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What NOT to do in retirement

By Jennie L. Phipps ·
Monday, September 23, 2013
Posted: 5 pm ET

There's a piece that's making the rounds about a former vice president for a major company who is 77 and just getting by working two jobs -- one at Sam's Club doing marketing demonstrations and another at a golf club, flipping burgers. The story is getting tons of social media traffic and sympathetic readers, but it makes me say "ouch."

The story holds this man up as emblematic of today's retirees. I think his situation -- if true -- is unfortunate, but had he made different -- and better -- decisions along the way, his current circumstances wouldn't be so dire. Those of us who are younger have time to be smarter.

Below are some lessons to be learned from this story about "Tom."

Save aggressively in tax-advantaged accounts. The story says that Tom had neither a 401(k) nor an IRA because he was self-employed. Self-employed people can and should have both of those kinds of accounts. Generous tax deductions mean that most self-employed people leave money on the table when they ignore those options.

Get good retirement planning advice. The story says that Tom at one point earned well over $100,000 a year, but he had saved only $90,000 by 2008. His saving were invested in stocks and were hard hit by the financial downturn, so he lost half his money. A good financial adviser before and during those tough times would have encouraged him to save more, diversify his investments, and stay the course, giving his investments time to recover.

Don't take Social Security at 62. A man who worked all his life, including earning more than $100,000 some years, and met his legal obligations as a self-employed person to pay annually into Social Security, would be entitled to far more than the $1,200 a month that the story says he gets. Using the free AARP Social Security calculator and assuming that he was born in 1936, I worked backward and determined that he must have earned an inflation-adjusted average income of $35,000 a year and started taking his benefit at age 62. That meant he took a 25 percent haircut. For every year he had waited to claim benefits past age 62, he would have gained about 8 percent. By the time, he was age 70 and reached the maximum amount available, he would be receiving $2,136 or $25,632 a year. That's not a princely amount, but combined with the $600 a month in pension benefits the story says this man gets, it would add up to nearly $33,000 a year, plus accumulated Social Security cost-of-living adjustments. At that income level, he  probably wouldn't need two part-time jobs.

Be thoughtful about supporting your grown children. This story also says that this man sold his house in New Jersey for $182,000, bought a mobile home for $23,000, and divided the rest among his grown children, so they would have enough to buy their own homes. That is a generous gesture, but not if it means that they have to support you in your old age.

This retirement sob story appeared originally in a very reputable publication. I wish the editors there had questioned it. These kinds of pieces are widely read, but they make heroes out of people with poor judgment. That doesn't help people trying to make good decisions.

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Frank Mc, Sr
November 07, 2013 at 10:22 am

Whiners sit around in their recliners. Winners start every day as beginners!

November 04, 2013 at 1:24 pm

"a former vice president for a major company"
I've known MANY former VIPs in business, some who worked in small business and some who worked for the majors.
I don't know ANY that ended up at age 77 working two part time jobs just to "get by". The internet story is probably just that, a story.
I DO know some retired 77 year olds who CHOOSE to work minimum wage jobs to keep busy and remain productive. Although I retired early, took (MY) SS at age 62, after having worked 32 years for a pension, I find nothing wrong with working as long as you want.
I chose to be productive in retirement, VISIT my kids at THEIR homes, contribute and volunteer to my community, and participate in the Christian Conservative side of politics.
I'm 71 and proud to be a True Patriot and a REAL CONSERVATIVE.

October 29, 2013 at 9:11 pm

Don't take Social Security at 62? This is not a concrete rule. According to SSA's mortality tables, a person who took his benefits at 62 and another who took his at 70 both stand to receive the same amounts throughout their projected lifetimes. So make the decision to claim or not to claim based on ALL factors of your life and environment, NOT just the simple arithmetic involved in 62 versus 65 or 70.

October 23, 2013 at 6:57 pm

P.S. Just noticed Marcia's comment. I noticed no mention of food stamps or ADC in the couple's story. Social Security would not be relevant; that benefit is based on accrued earnings. I never received either, by the way. I managed. So where's the shame? I tend to see shame in self-righteousness (and who else hated that? If you don't know, shame ! Hint: think "hypocrite")

October 23, 2013 at 6:43 pm

And my sociopathic child walks out on me while I offer shelter to her and her baby after a marital disaster. She does not return. I should turn my grandchild over to social services? To me, judgmental condemnation should be tempered by the fact that things are not always as black and white as one thinks -- in many cases other than family ties also -- and thus affected by mercy. (Money isn't the be-all, to me, anyway!) Bless you, Connie and Ed ~

September 25, 2013 at 12:07 pm

Marcia, if that is what Connie & Ed are saying then it is unbelievable. I told my 20 something kids to get jobs and kicked them out of the house. It was the best thing I ever did for myself and for them.

September 25, 2013 at 9:13 am

As a retiree at 54 and not ever an executive in any company I found aggressive savings and living below your means imperative to reach your retirement goals. I believe this story is just a story, corp executives aren't this naive or that's why he's not fully employed.

September 25, 2013 at 9:09 am

So what you are saying Connie and Tracy, is that your children dumped their kids on you - which is why you could never save for retirement? SO the rest of us are supporting you through food stamps and ADC AND social security, while your kids are off doing anything but raising their own children?

Shame on you for blaming your poor judgement on the rest of America!

Connie & Ed Tracy
September 24, 2013 at 1:26 pm

This article does not fit soooo many people, in so far as, Ed and I have been raising children for years with no way to have a savings account and a life, now at 67 & 68 years old we still have two underage grandchildren to worry about and have a 19 year old grandson still living with us and just starting his working life and is still not done with education.

This is the truth about many many average Americans who now have lost a retirement if it was through their work or on their own with investments. I understand that Politicians are living the life of Riley because of their unlawful activities. That is Our America!

Richard Alper
September 24, 2013 at 10:51 am

Your article is a very good piece. Put me on your email list, p