Our On-Going Retirement Crisis

It seems like another life. At the height of his corporate career, Tom Palome was pulling in a salary in the low six-figures and flying first class on business trips to Europe.

Today, the 77-year-old former vice president of marketing for Oral-B juggles two part-time jobs: one as a $10-an-hour food demonstrator at Sam’s Club, the other flipping burgers and serving drinks at a golf club grill for slightly more than minimum wage.

While Palome worked hard his entire career, paid off his mortgage and put his kids through college, like most Americans he didn’t save enough for retirement. Even many affluent baby boomers who are approaching the end of their careers haven’t come close to saving the 10 to 20 times their annual working income that investment experts say they’ll need to maintain their standard of living in old age.

The U.S. is facing a retirement crisis with too many Americans who will be hitting their retirement years without very much money saved up: “59 percent of households headed by people 65 and older currently have no retirement account assets, according to Federal Reserve data analyzed by the National Institute on Retirement Security,” reports Bloomberg. Nearly 7.2 million Americans over 65 were still working last year.

The Bloomberg story features a 77-year-old former executive named Tom Palome as an example of one of the many Americans out there who should be settling into retirement, but has continued working. Palome could probably scrape by without working: He receives $1,200 a month from Social Security and is fortunate enough to have $600 a month from a pension from a corporate job he had — that’s $21,600 a year to live on. But Palome says he sees too many seniors who are unable to leave their homes to do anything because they don’t have any money beyond what they use to cover their living expenses, so to maintain his independence (he has declined offers from his children to live with them) and pay for things like plane tickets to visit his children and grandchildren and travel for vacation, he has taken two part-time jobs to add an additional $1,400 a month to his income.

Palome’s story is a cautionary tale — how a former executive earning six figures ended up without enough money to live on for retirement — but I would not say that he’s 100 percent to blame for his circumstances. When his kids were 14 and 16, his life turned upside down after his wife was tragically killed in a car accident, and he went from an executive who traveled a lot for business to a single father who tried to hold everything together. The money he did have for retirement — about $90,000 — was decimated during the financial crisis after he stopped working. Young people have the luxury of allowing the markets and their accounts to recover before they retire. They have the luxury of time to provide them with a rebound. Those who retired in the recession were extremely unlucky.

And yes, Palome also made other choices instead of diligently putting away money into a retirement fund: He funded his children’s college education (folks, please fund your own retirement accounts before putting away money in a 529 college savings plan or another kind of savings plan for your children — they would rather have you be able to retire comfortably than working at 77). When he downgraded to a much cheaper home in Tampa, Fla., he sold his house in New Jersey, divided the money from the sale, and gave it to his children as a form of inheritance. He also provided financial help to his elderly parents. Palome was very generous to others, and not enough to himself. Even so, he could not have foreseen the financial crisis. It was bad luck and timing.

In any case, the retirement crisis is bad news for all of us. More older Americans staying in the workforce means fewer jobs to go around. And with fewer jobs to go around, we’ll never start earning enough money to sock away for retirement.

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