MTPR

Retirement Planning

Oct 2, 2014

Good evening.  I’m Susan Kohler, CEO of Missoula Aging Services, the Area Agency on Aging for Missoula and Ravalli counties.  Tonight I want to emphasize again the importance of retirement planning, especially for women.

The Women’s Institute for a Secure Retirement, or WISER, is a national institute focused on helping women prepare for a secure retirement.  They operate in partnership with the Administration on Community Living, the federal agency that oversees Area Agencies on Aging like ours.  WISER promotes retirement readiness, health and long-term planning, and the prevention of elder financial abuse.  On their website you can find a variety of tools and information about key retirement planning topics.

Tonight I’ll share a few of their suggestions. But first, why the focus on women?  I have always said, “Aging wears a woman’s face.” Consider these statistics:

  • Currently there are six million more women than men age 65 or older.
  • The longer a woman lives, the more likely she will end up living in poverty.
  • Today three out of five women age 65 plus have incomes that don’t cover their basic daily needs. 

Scared?  You should be, and I am, too. But it’s never too late--nor too early--to start planning for retirement. 

I am amazed how many of my friends, family and acquaintances, mostly Baby Boomers, know very little about what their retirement income will be, let alone how to  calculate how much they will need. Most don’t understand the important role of Social Security in their retirement years. My brother just turned 60 and was sure he could get his full Social Security benefit at age 65. In 1985 Congress amended the age for full Social Security benefits to 67.  This is phased in, so my brother, born in 1954, has to wait until 66 for his full benefits.  Born in 1956, I will be eligible for full benefits at age 66 and four months. 

Another scenario involves a friend who is 61 years old and divorced.  She has worked on and off and supported herself with a small family inheritance, living very simply for most of her adult life. She is just realizing this probably will not support her for the rest of her life.  She was unaware that because she had been married for more than 10 years and never remarried, she is eligible for half of her ex-husband’s full Social Security benefit. This does not affect her ex-husband’s benefit at all; it is simply how Social Security calculates benefits in her situation. 

Both examples demonstrate how important it is for you to visit the Social Security Administration website and create your personal account to give you information on your benefit situation.  For anyone under age 65, this is now the only way you can get your yearly benefit statements, which used to be mailed annually around the time of your birthday. Social Security is moving toward managing most information through their website and also reducing the hours of availability for one-on-one consultations through local offices. This is unfortunate because peoples’ lives are complex and a website can’t address all the scenarios. To make these changes just when waves of Baby Boomers are hitting retirement age results in reduced customer service and the potential loss of benefit opportunities to individuals. 

I hope you understand how critical your Social Security benefits are, but there is more to be considered. Planning for retirement requires you to know your needs, where the money will come from and what retirement will cost.  Fortunately, there are many websites that can help you calculate this information. One is through the Department of Labor; another is AARP’s retirement calculator. Your financial advisor should also be able to help you with this type of planning.  Especially women, who tend to make less than men throughout our careers, need to get this information to properly plan for our longevity.  

When I went through this exercise I was a bit stunned at what I discovered.  I’m doing what I can to increase my retirement income now, and may need to work at least part-time after I retire from my current career.  Younger people have the opportunity to get educated about retirement early and start saving for it as soon as possible.  Don’t put it off--most of you will likely live to age 100. The world of retirement has been changing radically due to longevity. 

Those who are close to retirement and discovering they may have insufficient resources might consider an Encore Career, defined as retraining to do something different after you are done with your primary work experience. Besides making later life more fulfilling, this can also give you more financial security.

This is Susan Kohler, CEO of Missoula Aging Services and as always, thanks for listening.