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GUEST ARTICLE

***Re-printed from www.preppernation.com





Retirement? What retirement?







I have been pondering this whole "Retirement" issue for almost as long as I've been working. Yes, I'm a youngish man (38) and so I'm no where as near a legitimate retirement age as some of you but it seems to be what we are all working towards, so I do think about it often!

First, what does "Retirement" really mean? Is it that magic age when we have worked for a company long enough to qualify for a pension? Is it when our investment advisor calls telling us we have reached the total of 3.25 million dollars that they always seem to expect we will need to actually live out the rest of our lives? Maybe it's the year we get to sick to work anymore and have to choose between eating or taking our medications? What is retirement to you? I know that we won't actually find a single answer to this question because I don't believe that there is only one answer!

I'm just going to take a shot at this and share some of my thoughts on what it means to me, at least at this point in my life. Like I said, I'm only 38 years old but like most of you I have been working "full-time plus" all of my adult life. Actually, I was one of those ambitious youths of yester-year who went looking for ways to make money from a young age... I was mowing lawns for family friends starting at about 10 years old, newspaper routes, then babysitting at age 12 and a real after school job (paid cash under the table, of course) working for a nursery wholesaler when I turned 13. All of this done with the blessing of my folks who have always been hard working entrepreneurs themselves.

So, as far as my basic math skills will allow me to add these years all up I have been working/earning in some fashion for over 25 years. Yes the full time job has only been 20 of those years, so I can't compete for sympathy with all you old-timers reading this. The point is how many years do we have to work before we are allowed to feel entitled to slack up or even "Retire"?

When I was growing up, I recall there being companies that would give a pension to a worker after they completed 20 years of faithful service... Not a bad deal, if it was ever true and I don't know first hand if it was? I do know that when I worked a county government job, we were part of the Washington State pension program. This retirement program was as close to a true pension program as I have ever heard of. You would work to what ever calculated/negotiated age and years of service and than you became vested. This vested status would allow you to either take or be eligible to take a retirement pension check at some point in the future. Also, not a bad deal, if you have the ability to deal with all the politics and games that come with government or large company employment. I didn't have the patience for that and only worked for them 11 years! That's right ONLY 11 years, so no big payout coming down the road for me... Shucks!

Truthfully, there wouldn't have been a big payout coming down the road even if I had stayed! That's why I left a cushy, under-worked - overpaid government union job for the hazards of self-employment! I was told by co-workers that I was making a big mistake but I left anyway. I do miss the paid vacation, holidays, sick and comp-time days off, the medical insurance was pretty good too but it was all those years of my life being sucked down the crap hole that I just couldn't tolerate!

I went to work for this particular employer when I was 19 years old and wouldn't have been eligible for my pension check until I was 67 or with an early retirement PENALTY if I bailed out early at 59.5 years of age. That's right, I was fortunate to get a good J-O-B, when I was 19 and I stayed as long as I could and remain sane. The carrot they dangled in front of me was enticing, at least to young man. A pension check of up to 60% of my working wage, when I turned 67 years old...

If you are just reading this and not doing the math, let me help you... I would have to work until I was at least 59.5 or 40YEARS, to be eligible to collect a penalised pension check... I thought for a number of years that this would be the course I would take. That was until I found out exactly what the PENALTY was for daring to take an "Early Retirement", after 40 YEARS of service. They were going to reduce the percentage of my wage from the full potential of 60% by 2% per year that I left early. So that would be 60% minus 17% to equal a maximum of 43% of my then current wage!

Yes, I made relatively good money on payday and extremely good money for the amount of effort that I had to put in every day. It wasn't the work, it was the time that killed me! It wasn't even the 43% pension calculation, still a good deal to be able to collect a check for the rest of your life. Unfortunately it was the required attendance at a J-O-B for 40 or more years to be eligible to play that game.

Next, I discovered the 401K retirement route. This is a great option - for the employer! If we the workers put money in the 401K then and only then do the employers have to contribute some of the companies money to your retirement account. I have spoken to many people over the years that when questioned about their retirement, they explain that their company has a 401K program! However, when I ask how much they are contributing to the their account, they hem and haw. This says to me that they aren't participating and therefore the employer isn't either. So that eventually come to a bottom line of they will not have a retirement account!

Sticking with this 401K account for just a few more minutes, let's look at how the plan works? If you and your employer DO contribute to the plan, what happens to your money? It typically goes into some sort of investment account right... I agree, as close as I can tell that is where it should be going... This account has certain tax advantages and to play this game by the rules, the money stays safely put away for that mystical day in the future when we might retire. The basis for this plan is also age based...

Now, I know you're thinking we all have the options to handle these things on our own through an IRA or something similar. Skip the employer angle and we can just take care of our own investments and be self reliant. Yes, I agree we should all be self reliant but even with an individual retirement account, we are still held to the age based requirements of grave edge withdrawals... I say this somewhat in jest as I know that 59.5 or even 67 years old isn't the graveyard's gate for most of us in America. If you do your own calculations against the average life expectancy now days, we are not many years away though? I believe I read that 73 years was the average age of death for an American male.

Lets say we all had the option to retire with a pension check at 59.5 years old, that would be 13.5 years before the statistics show most of us would have checked out. I don't know about you but if I'm going to work for 40 years, I'm going to need a bigger incentive than a poverty level pension check monthly for the next 13 years. When we look at what that pension check will have to be stretched to pay for, what will we have left? The only thing I see being left over at the end of that check will be a whole lot of MONTH!

I don't want to sound to depressing and I do have some ideas on what can be done to improve our situation both now and in the rapidly approaching future. Stay turned for part 2 tomorrow!





Prepper



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