How did you react to the Centers for Disease Control and Prevention (CDC) announcement that the average life expectancy for a U.S citizen has increased from 77.3 years to 77.6 years? If you are graying like me or already retired, you quickly computed that you are likely, on average, to live another 3.6 months. Good news, yes, but that is 3.6 more months of retirement income I will need.
Life expectancy in 1930 was only 58 for men and 62 for women -- a reflection of high infant mortality. When Social Security checks were first issued in 1940, the average 65-year-old man could expect to receive benefits for 12.7 years; women 14.7 years. The average benefit period has increased five years since then.
But remember the life expectancy is just an average. The first person to ever receive a Social Security check, Ida May Fuller of Ludlow, Vt., lived to be 100 years old. That's right, Ida lived 20.3 years longer than the average woman! So, take a tip from Ida. Plan to live way beyond the average age.
Start with a plan
Don't make a New Year's resolution to "save more" and then forget about it. To get focused, use the free Retirement Tools at The Motley Fool to calculate how much you will need for retirement. The sober reality of what you need to do allows you take the first step of getting on with the plan.
Consider this. The median balance in a 401(k) is around $70,000; an IRA is $30,000; a Roth IRA is $10,000. Add that together and it only totals $110,000. Yes, it is a bad assumption to think that every worker has any of these, let alone all three. But, because tax-advantaged saving accounts are not being used to their maximum potential, it is safe to assume a lot of people are headed for retirement without a plan.
Don't be a fool (yes, small "f"). Get a plan.
Face reality
Hey, the cat is already out of the bag. The title for this piece is Planning a Working Retirement. So, even after getting a plan, retirement for you involves working.
Before you start hyperventilating as you view yourself flipping hamburgers at McDonald's or greeting customers at Wal-Mart, consider these two options. Turn a hobby, like antique collecting, into a business. Avoid brick-and-mortar expenses by listing your finds on auction site and Motley Fool Stock Advisor recommendation eBay (NASDAQ:EBAY). Or, if you enjoy writing, turn your passion for investments into commentary for The Motley Fool.
These two ideas share a common theme -- start "working" today. Test, before retirement, your business ideas. Then, find out what works, master those skills, and build a reputation ahead of time -- and supplement your income before retirement. In fact, the April issue of Rule Your Retirement profiles a fellow who did just that, including his tips for starting your own business.
Self-employment also sidesteps the issue of the corporate mandatory retirement age. If you live as long as Ida May Fuller, you may really appreciate working well into your 70s and 80s. The key is doing something you love.
Working for wages
Many do not want to deal with the complexity of owning a business and a "regular" job provides both fulfillment and income. For most, the simple fact is that a few years of additional employment will give them the security they need to live to Ida's age. Why get bogged down with self-employment when an employer would welcome your contribution for a few years?
Check to make sure your employer allows employees to work beyond age 65. Sure, some predict that as the baby boom generation (those born between 1946 and 1964) ages and becomes a bigger part of the labor force, many companies will relax mandatory retirement ages. But, it is worth knowing your employer's policy and deciding now if continued employment there makes sense.
Retirement membership organization AARP's Foundation has recently announced a "hiring partnership" with "companies that have committed to an aggressive program of recruiting, hiring, and retaining mature workers." Companies participating in this partnership for full- and part-time employment include Home Depot (NYSE:HD), MetLife (NYSE:MET), and Walgreen's (NYSE:WAG). If you are looking for employment, here is a good place to start.
Keeping informed
How about getting your retirement plan to end up better than planned? The Constitution allows for the "pursuit of happiness." So, here are a few thoughts to consider while in the pursuit of retirement happiness.
For those like me who want to be reminded and educated regularly about retirement, try a free trial subscription to the Rule Your Retirement newsletter. I enjoyed learning (in the current issue) how to add 15% to my nest egg and about reproduction -- hey, not that kind of reproduction! Editor Robert Brokamp wrote an article about buying a Coke (a purchase that disappears after consumption) vs. buying Coca-Cola (NYSE:KO) stock (a company with reproducible growth). The Rule Your Retirement newsletter is broad-focused, with topics that range from housing and money management to early retirement and getting the most out of life.
Fool contributor W.D. Crotty owns stock in McDonald's. Click here to see The Motley Fool's disclosure policy.
