Joyce Wiseman had just about a year between taking care of her mother, who died at 98 years old after suffering from dementia for five years, and starting to take care of her husband, who was diagnosed with Alzheimer’s disease in 2008.
At the time, Joyce and her husband, Craig, lived in Washington.
“I worked for the local school district,” she says. “I was a substitute teacher’s assistant. It was a great job.”
Now Joyce is 63, Craig is 66, and, lacking much in the way of retirement savings, they live with their son in his Parker home.
This year, the Employee Benefit Research Institute released a study in which 28 percent of respondents said that they have less than $1,000 saved for retirement; 57 percent said that they had less than $25,000 saved.
Among workers over 55, 43 percent said they had less than $25,000 saved.
Among workers between the ages of 45 and 54, 51 percent said they had less than $25,000 saved — in other words, even those approaching a traditional retirement age are pretty likely to be nowhere near prepared.
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In addition to Joyce’s small retirement savings from working in schools here in Colorado the first time they lived here, the Wisemans have Social Security, which they both tapped into early. They benefit from a close, loving family; they have standing offers to stay with children in three states, and they pay a modest rent to their son, to help out.
He lives in the basement, which he had shared with a brother and his brother’s girlfriend until recently, and the elder Wisemans have the cozy, homey upstairs. While it’s more than room enough for any couple, the footprint feels just a bit small for the suburbs, although the living area benefits from nice vaulted ceilings. Grayish-blue kitchen accents and a smattering of knickknacks and photos suggest a home loved and lived in for longer than only these past three years.
Wiseman says that they had had a lot of stock in Qwest from Craig’s many years of service there, and they had it in March of 2005, too — when then-CEO of Qwest Joseph Nacchio was sued by the Securities Exchange Commission over a massive insider-trading scheme.
The stock tanked. While any financial adviser would say that the Wisemans should have been more diversified, it’s worth noting that theirs was certainly not the only savings undone by distant players in fine suits.
“I kind of felt bad because I always figured maybe we’d get to kick back and live the good life, whatever that was,” Wiseman says.
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“I just remember my husband saying, ‘I’m never going to be able to retire,’ ” she says. Today, 7 percent of all workers and 10 percent of those over age 55 share that sentiment, according to the EBRI. “It wasn’t like he felt bad about it, it was just kind of a fact of life.”
That setback may have put a dent in what they had, but Wiseman admits that they probably hadn’t planned appropriately in any case.
“There was a savings program with his work that they would match,” she says. “That probably would have been a good idea. We had a little (credit card) debt that we had to take care of. That’s done now.”
Now, the Wisemans have a little bit of money that they invest with a certified financial planner, but they’re not sure exactly how long they’ll keep it invested, facing conflicting advice from professionals.
Unforeseen health issues notwithstanding, Craig Wiseman’s plan — to work forever — was spot-on, according to many financial experts.
Savers should know what they don’t know
The legion of working Americans nearing traditional retirement age with little saved must own up to that fate, says Jerry Gill, chief operating officer at M.J. Smith and Associates in Greenwood Village.
“I would honestly tell you that the likelihood of them retiring before 75 would be 50 percent,” he says. He suggests that families see a financial planner — someone like him — which does cost money.
“One of the benefits of a financial plan is that you now are going to have a target rate of return that you want to focus on.”
That rate of return is sort of a guideline, telling you how much you need to earn on your investments, which can in turn inform what you’re investing in. In a tight spot, aggressive investments might be your only hope of growing savings enough to achieve your goals (even as it exposes you to more risk, a confounding and frustrating tradeoff for those already in dire straits). If you’ve saved well, it might be that you don’t need your investments to gain quite as much, and can afford to invest in something more stable or secure.
Making a financial plan with a professional may also help to understand risk, Gill says — risks of investing, risks of not investing…
“The chance of you outliving your money is pretty damn high,” he says. The solution: Work longer, spend less and save more.
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“That’s not such a scary proposition,” Gill says. “We think of our parents as a frame of reference and that’s not a great frame of reference. The health care where I am at 60 is a lot better than my parents’ (was).”
Says Wiseman, who takes care of her husband’s basic needs full-time: “I still feel like I’m 40, and I feel like I could go to work if I had to, but I don’t know if that’s going to happen.”
More than a question of investments
She’s at a disadvantage already, says Steven Sass, program director of Boston College’s Center for Retirement Research, because she’s claimed Social Security benefits early.
“If you claim benefits at 70 as opposed to at 62, you get at least 76 percent more (annually),” he says. “Very few people know that. I think it’s criminal. You can really improve your prospects by working longer.
“You don’t have to put more money into a 401(k), you just have to not touch that Social Security, not touch that retirement savings.”
Sass, who wrote the matter-of-factly titled ” Working Longer: The Solution to the Retirement Income Challenge,” takes issue with the popular focus on investment strategy and retirement strategy.
“If you don’t have money to invest, there are still lots of things you can do,” he says. “Move to a more sustainable standard of living. That’s identical to saving more.”
In other words, downsize and work longer. Each year you work instead of tapping into retirement savings, even if you work less, earn less and don’t put away additional money, increases how far you can stretch that savings. Retiring earlier puts you up against long odds.
“If you work for 40 years and retire for 20, it’s a pretty impossible piece of arithmetic,” Sass says.
The Wisemans know a few families with similar situations. A friend their age who just had to go back to work. Another who wanted to go into a retirement job that was more in line with his passions, but has instead resumed his career.
It’s not an uncommon problem. And, after you account for effects outside of control of the average investor, like white-collar crime and recession, it’s not especially complicated.
“We just weren’t, I guess, smart about saving our money,” Wiseman says. “We didn’t have any huge boo-boos.”
Dave Burdick: 303-954-1957, dburdick@denverpost.com, Twitter: @daveburdick
