2The Current State of “Retirement”

When people first started “retirement planning,” their focus was often on what was known as a three-legged stool. Each leg of the stool represented a foundation of financial support to count on during retirement, removing the fear of outliving personal resources. The three legs were employer-defined benefit plans or pensions, Social Security, and personal savings. The personal savings leg of the stool was typically used to fund the proverbial “bucket list” while the Social Security and pension supported most people's day-to-day living expenses.

Retirement planning forecasts were then filled with excellent news. We had great “pensions”; many committed to paying private or federal employees the average of their top-three working years for the rest of their lives! They were getting paid the same amount in retirement as in their top-earning years; a lucky few have actually earned more in retirement than in their working years! The government provided Social Security, incomes were growing, access to more luxury items was available, and most people were working fewer years so that they could enjoy all the wonderful bounty! Life was great.

But things have changed for most Americans.

In the previous chapter, we discussed the dramatic decline in the labor force for men age 65 and older at the beginning of this century. What do you think has happened since then? We have seen a marked increase in the labor participation rates of older men, and women, ...

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