The Retirement Bubble

Last June, I wrote an essay titled, The Other “Population Bomb” in which I criticized the tiresome stream of articles claiming that the population growth rate was a disaster and would lead to the exhaustion of natural and financial resources globally.. Showing some relevant stats, I argued that the increase in lifespans was an ignored critical factor that might have an even greater impact than population growth. I concluded by saying…

As far as I’m concerned, nations are doing a pretty decent job of dealing with birth rates and they are not about to make some incredibly dramatic shift now. Likewise, nations are doing a pretty decent job of dealing with lifespan extension and they are not about to stop that either. Barring the unexpected, I see no reason for either of these well-established trends to shift direction any time soon. I accept them and I accept the only “solution” that makes sense to me – I depend on human ingenuity.

We need to spend less time complaining about trends we cannot stop and more time supporting the human ingenuity that will get us all through this successfully.

I am pleased to say that there is at least some serious attention being given to this issue. In its very recent Global Financial Stability Report, “The Quest for Lasting Stability”, the International Monetary Fund devotes an entire chapter to what it calls “longevity risk”. One of those who helped prepare the report provided a summary for EconoMonitor. Here are a couple extracts.

Here’s the issue: governments have done their analysis of aging largely based on best guesses of population developments. These developments include further drops in fertility and some further increase in longevity. The trouble is that in the past, longevity has been consistently and substantially underestimated. We all live much longer now than had been expected 30, 20, and even just 10 years ago. So there is a good chance people will live longer than we expect now. We call this longevity risk — the risk we all live longer than anticipated.
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Our analysis presents some back-of-the-envelope estimates that indicate that this longevity risk, when aggregated over all individuals, could make the global cost of aging — already recognized to be very large — some 50 percent larger still if people live just three years longer than currently expected. [my emphasis] These extra costs could have large negative effects on already weakened private and public sector balance sheets, making them more vulnerable to other shocks and potentially affecting financial stability.

Ah, yes. Here is the problem looked at in detail and the results are not pretty for us who are nearing or at traditional retirement age. I am not going to belabor this subject here today. I will give you links if you want more information. But I will provide a very brief summary of my take on longevity risk.

– The rapidly developing fields of bio-technology, nanotechnology, genetic engineering, stem cell therapy and others combine with a rapidly growing number of older people who clearly will value anything increasing their longevity. It is a rapidly growing market fueled by Boomers. In other words, there is big money in that market. This guarantees that thousands of research scientists around the world are going to be focused on increasing longevity.

– You and I are very likely to be alive when longevity breakthroughs are announced and become available, probably more likely than we can imagine now. If the experts continuously under-guess future increases, we are likely to do so as well. Indeed, the great majority of the general public is all but completely unaware of the massive amount of research underway in this area and the potential for sudden, unexpected (by them) change.

– As the report affirms, the financial impact on governments may far exceed the serious negative impact already expected.

– Those of us who choose a traditional retirement without any income-earning are very likely to discover in a decade that planning to be alive until our mid-80’s or even 90 was a mistake. An extra ten years or more of lifespan may be the financial death of us.

I have said on several occasions that those of us in the 55 and over group are the guinea pigs. We are the ones who will get hit the hardest, if we are not willing to think of the future as dramatically different than the present. Those in their 40’s, 30’s and younger will learn from our pain. They will have a completely different attitude toward retirement and we may have trouble convincing them to pay for our mistake.

Ignoring the impact of longevity risk may be easy to do today, but the price we pay for that ignorance later may be far more than anyone can afford, least of all, the traditionally retired.

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For those interested, the summary article quoted above can be found at EconoMonitor.

The full 37-page chapter on longevity risk can be downloaded at the IMF.

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I write when I have the time and inspiration. If you enjoyed this post and do not want to miss new ones when they are published, click here to subscribe to updates to The Retirement Bubble by e-mail. If you prefer an RSS feed, click on the RSS symbol on the upper-right of this page. If you would like to share this with a friend, just click on “share this post” below.

In a recent article, I read…

“The headlines say the financial crisis is behind us. The Dow is back to pre-financial crisis levels. Layoffs are the slowest since the financial crisis, and car sales the highest since the financial crisis. So why are Americans still too scared to get back in the stock market? Because all they hear is “financial crisis.” ….. ‘They pulled $19 billion from funds that invest in U.S. stocks in December, according to the Investment Company Institute, and $2 billion more in January. “In the old days, if there was a market rally, people would call and ask to put more money in. They felt they were missing the party,” says Deborah DeMatteo, an independent wealth manager at 10-15 Associates in Goshen, N.Y. This time, investors seem more than happy to miss the party. “Now, people call and ask, ‘When is it going back down?’” DeMatteo says. “There’s a sense of doom.” What are they thinking? It’s a question fit for a shrink.”

The article goes on to quote a couple psychiatrists who run through some of the human behaviors that lead us to make errors. They are not incorrect. I’m familiar with them and they do have a point, but it irritates me a little to see them applied to this situation.

People may miss profit opportunities, everyone probably has at one time or another, but life and the markets are not that easy to predict. I mean, after all, were these psychiatrists criticizing us for buying more stock in 2000 or more real estate in 2006 because the two “bubbles” were obvious, but we were too dumb to understand that? I doubt it very much. If “once burned, twice shy” is based on real-life experience and makes sense to a lot of people, why would “twice burned, thrice shy” suddenly be unrealistic?

There is more that annoys me.

“A variety of emotions and thought processes are keeping Americans out of the stock market, Peterson and other experts say. The memory of 2008, when the Dow Jones industrial average swung wildly by hundreds of points a day, is probably No. 1. … ‘Fear is still with us,’ says Meir Statman, a professor of finance at Santa Clara University in California and a leading expert in behavioral finance. ‘We live as if it’s still 2008.’ … As a result, they respond to events as if it were September 2008 and Lehman Brothers were about to collapse all over again. In this case, Statman says it’s not fear that’s driving people but an error of reasoning.”

There you go! There’s the problem! These gentlemen deal with the guys with the big bucks, not the general public. Yes, I am well aware that the collapse of Lehman Brothers and the government’s refusal to bail it out was a critical moment in the markets, one well-known to everyone in the professional financial and investment community. But is that the reason so many people are so often very conservative with their money today?

I definitely do not think so. I deal with substantial numbers of folks, not just Americans, who are very depressed about the economic outlook and very worried as to what to do with their money. They are not rich. Many of them (probably most if I were to know all the details) lost a considerable amount of their savings a decade ago when the stock market had fallen off a cliff. As many, if not more, lost a great deal of money in real estate following the collapse of that bubble.

In 2000 and in 2006, many of these same people were happy and looking forward to using their investments for a whole variety of purposes, retirement very much one of the primary purposes. They have been burned at least once, often twice, and I cannot blame them for being very cautious and nervous now. For all the people I have spoken to about their financial concerns and their disappointments, not one of them has mentioned the collapse of Lehman Brothers. They don’t even remember the collapse of Lehman Brothers.

Lehman Brothers was and is immaterial to them. What is important is that they do not have the money they expected to have and their losses were often very substantial on what were frequently fairly modest investments to begin with, certainly by the standards of Wall Street.

They have been seriously “burned” and they don’t want to go through it again. I do not find this to be unreasonable or irrational at all. I grant that this may lead some of them to over-concentrate their remaining funds in some other market that may not pay off, but I don’t like this attitude that small investors/speculators are somehow less intelligent than the “experts” who have no better track record of predicting the unpredictable future.

If you read here regularly, you know I prefer statistically-valid surveys of the public on a topic of importance, as opposed to someone’s “opinion” based on their own assumptions and often their personal financial agendas. So I take note of the results published this month by the Employee Benefit Research Institute of a survey of American adults on the subject of retirement. Here is their list of main points:

- Americans’ confidence in their ability to retire comfortably is stagnant at historically low levels. Just 14 percent are very confident they will have enough money to live comfortably in retirement (statistically equivalent to the low of 13 percent measured in 2011 and 2009).

- Employment insecurity looms large: Forty-two percent identify job uncertainty as the most pressing financial issue facing most Americans today.

- Worker confidence about having enough money to pay for medical expenses and long-term care expenses in retirement remains well below their confidence levels for paying basic expenses.

- Many workers report they have virtually no savings and investments. In total, 60 percent of workers report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000.

- Twenty-five percent of workers in the 2012 Retirement Confidence Survey say the age at which they expect to retire has changed in the past year. In 1991, 11 percent of workers said they expected to retire after age 65, and by 2012 that has grown to 37 percent.

- Regardless of those retirement age expectations, and consistent with prior RCS findings, half of current retirees surveyed say they left the work force unexpectedly due to health problems, disability, or changes at their employer, such as downsizing or closure.

- Those already in retirement tend to express higher levels of confidence than current workers about several key financial aspects of retirement.

- Retirees report they are significantly more reliant on Social Security as a major source of their retirement income than current workers expect to be.

- Although 56 percent of workers expect to receive benefits from a defined benefit plan in retirement, only 33 percent report that they and/or their spouse currently have such a benefit with a current or previous employer.

- More than half of workers (56 percent) report they and/or their spouse have not tried to calculate how much money they will need to have saved by the time they retire so that they can live comfortably in retirement.

- Only a minority of workers and retirees feel very comfortable using online technologies to perform various tasks related to financial management. Relatively few use mobile devices such as a smart phone or tablet to manage their finances, and just 10 percent say they are comfortable obtaining advice from financial professionals online.

The last point is not much of a concern to me, but the rest are. They tell me more about why many people like you and me are being more critical and more cautious these days. It is clear that too big a proportion of the public is in no shape to chase any market safely. Their money is not really “discretionary income” that they can use for any purpose. In truth, it is their “nest egg” and critically important to them. It has nothing to do with Lehman Brothers.

Whether we are doing the right thing with our money today, my mind keeps returning to one thing, “twice burned, thrice shy”. Right or wrong, I think the concerns of the public deserve more than just casual dismissal by the “talking heads” who did little or nothing to help them or warn them in the past.

If you would like to read the article quoted above, you can find it at Business Insider. You can read the full reeults of the EBRI survey at the EBRI website.

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I write when I have the time and inspiration. If you enjoyed this post and do not want to miss new ones when they are published, click here to subscribe to updates to The Retirement Bubble by e-mail. If you prefer an RSS feed, click on the RSS symbol on the upper-right of this page. If you would like to share this with a friend, just click on “share this post” below.

I expect that the value of being an older worker will increase in time to come as we begin to deal realistically with a reality that refuses to fit what many had expected a few years ago. That is beginning to happen and it is not based on kindness to the elderly, but to a simple understanding that age is not the primary factor determining success. Here are a few excerpts from “Schumpeters” weekly column for Britain’s Economist magazine.

In the 1960s pop was a young person’s business. The Who hoped they died before they got old. Bob Dylan berated middle-aged squares like Mr Jones in “Ballad of a Thin Man”. But today age is no barrier to success. The Rolling Stones are still touring in their 60s. Bob Dylan’s songwriting skills, if not his vocal chords, have survived intact. Sir Paul McCartney warbles on…It is time to do for enterprise what such ageing rockers have done for pop music: explode the myth that it is a monopoly of the young.
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Research suggests that age may in fact be an advantage for entrepreneurs. Vivek Wadhwa of Singularity University in California studied more than 500 American high-tech and engineering companies with more than $1m in sales. He discovered that the average age of the founders of successful American technology businesses (ie, ones with real revenues) is 39. There were twice as many successful founders over 50 as under 25, and twice as many over 60 as under 20. Dane Stangler of the Kauffman Foundation studied American firms founded in 1996-2007. He found the highest rate of entrepreneurial activity among people aged between 55 and 64—and the lowest rate among the Google generation of 20- to 34-year-olds. The Kauffman Foundation’s most recent study of start-ups discovered that people aged 55 to 64 accounted for nearly 23% of new entrepreneurs in 2010, compared with under 15% in 1996.
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Experience may be nothing if it is not linked to mould-breaking creativity. But there are plenty of older people who are capable of breaking moulds. Ray Kroc was in his 50s when he began building the McDonald’s franchise system, and Colonel Harland Sanders was in his 60s when he started the Kentucky Fried Chicken chain.
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The evidence that older people are if anything becoming more enterprising should help to calm two of the biggest worries that hang over the West (and indeed over an ageing China). One is that the greying of the population will inevitably produce economic sluggishness. The second is that older people will face hard times as companies shed older workers in the name of efficiency and welfare states cut back on their pensions.

If you would like to read his full column, you can find it here.

I write when I have the time and inspiration. If you enjoyed this post and do not want to miss new ones when they are published, click here to subscribe to updates to The Retirement Bubble by e-mail. If you prefer an RSS feed, click on the RSS symbol on the upper-right of this page. If you would like to share this with a friend, just click on “share this post” below.

Losing a member of your family is always difficult and losing your only sibling, your brother, is never an easy thing. You suffer right along with him as his health slowly and agonizingly deteriorates and, although you realize his passing is also a blessing because his pain and suffering are now over, your pain and suffering at his death do not disappear quite so quickly. All of a sudden, you’re the oldest surviving member of your family and that has never been your goal. It is no honor. And yet, this is what happens and, no matter how painful, it is an adaptation that must be made. It is one drawback of a longer lifespan. The older you get, the more likely it is happen. My apologies for being gone so long.

The discussion of retirement in this day and age continues to unfold in an easily forecasted manner. We continue to hear how dire the situation is for Americans (and many other nationalities) who hope to retire in the near future. Emily Brandon, at U.S. News & World Report last November, shared this:

Just over three quarters (76 percent) of middle class workers say it is more important to have a specific amount saved before retirement than to reach a certain age,,,However, the survey found that most middle class households aren’t even close to hitting their retirement savings goal. The survey of 1,500 people living in households earning between $50,000 and $99,999 ($25,000 and $99,999 for workers 25 to 29) or having household investable assets of $25,000 to $99,999 found that workers have accumulated, on average, only 7 percent of their desired retirement savings. They have a median of $25,000 in retirement savings and a median retirement goal of $350,000. Even among those in their 60s, over a quarter (29 percent) have less than $25,000 saved for retirement. And the workers surveyed expect to live an average of 21 years in retirement.

If you like, you can read her full report.

Then there is the question of whether to continue working after whatever you consider to be “retirement age”. Michael Hodin of the Financial Times shared this a few days ago:

At the core of this week’s economic news – President Obama’s fiscal 2013 budget and the Greek debt bailout – is a political unwillingness to be honest about the changes needed to our social welfare contract, something that was created literally in an earlier century. Today, neither the American insistence on continuing the entitlements of the 1960s nor the notion of Greeks retiring in their 50s is truly feasible. We need to work longer – that’s an obvious solution. Too often, it’s the exception.

If you like, you can read his full report.

Ms. Brandon’s comments are not a surprise, if you follow the retirement issue carefully, but she does a good job of pointing out the “disconnect” between what people think they need, what they have, and how long they expect it to last. And the sad truth is that perhaps the majority of them assumed 65 as a retirement age when they made their estimate of 21 years of life in retirement. They could be under-estimating it, if medical science and technology continue down their current path. In ten years, we may be very much surprised at how much longer we have to pay our way in life. In any case, too many don’t have enough money for even 21 years, despite expected Social Security payments that may not be as generous a few years from now as they are today.

It’s Mr. Hodin’s comments that draw my particular attention. He is making a pitch for working after retirement, but it sounds as if he thinks we are not already thinking about that, or if so, that it is only recently. I understand that. I made the same assumption, but I also knew there was only one way to find out the reality and that was to ask people. I learned that from my work that resulted in America Wave.

Thankfully, the Gallup organization has been asking relevant questions that can help us understand the real situation. They have asked that question over time, so let’s take a look at the results. There are several. Here’s the first.

Back in 1996, when times were okay, but the stock market had yet to reach bubble stage, folks chose 60. By 2002, they chose 63. These statistics tend to move very slowly. Your choice might change quickly at various points in your life, but when you think in terms of tens of millions of people, the average moves much more slowly. It is not so much the exact number, but the trend, and the trend in expected retirement age was already movng up, very possibly in response to the crash of the very stock market that was beginning to climb six years earlier.

Following that, Gallup asked the question more frequently and you can see that, despite occasional tiny steps back, the trend is still very much alive and another three years has been added. Again, the second bubble in real estate has undoubtedly played a role, but the chart make clear that what Mr. Holdin believes needs to happen in the future has been happening, and not just over the last two or three years. As I mentioned in an earlier essay, we often find that the “people”, taken as a whole, are much better at figuring out what they need to do than many of the commentators (and politicians) think is possible.

Let’s break these numbers up into three groups based on whether people thought they would retire before 65, at 65 (the traditional retirement age in the US), or after 65. The trend is clear. Just look at what has happened to the number expecting to retire under 65. This chart underlines just how dramatic the shift has been.

Okay, so we plan to retire later, taken as a group, so what about working after retirement? This is Mr. Hodin’s primary concern. Let’s look at another Gallup poll taken last year.

Well, what do you know? It looks like we are figuring this out for ourselves! Surely, this must be much more common among households with lower incomes, right? Let’s see.

There’s a difference, but it isn’t very impressive.

When I wrote Next, the Retirement Bubble back in 2009, it was meant in part as a “wake-up call” to those planning retirement. It appears that a lot of people have woken up. Whether they choose an approach like the Life Sabbatical or another is not critical. What is critical is that the basic idea is catching on. If this shift hasn’t quite caught on with the commentators, who cares? The important thing is that it has caught on with us.

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I write when I have the time and inspiration. If you enjoyed this post and do not want to miss new ones when they are published, click here to subscribe to updates to The Retirement Bubble by e-mail. If you prefer an RSS feed, click on the RSS symbol on the upper-right of this page. If you would like to share this with a friend, just click on “share this post” below.

They were just kids, teenagers to be more exact. I was working in Ghana in West Africa 40 years ago and these kids’ parents were working there too, but out in the “bush”. They needed an education, but they couldn’t get it in the bush, so they stayed in a hostel in Accra, the capital city, and attended the international school there. They were of various nationalities from North America and Europe. They hung with other teenagers who attended the school, Ghanaian and expatriate.

I was 27 and on my first international assignment following Peace Corps. I worked professionally with many of their parents. As a result, I got to know them all well. The expat community in those days was very small, so we knew each other, worked together sometimes, socialized together frequently, and formed a real sense of community with each other.

Due to my relatively young age, I forged a bond with these teenagers and thoroughly enjoyed their company. I was young enough to remember what it was like and yet old enough to be able to stand aside and let them work their way through it without my criticism.

They were a mixed crowd, but they held two things in common and that may be instructive for us.

First, they all had to leave their friends and other family members behind when they moved to Ghana. Like most kids in most circumstances, I am sure this was not a happy transition for some of them. And for many of them, if not all, they also had to live away from their parents, often seeing them only once a month. Additionally, in those days, nations like Ghana offered very few of the amenities that expats liked, and even fewer that expat teenagers liked. But circumstances beyond their control gave them no choice. Their only choice was to work with reality and make it as much fun and as useful as possible.

The second thing they held in common, although they were likely unaware of it at the time, was very obvious to me. They were substantially more mature than kids of their age that I knew back home in the US. The difference was really striking. Yes, they were teenagers, Yes, they could practice a little deviltry from time to time, but they learned to deal with highly unusual circumstances effectively and almost always responsibly. Their parents trusted them, as did the folks running the hostel for those living there. Oh, they had rules to live by and they had curfews that had to be respected, but all of us adults were deeply impressed with their maturity. I got along well with them not simply because I was so “young”, but because they were so “old” in a very positive way.

All wasn’t perfect. One or two had some serious problems adapting, but they worked their way through them. Perhaps their “maturity” came at a higher cost, but once gained, paid off richly. Life forced them to jump off a cliff and they suddenly had to grow wings. They did. It wasn’t easy and it wasn’t always fast, but they grew those wings and it paid off.

I sit here now, waiting as the days tick by toward my 67th birthday, recognizing my debt to a group of teenagers in Africa four decades ago. They didn’t teach me anything that was new, nothing that I couldn’t have figured out for myself, but they did something more. They lived it in full view of me and the world around them. It was and still is an inspiration.

Perhaps it can be the same for you. I am sure nothing above comes as any great shock, and I’m sure you can understand that there are “cliffs” we are forced off from time to time.. We all have to grow wings at various times in our lives. We gave plenty of scabs and bruises and cuts to show for how challenging that can be, but let’s not forget, we are still here. In today’s world, we may feel that we are being forced to jump off a cliff far higher than any before. Time to grow wings again. Indeed, “growing wings” is what the Life Sabbatical is all about.

It ain’t easy. It ain’t painless, for sure. But it pays off.

Like those teenagers when the change was first forced on them, we can find it difficult to imagine how it might improve our lives. The key is to accept what we must accept and adapt. At our age, we may be considered “mature” already, but all of us can still grow up a little more. The Life Sabbatical or some similar approach is meant to make it not easy, but easier. We are never too old to add another inch or two onto those wings that have carried us this far. But they don’t grow by themselves. We need to make it happen, like everyone else.

I would like to introduce you to one of those teenagers from 40 years ago today. Her name is Barbara Higbie. She was only 13 when I first met her and her family. She was bright, smart, and talented, although her talents were to be discovered. She was pushed off the cliff along with all the other kids. She had to grow wings too. She grew them in her own version of a Life Sabbatical. She was very sociable and very busy as teenagers can be, but she took the time to seek out a master Ghanaian drummer, Mustafa Tetty Addy, and discovered a new talent, music. When she was 17, she had her first professional appearance. Since then, she has mastered a dozen instruments, although she is best known for her work with the piano and the violin. She is now 53 with a Grammy nomination and twelve albums behind her and is still traveling, sharing her music in public venues all over the US, and elsewhere when the opportunity arises.

So I will leave you today with one of my favorite Barbara Higbie videos. She is the blond who turns her violin into a fiddle. If you look closely enough at her face, you will see the same 13-year-old I once knew.

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I write when I have the time and inspiration. If you enjoyed this post and do not want to miss new ones when they are published, click here to subscribe to updates to The Retirement Bubble by e-mail. If you prefer an RSS feed, click on the RSS symbol on the upper-right of this page. If you would like to share this with a friend, just click on “share this post” below.

It has been the usual crazy time associated with holidays, not to mention a number of other things, so this is the first post in a while. It’s pretty simple, basically it will introduce what has been written by others. A reader of this blog, Dan, helped me by sending a link to an article on retirement that I had not seen. I’m an analyst by profession, but a human by nature, so I have very limited time for any one of the half-dozen topics I am following at present and I miss some good information in the process. Thus a little help from a friend is always appreciated! I will share the wealth with you by providing several links that may be of interest.

Dan sent me a link to an article at The Atlantic magazine in the US. It poses the question, “In the ‘Indian Summer’ of their lives, more Americans between 50 and 75 are working well into years that used to be exclusively for the retired. Should we cheer them?” Although the article stresses a few cases that may not be relevant to you specifically, it underlines a growing trend for older people to become entrepreneurs, the subject of this post. Indeed, the Life Sabbatical is all about entrepreneurship. To read an article like this is very encouraging. It provides a general discussion of the shift among some of us of “retirement age”. It is titled, Old Dogs, New Tricks: Why More Seniors Are Starting Companies.

It mentions other research which I promptly checked out. A study sponsored by Civic Ventures with the support of the MetLife Foundation and Penn Schoen Berland provides some basic statistical information on this growing shift. They refer to the hoped-for results of a Life Sabbatical as an “encore career”. That’s cool. Here is an excerpt.

New research from Civic Ventures, a think tank on boomers, work and social purpose, shows that as many as 9 million people ages 44 to 70 are already in encore careers that combine personal meaning, continued income and social impact. That’s up from an estimated 8.4 million in 2008. Another 31 million people, ages 44 to 70, are interested in finding encore careers. Together, those currently in encore careers and those interested in encore careers represent 40 percent – or two in five – of all Americans ages 44 to 70. [The bold type is their emphasis]

I recommend reading the full press release that provides a number of interesting statistics by clicking here. Additional commentary on this study can be found at the Huffington Post.

There’s more. The Kauffman Foundation that specializes in the study and support of entrepreneurism provides a really neat “interactive” demonstration of trends in entrepreneurship at its site. When you arrive at their site, click on “View 1996-2010 Demographic Data”, then “by Age”. If you play with it a little, you will find the data for each year from 1996 through 2010 provided for each age group and for a variety of categories other than age as well. They keep stats on new businesses begun in the US started by entrepreneurs each year. If you dig enough, you will discover that the percentage of new entrepreneurial businesses created by the 20-34 age group has fallen from 35% to 26% over this time period. The percentage created by people in the 55-64 age group has risen from 14% to 23% over the same period. Yes, a shift is underway.

Now, let’s stop and take a breath. In my mind, there is a critical factor that is typically left out of reports and articles like those above. I will share it here in “loud” type because I want to be sure you get it, whether you visit any of the links above or not. So here it is.

You do not need to create a business to be an entrepreneur. An entrepreneur is someone who begins something new, whether that leads to a business or not. The moment you begin your Life Sabbatical, or whatever approach you choose to plan your future, you are an entrepreneur. You are opening your life to new experiences and new growth. That is what it takes to be an entrepreneur. Don’t let anyone tell you otherwise.

I will finish this with two more links, each describing people who began with little or no resources, yet succeeded as entrepreneurs. The first is titled 15 Inspirational Rags-To-Riches Stories and provides very brief summaries of how these people made their way through life as entrepreneurs to success and wealth. That’s fine and I appreciate their stories, but they are not the only people who should be recognized.

The second is titled 3 Incredible Stories Of Entrepreneurs Who Started Off Homeless . It takes a little longer to read and the people mentioned have not become famous or rich, but these stories are as inspirational to me as the others, perhaps more so. The article is well-written and well-worth reading.

The message I want to leave is a simple one. Entrepreneurship has nothing to do with your age, your wealth, your gender, your IQ, your religion, your hometown or any other such factor. It has everything to do with pulling yourself together, getting out there, and trying something new!

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I write when I have the time and inspiration. If you enjoyed this post and do not want to miss new ones when they are published, click here to subscribe to updates to The Retirement Bubble by e-mail. If you prefer an RSS feed, click on the RSS symbol on the upper-right of this page. If you would like to share this with a friend, just click on “share this post” below.

The Washington Post recently published a column by Vivek Wadhwa. It’s the sort of thing that we will read every once in awhile. It makes the case that age does not determine entrepreneurial ability. In this case, Wadhwa argues that being young is not a qualification to be a successful innovator or entrepreneur. I can still remember in decades past when young adults were not considered to be sufficiently experienced to be successful innovators or entrepreneurs, or even managers. There was a “tidal shift” in attitudes and now these articles have to say the same thing, but in reverse. Before all is said and done, I expect we will see yet another tidal shift. Hopefully, this will be one that convinces us that age is not a critical factor in starting something new or better.

I suspect there may be a person or two who wonder how anyone with a name like Vivek Wadhwa could be considered an expert in this area in the US. Such are the remnants of 20th century bias. But reading his professional background should take care of that problem quickly.

I will provide a link to his column which is not all that long, but I would like to highlight a few sentences here. After discussing his own research, he adds,

Kauffman Foundation director of research, Dane Stangler, built on our findings by analyzing Kauffman Firm Survey data and Kauffman Index of Entrepreneurial Activity — which uses data from the U.S. Census. He found that the average age of U.S. entrepreneurs is actually rising, with the highest rate of entrepreneurial activity shifting to the 55–64 age group.

The experience entrepreneurs have gained, the contacts they have made, networks they have formed, their ability to recruit good management teams and their education give them their greatest advantage. Young adults fresh out of school don’t have these advantages.

I could write more, but I would just be repeating what Vivek Wadhwa puts so succinctly. So I will leave you read his column for yourself. I suggest reading it, then returning later and reading it again, just to have it clear in your long-term memory.

You and I may not be the next Steve Jobs, but you and I may need a job in times to come. We need to remember one thing. Our age, whatever it is, will not be a factor, unless we insist on making it one.

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I write when I have the time and inspiration. If you enjoyed this post and do not want to miss new ones when they are published, click here to subscribe to updates to The Retirement Bubble by e-mail. If you prefer an RSS feed, click on the RSS symbol on the upper-right of this page. If you would like to share this with a friend, just click on “share this post” below.

First, a quick note. The article at Barron’s mentioned in the last post can now be read freely at my AmericaWave.com website by clicking here. But today’s post will focus on someone else’s work, a survey by Wells Fargo & Company titled, “80 Is The New 65 For Many Middle Class Americans When It Comes To Retirement”. The results are a bit more involved than that, but this is a press release and its title is designed to catch attention. It certainly caught mine.

As I have said in the past, one thing I want to share when the opportunity arises is any news on the changes in attitudes regarding retirement among the general public. This press release is one of the most detailed I have read and provides plenty of information. I will give you a link to the full release, but I would like to quote a few comments for you here and comment briefly.

A quarter (25%) of middle class Americans say they will “need to work until at least age 80” to live comfortably in retirement.

I think it is fair to call 25%, “many”, especially since that would have been a totally surprisingly result just a few years ago. Getting most Americans (and many other nationalities) to think any older than 65 would have been challenging. For a quarter of them to shift that up to 80 is impressive. I have often said here in the past that younger generations of adults will be learning from our experience. Their attitudes toward retirement will reflect how well or how poorly those of us over 50 today deal with the financial crisis and our own futures. I expected the optimum “retirement age” to rise in the face of increased longevity combined with reduced finances, but I admit I did not expect to see the shift underway so quickly. Of course, if the economy suddenly takes off, this attitude could fade, but I don’t expect that to happen any time soon and I certainly am not alone. Thinking in terms of what would have before been consider an “extremely late” retirement as a retirement goal is something that will become a habit as the crisis continues and we are faced with having to turn this “sow’s ear” into a “silken purse”. We will do it and this survey indicates the process is underway.

Three-fourths (74%) of middle class Americans expect to work in their retirement years, including 39% of all respondents who will need to work to make ends meet or maintain their lifestyles, while 35% say they will work because they want to, rather than out of financial need.

This is more of the same shift, but I am encouraged that 35% put it positively. The Life Sabbatical is designed to help make that possible for more of us.

More than a quarter of people in their 20s (26%) and 30s (28%) expect no income at all from Social Security during retirement years, and on average, people of those ages expect Social Security to cover only 20% of their retirement funding. By contrast, those in their 50s expect Social Security to provide 36% of their retirement funding, while those in their 60s expect it to cover 46%.

Here we see the results of younger adults already responding to what they see happening among older adults and in their society in general. We also see the continued dependency on government support in older Americans who were raised expecting a different situation when they retired. For many of that 46%, I suspect, it’s a matter of not feeling that they can do anything else but be dependent on government support. Hopefully, more of them will shift to the Life Sabbatical or some other similar approach that convinces them they can do more than that.

Of the 69% of middle class Americans who lack a written financial plan, the majority (60%) either say they are “overwhelmed,” say it is “pointless” or say they are “too far behind to catch up.” Only 24% say it is because they are confident in their ability to retire comfortably.

This is sad, but entirely understandable. The social, economic and political atmosphere we live in on both sides of the North Atlantic these days is simply depressing. The feeling that everything is out of control is widespread in my experience working with older Americans, Canadians, and Europeans. How could they feel otherwise? Things are out of our control and apparently out of our leaders’ control. I may have a positive outlook on life, but I can assure you that I frequently feel “overwhelmed” myself. It is a genuine mess in the North Atlantic and gives every appearance of getting worse before it can begin to get better.

As political leaders consider potential cuts to future Social Security and Medicare benefits to help close the budget gap, 49% of middle class Americans between the ages of 25 and 49 are willing to accept future cuts to help reduce America’s debt burden. Only 28% of those age 50 to 59 and 19% of those age 60 to 75 would be willing to accept cuts.

Here is the onset of the “generation gap” so often mentioned. I continue to feel that “gap” will relate less to age in the future and more to whether a person is paying taxes to support the social security system and similar programs or is receiving the benefits. As the number of those over 55 who are working increase, that gap will narrow and continue to do so as the “new retirement”, however we end up defining it, comes into its own. But as this process begins, the “gap” will at first widen and that is underway.

Economists have longed talked about the massive amount of wealth that will transfer between generations as the Baby Boomers age. But among the middle class, shifting economic realities mean those transfers will often disappoint. Four-in-ten (43%) middle class Americans expect to leave no inheritance to their children due to money needed to support their own retirement. Even among households surveyed with more than $100,000 in household incomes, three in ten people (29%) expect to leave no savings behind.

For years, actually decades, I have heard financial analysts talk about the great economic impact of the fat, juicy inheritances that will be left by my generation to those coming up from behind. I doubted it then and I just don’t believe it anymore. I even suspect those percentages above will rise as more and more of us realize how much we will need compared to how little we have. Too bad, but just part of the shifting reality of retirement and of life in general in the 21st century in the North Atlantic.

I promised a link to the full release and here it is. There is considerably more information than I have shared here. I think it is good for us to occasionally stop and consider how our peers are dealing with life these days. This is one opportunity.

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I write when I have the time and inspiration. If you enjoyed this post and do not want to miss new ones when they are published, click here to subscribe to updates to The Retirement Bubble by e-mail. If you prefer an RSS feed, click on the RSS symbol on the upper-right of this page. If you would like to share this with a friend, just click on “share this post” below.

Every Life Sabbatical has its bumps. Unfortunately, I have a good example from my own experience of the last few days and it was a very painful bump indeed.

As I mentioned briefly in an earlier post, I have been waiting for an article of mine to be published at Barron’s, the US weekly “sister” publication to the Wall Street Journal and one of the most respected American financial and business journals. Although Barron’s is found on-line at a very active site, it is first and foremost a print publication. With the craziness going on with America’s not-so-super Super Committee and the disorder found in the eurozone on the other side of the Atlantic, space has been a rare commodity for weeks, but I was told earlier this week that my article would be published in the coming week’s issue.

This is my fifth time to publish at Barron’s and I am always impressed with how dedicated they are to seeing that every word to appear in an issue is exactly what it is meant to be. So on Wednesday morning, I got the expected email notification that the final editing process was underway. Within minutes, no joke, my connection to the Internet and email which had been a little shaky before, suddenly became completely unpredictable.

It was the beginning of a three-day nightmare. I received emails sporadically and my responses were just as uncertain. What was a major problem became worse. Thursday was Thanksgiving Day in the US and staff, understandably, wanted to be with their families. That meant doing two days work in one day. They wanted all editing done by close of business Wednesday, but here I was, unable to respond rapidly.

It got worse and worse. My land line, also connected to my cable modem through which I have access to the Net, went totally dead. We spent eight hours struggling to get edits back and forth. I was reduced to using my cell phone, but the connection to the US was weak and I was constantly losing it. At 7 pm, I received the final draft with a plea to respond as quickly as possible. It had been sent at 4:35 pm. Unfortunately, there was a major error that required correction, plus a couple minor changes required. I called and found them waiting at the other end. But nothing can go to press without my written approval. My editor is insistent on that, but I couldn’t provide it. So it would have to happen first thing, Friday morning.

On Thursday, while they were at their family homes, I was on the phone to tech support again and again, a totally useless effort. If any of you wonder if cable companies in other nations can be as inefficient and uncooperative as those may be in your nation, the answer is yes.

Thursday arrived and all connections were completely dead. I got a cab and headed for their office. I carefully explained to the person there that I had been waiting for five months for this article to be published, that it would be seen by several hundred thousand readers, and that I had set up a website to provide further information to anyone interested. Now I was at risk of losing the article or, even if my phone “okay” was accepted and it was published, I was completely unable to get into that special website, plus another related website, to prepare. It was a disaster in the making and I absolutely had to have the problem taken care of that day. She took all the info and assured me someone would be out to fix it that day.

I waited all day for the “cable guy” and no one came. Near the end of the day, I called to see what was happening, only to be told there was no record in their system of any problem and it was too late to do anything now. The first chance they would have to send someone out was next Wednesday! The lady at the other end was sympathetic, but useless. I was devastated. Months of work and so much hanging on the outcome and here I was, literally out of touch.

Thursday evening, I spent the most stressed out, unhappy Thanksgiving dinner of my life. I am a cheerful person, as my friends will assure you. I always try to keep a positive outlook, but I was stretched to the limit and a bit beyond. I was even angry with life, something that is totally out of my character. This was nothing less than a genuine disaster and I felt helpless.

Friday came without any improvement. Once again, I set out for the cable company’s office. I got bounced around, but eventually found someone who seemed to understand how serious my situation was. Ms. Alvarez went to work on her phone. She told me someone would be out that day or Saturday morning. I grimaced. Saturday morning would be too late and, despite having cell phone contact with Barron’s, I still couldn’t get into my websites.

From there I went on the hunt for an Internet cafe and at last found one. Seated in front of a Spanish keyboard, I finally got all the messages sent that needed to be sent, less than 30 minutes before their absolute deadline. By that stage, given the circumstances, I was corresponding with two editors, two assistant editors, a “fact-checker”, and a sixth gentleman whose role is still unclear! They all took it in stride and were remarkably kind throughout the ordeal. But I could not make the corrections and additions to my websites from an Internet cafe.

Finally, at 4:30 pm on Friday, the cable guy arrived and, fifteen minutes later, had repaired the modem, just enough time for me to send a heart-felt “thank you” note to all my correspondents at the other end at Barron’s offices in New York City and Washington DC. The article has been published and is on the Web this morning. I won’t bother with a link now as it requires a paid subscription, but those who are subscribers will find it as “The Great Escape” when they go in to read the new issue. I am allowed to republish without cost at my own website and I will do that, and share the link with you if any are interested. Finally, my websites are updated as well.

The lesson of this very personal story for you? This was just one step in my Sabbatical, but a critical one. You will face similar steps in your own Sabbatical. Once in awhile, you will encounter a bump that turns out to be a wall, sometimes at the worst possible moment. You won’t be able to climb it by yourself. You will need help. As I have said before, there is no such thing as a self-made man or woman. We are all interdependent and no one makes real progress without the help of others at many different points in their journey, whether they are willing to acknowledge it or not.

I am happy to acknowledge it and Ms. Alvarez will get a very nice box of candy as a small thanks for her help when I was at my wit’s end.

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I write when I have the time and inspiration. If you enjoyed this post and do not want to miss new ones when they are published, click here to subscribe to updates to The Retirement Bubble by e-mail. If you prefer an RSS feed, click on the RSS symbol on the upper-right of this page. If you would like to share this with a friend, just click on “share this post” below.

Today, let’s take a look at some statistics that may surprise you. As I have mentioned in month’s past, I believe in the long run that any conflict over retiree benefits will not be between generations, but between those working and paying the taxes for the benefits, and those not working and receiving the benefits. That will mean the older generation will be divided within itself on this question as more and more people retire later and work longer.

But before we get there, there is likely to be a “generation gap” on this question. The media will push this because it’s a simple story line and it’s “obvious” at first glance. Movements like Occupy Wall Street and reports like mine at America Wave will seem to support that argument as well.

A report released by the Pew Research Center, one of the finest research centers in the US and about as unbiased as it gets, titled, “The Rising Age Gap in Economic Well-Being”, adds strength to this apparent generational conflict and it only takes a few glances at the charts and graphs to understand why. So let’s take a look at two of them. First, we have this.

Wow! Take a look at those numbers. The amounts are in 2010 dollars (that is, they are corrected for inflation). Overall, Americans are a little better off financially in 2009 (the latest figures available, but after the financial crisis was underway) than they were 25 years earlier, but oh my, what a terrible time to be young! Not a very good time to be middle-aged either! How can someone 30, 40, or even 50 look at those results and not be heart-sick (and angry)? Most of them know this is true in general, but when they see the actual statistics, I bet many of them are still surprised at how bad it is. They know who ran up society’s bills and now they have to pay them and their bills. Not a pretty chart.

Okay, then look at a graph, maybe that will be prettier.

Now we are talking actual poverty. Back in the 1967, when I was 22, people over 65 had a tough time of it, that’s obvious. A great deal of effort was made over the following years to correct that situation through government entitlements. Well, we did a great job of it, didn’t we? But look at my generation’s kids and grandkids. I think that’s worth another “Wow”. And note that since the start of the global financial crisis, the gap between the two groups has widened. Now, there’s a real generation gap.

I am not going to belabor these statistics today. I really think they speak very clearly for themselves. My suggestion to all those planning retirement or already retired is that they remember both the chart and the graph above as the debate over debt and deficit reduction rages on, all around us.

We are older and we are supposed to be wiser. We shall see in the months and years to come whether our greater wisdom is a reality or just an illusion.

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If you’d like to read the full Pew Research Center report, you can find it here.

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I write when I have the time and inspiration. If you enjoyed this post and do not want to miss new ones when they are published, click here to subscribe to updates to The Retirement Bubble by e-mail. If you prefer an RSS feed, click on the RSS symbol on the upper-right of this page. If you would like to share this with a friend, just click on “share this post” below.