Retirement

I'm among the 31% of pre-retirees who would prefer to clean the bathroom or pay bills rather than plan for retirement, so this is an area that I could use a lot of help in, as I admittedly do not pay as much attention to it as I should. At my current workplace, most employees are automatically enrolled into the Teacher Retirement System of Texas (TRS), where members contribute 6.4% of their eligible compensation on a pre-tax basis to TRS through payroll deduction. Members can receive benefits when they attain the age of 70.5 or when they terminate their employment, whichever comes first, and there is also a health-benefits plan for retirees who have at least 10 years of service.

As it is likely that I will leave the TRS system before reaching the age of 70.5, I will probably take a refund for my accumulated benefits when I leave UT. My future retirement planning will most likely depend upon my future employer(s) and also changes in the political and economic landscape. (For instance, will we still have Social Security and/or Medicare when it comes time for people of my generation to retire?)

I already have a Roth IRA account that was set up by my parents upon my graduation from college, and I intend to continue contributing to my retirement fund through whatever employment I have in the future. Depending upon what type of job I will have, I will consider enrolling in a Roth 401(k) or 403(b) if such a plan is offered by my future employer(s), as I like the idea of being able to make tax-free withdrawals after a certain age, and I also like the idea of being able to roll over the funds from a Roth 401(k) to a Roth IRA account without any tax payment. (Of course, much will depend on how much these plans will change by the time I reach retirement, and I am sure that they will.)

I intend to continue working for a fairly long period of time, and I hope to be in a higher tax bracket at retirement than what I currently am in. Thus, to answer the questions posed in the lecture:

•How old will you be when you retire?
According to the retirement calculator available at the Social Security web site, my full retirement age is approximately 67. However, based on current retirement trends and also due to personal reasons, it is likely that I will continue working past that age, as no doubt will many of my peers.

•Where do you want to live?
I would like to live in the Northeast, preferably in New York, Boston or D.C., but the harsh winters may give me pause. I would also consider California for its moderate weather, but if the living expenses are still as high as they are now, it may be necessary to look elsewhere. Texas's relatively low living expenses are appealing, and I have some familiarity with the area, but I will have to think about whether I will still want to deal with the 100-degree heat in the summers, air conditioning or no. (In fact, the heat is part of the reason why I am considering moving from Texas now!)

Depending on how healthy I am and whether I have a living spouse or not, I may consider living in an assisted living community or another type of retirement residence. If my house does not have stairs and if I am able to afford it, I may not want to move or sell it, but it will depend upon the type of neighborhood I am living in, and whether I would want to be more around others my age or not.

•Do you plan to work? To volunteer?
I definitely intend to volunteer in the community when I retire, and if possible, I would like to continue working at least part-time. According to the Social Security web site, if I work while also receiving Social Security and/or retirement benefits and if some of my benefits are withheld because my earnings exceed a certain amount, my benefits will be increased to take into account those months in which benefits were withheld when I reach full retirement age, which will be beneficial to both myself and to my beneficiaries. Thus, working is definitely something that I will consider doing, to keep myself both financially and emotionally/psychologically secure.

•What do you see as your sources of income?
My sources of income will most likely be Social Security, Medicare (if they still exist), my retirement savings from both my Roth IRA account and any other retirement plan I have, and possibly income from part-time work. If I am married, my spouse's savings and retirement benefits will also be a source of income.

•What else will be important to you?
I will pay more attention to any health benefits that will be available to me, since like many, when I think about retirement, I tend to focus primarily on the financial aspects and I forget about health care. Having long-term care, including the possibility of living in an assisted living facility or nursing home will also be important to me, as will the presence of a spouse or another companion (including pets), contact with any children that I may have, a support network outside of my family, having satisfying and stimulating hobbies, as well as any work I may still be able to perform.

No doubt part of what makes it difficult to motivate pre-retirees to plan for retirement is that the retirement landscape will look vastly different when it is time for us to retire than what it is now. Perhaps universal healthcare will be available by then (although of course, that too has its limitations) and who knows what advances in medical technology will bring that will allow us to live longer and healthier lives? Perhaps many of the ailments that afflict retirees will be more manageable by then, due to greater awareness of such issues and greater research in these areas (in part thanks to the retiring baby boomer population). With such advances, it is possible that many people will be able to continue working well into their 80's, if not further, which may change the way we look at retirement even more.