having potlucks.. we don't need to spend a lot to enjoy life.But we do spend where we get the most pleasure, and so have splurged a bit on travel lately also. You really don't need so much on a daily basis to feel happy-- and as you and others here mention;FREEDOM is priceless!!!! TIME is our greatest wealth right now and I love that!!

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    1. Next time we meet I must hear all about the cruise you and Ken took. I know that was a splurge, but I gather it was worth every penny. At the same time, I love your various posts on Facebook because you remind me of things to do around us that are free, or nearly so, and so stimulating.

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    2. OK! You and Betty get a date for July. Needs to be second half though.

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  8. I thought more about this and wanted to add,I think our mass media,TV etc. all promote such a consumerism and lust for STUFF that many people kind of forget you can live WITHOUT every latest shiny thing and so you don't need so much MONEY to retire!! We have had some of our best vacations just 2 hours from home,in Sedona,swimming in Oak Creek, hiking the red trails, eating at the Indian food buffet,staying in a very affordable airbnb room in the home of lovely people who became friends.. so many possibilities and in retirement you have the TIME to scope out bargains and to just chill!!

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    1. I have found some amazing bargains on Groupon for experiences or home decorations that I would never have bought if it hadn't been for the coupons. I use them when we travel in the U.S., too.

      There is a very large segment of our economy that is dedicated to convincing us we are less happy, less fulfilled, and less successful without (fill in the blank). I contend that the reality is just the opposite: the less clutter and stuff, the more free and content we feel. I know you and Ken agree.

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    2. We did not have a television for many of the first years of our marriage.Andrew grew up without TV till he was around 10 years old. Of course no facebook either! We somehow lived our own priorities without the constant prompting that the media insists into your brain---- we are so bombarded now..drugs ads,car ads,houses to flip,kardashians, and the latest diets. Yikes! Do we remember our AUTHENTIC SELVES.. who we are without this "Programming??"

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