Feeling the Squeeze?

More people nearing retirement, the “near elderly” aged 55-64, are figuring out that their later years are going to be longer and more expensive than they had planned. The Social Security fund is running low because it has more retirees taking from it and fewer workers donating to it. Frightening estimates say that a third of middle-income workers may run out of money after 20 years of retirement, even with the help of Social Security.

We can blame this negative situation on two elements: a larger number of people living longer lives, and those longer lives are healthier lives, thanks to expensive medical advancements. Some solutions to rescue Social Security benefits being considered are extending the retirement age, decreasing benefits to the wealthy or increasing payroll taxes.

A subset of the Baby Boomers is called the Sandwich Generation. They are really feeling pressure as they give both time and money to their aging parents and their growing children simultaneously. They need to save for their children’s education, their own retirement, and their parents’ long-term care needs.

The squeeze in the middle of the sandwich is the higher cost of funding all three: A public college education will cost an average of $175,000 for children born in 2010; there is an increasing awareness that Social Security and other retirement programs will be inadequate, and the cost of long-term care for the elderly will continue to soar.

Are you feeling retirement slipping out of reach? Our nation’s Baby Boomers (born from 1946 to 1964) have redefined things all their lives. Now they are busy redefining the concept of retirement. It’s no surprise that retirement years of golf and fishing are being postponed. But if you are educated, you have more options, and may try to figure out how to stay in the labor force longer. Retool your training and education, re-creating yourself, and continue to work through what would have been your retirement years. It’s time for seniors and seniors-in-training to hang onto their money. Earn and save as much as you are able, as long as you are able.

Hopefully, you will find renewed fulfillment in your new life.

Nest eggs have been raided, pension plans frozen, and retirement incomes are at risk. Fewer pension plans are available. Many have reduced their 401(k) contributions, raided their retirement accounts to cover the shortfall from job loss and housing value loss. To make matters worse, when older workers are laid off or lose their jobs, it takes longer for them to find a job than younger workers, because they are accustomed to higher salaries.

In a tight economy, workers fresh out of college tend to be less demanding about salaries and benefits. Like everyone else, they are pinched by higher health care costs and the lower home values. They are saving, cutting back on entertainment and non-necessities. Boomers and almost-retirees alike are facing up to the New Normal, and learning to adapt. The time is now to build a financial fall-out shelter, both for our county, and each one of us!

Heidi Clingen is a long-time resident of Stevenson Ranch. She and Samuel K. Freshman are authors of The Smartest Way™ to Save, Why You Can’t Hang on to Money and What to Do About It. They offer only their opinion, which does not constitute professional, financial, or legal advice. To receive a copy of The Principles of Financial Independence or submit questions, email them at 2heidi@allwaritey.com