Editor’s Note: Journalist Philip Moeller is here to provide the answers you need on aging and retirement. His weekly column, “Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of the new book, “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil.
George – Washington, D.C.: I’m 64, and I can’t seem to find work in my field. I’m an industrial engineer specializing in lean-based business process improvements. I’ve responded to hundreds of ads for people with my skills. Only two calls and no interviews. I took early retirement in 2005. My younger spouse was making a good living, and I had $1 million in an IRA. I thought I was safely set. Now, my family circumstances have changes, and I need to go back to work for a few years.
Having the recognition of performing at a high level in my profession is important. I have suffered from anxiety and depression as I began to despair for meaningful employment. I continue to respond to ads for my skills, but it’s tough to keep writing cover letters that explain my strengths, experience and accomplishments. Who knows whether anyone even reads them?
Phil Moeller: I’m sorry, but unfortunately, I’m not surprised at your experiences. They are shared by millions of others. And as I’m sure you’re aware, there are no easy fixes. Kerry Hannon is the go-to person here for advice, and has become a champion in spotting work opportunities for folks like us. (I hate using the “seniors” label anytime, but particularly when it comes to workplace matters, where major age biases still seem to be the order of the day.)
Depending on how much income you need, you might consider a part-time job. To be successful in such an effort, you may need to steel yourself to say goodbye to recognition from your peers. Another route that might be promising is to explore opportunities for modest-paying jobs that include making things better for others. These “pay it forward” jobs have become known as “encore careers.” Employers in these spaces are looking for experienced people like you whose skills can help them. Again, however, don’t expect these jobs to fill your wallet as much as they may fill your heart.
I lost a job when I was 60. For me, giving up the notion of finding an employer was the big change in attitude I needed. That, and understanding that a batting average of even just .200 will earn you millions of dollars in baseball! So, I got turned down a whole lot. Then, I finally got a small piece of work. Then, I got another. Now, I am a card-carrying member of the gig economy. I earn enough. I have multiple sources of income, and no single gig is so important that I lose much sleep over it.
So with all due sympathies, you can get past this and be stronger for the experience. Resilience is marvelous at any age, but few can develop this skill without experiencing some tough setbacks. Buckle up!
Lee – Colorado: My husband and I are in our 70s, and so far, we are pretty healthy. My mother is 95 and is not doing well. The police recently had to take her to a hospital when a friend asked them to do a well-person check. She always pretends she’s fine even when she’s clearly not. She lives in a different state. I am her only child. She’s never shared any details of her wishes, her insurance or her finances. As far as I know, she may be in deep debt, but does not want me to know anything.
What is an aged and not well-heeled child responsible for when an even more aged parent gets hospitalized? Mom never wanted me to live with her, and truth be told, she is a bit abusive. Nor has she ever wanted to live with me, which would be a non starter anyway, because my husband won’t hear of it.
Phil Moeller: Wow, this just might be an unanswerable question from where I sit. How about: whatever is needed to let you sleep at night.
I certainly would pitch in, including helping with insurance and related health care issues. I would help find a local caregiving agency to provide occasional help as needed, but this can be expensive. Clearly, you can’t spend money you don’t have.
Realistically, if your mom’s financial resources are limited, you might want to see if she qualifies for Medicaid, which would provide long-term care for her should she need it later. I would contact the local office of the National Association of Area Agencies on Aging, and see if they can recommend a pro-bono elder care lawyer to help you with these matters. I realize she may not agree to follow this suggestion. But this is something you may need to try anyway if only to satisfy the sleep “test” requirement mentioned above.
Jeannie – Arizona: I can find a lot of advice about saving for retirement, but very little about how to withdraw those savings now that I am retired. Do you have any guidelines?
Phil Moeller: You’re absolutely right. Most retirement financial advice is focused on how you accumulate assets, not on how you will spend them.
There is an old rule of thumb that says you can spend 4 percent of your assets each year and not run out of money before you die. However, since this “rule” was adopted, life spans have become longer and investment markets more volatile. As a result, many experts now put this “spend down” figure at 3.5 percent or even 3 percent.
I am of retirement age myself, and my focus is not so much on my spend-down rate as on my spending patterns.
I try to fund all my necessary spending from Social Security, private pensions and other guaranteed regular payments. These are my “must” spend items.
My discretionary spending comes next. These are my “nice to have” spending items — entertainment, restaurant meals, travel and the like. Ideally, I would have some guaranteed funds to pay for these items. But I also could liquidate some of my nest-egg funds to help pay for discretionary items.
Here, I would use that conservative 3 percent spend-down figure. I wouldn’t liquidate more than this, at least during my 70s. However, this figure can be re-evaluated based on your age, financial needs and how investment markets behave. Don’t forget that if you have tax-preferred retirement accounts, you probably will need to take annual required minimum distribution amounts from these accounts anyway.
My third “bucket” of spending is literally just that — for bucket-list trips and experiences of a lifetime. These funds are only available if spending them will not compromise my necessary and discretionary spending plans.
To execute this strategy, it really helps to have liquid funds that could pay for some surprise expenses and avoid the need to tap your nest-egg investments. If the stock market took a dive, which it does from time to time, this approach protects me from having to sell investments at poor prices. I can just reduce my discretionary spending. This may be no fun, but I will still have a roof over my head and be able to pay bills for food, utilities, health care and other basics.
Finally, I view the equity in my home as a big piggy bank to be broken into only in the event of a major spending need. This most likely would be a medical emergency leading to unexpected spending. And it wouldn’t be unusual for this emergency to involve a loved one other than yourself.
There are a gazillion books out there full of informed advice. And while I’m comfortable with my plan, your situation may differ from mine. So may your attitudes toward investment risk, whether you want to leave money behind for heirs and many other variables. Finally, if you couldn’t tell, I am not a licensed investment adviser, and my remarks should be not be viewed as professional investment advice.
Tina – California: I’m 60 years old and have been off from work for four months because of carpal tunnel problems. I have doubts that I will ever be able to return to work. I know I can draw Social Security at age 62 at a reduced rate. Would I be better off to go on disability now and draw Social Security at a later age?
Phil Moeller: It depends on how long you can wait to begin getting benefits.
Benefits reach their maximum level when you turn 70. If your life expectancy is not adversely affected by your medical problems, the odds are high that you would live into your late 80s or even 90s. Waiting to collect benefits can be a good idea under this scenario, again assuming you can afford to wait. You can open an online Social Security accountto access your earnings record and see estimates of your benefits at different claiming ages.
On the other hand, if you apply for Social Security Disability Income payments, and your request is approved, you could begin receiving SSDI benefits right away and wouldn’t even have to wait until you turned 62. Also, you would qualify for Medicare two years after receiving SSDI, and this also might influence your decision.
The downside of disability benefits is that they are not in place of Social Security, but actually are your Social Security. They automatically convert to “regular” retirement benefits when you reach your full retirement age, and will not receive the delayed retirement credits, which accrue at the rate of 8 percent a year for regular benefits between full retirement age and age 70.
I don’t know how much your SSDI benefit would change at different claiming ages. I would call Social Security and see if a representative would provide this information.