Sad Worlds Collide: The Unretired vs. the Unemployed

December 7, 2008 by  
Filed under Economics, Retirement Planning

The dramatic rise in unemployment (over 500,000 jobs lost last month) may be combining with an equally dramatic drop in the value of retiree investment accounts (40% and counting) to create a perfect storm.  More specifically, the recently unemployed may be competing head-on with the newly “unretired” for many of the precious-few open jobs that will remain in our economy.

Yes, it seems that severe losses experienced in the stock markets are causing thousands of retired people to return to the work force, as reported in Business Week.   In other words, they are going broke, just like lots of not-yet-retired people. is a leading resource for jobs doable by the 55+ group.  It has experienced a significant increase in traffic to its site, triggered by those needing to “unretire.”

This is a triple-whammy for employment data and reality.  First, a lot of the jobs that have been lost over the past year may never be regained even when the economy recovers.   (Auto industry jobs come to mind.)  Second, the stimulus plan that Obama wants to implement will be creating “infrastructure construction” type jobs for which many of the currently unemployed will be unprepared and for which the “unretired” will be physically unable to perform.   Putting a 67 year-old unretiree in a Walmart greeter vest is one thing; sticking him up on a bridge with a hard hat is quite another.  Third, as bad as the unemployment data is as released by the government, most of the “unretired” are not even included in that data.  The hard truth is that the unemployment numbers are likely worse than we are being told.

The stories in the Business Week piece suggest two common themes among many of those who are now desperate to unretire.  First, they did not make adequate plans for an affordable place to live in retirement.  Second, they did not set aside enough liquid retirement funds to allow them to ride out a downturn in the market without having to sell devalued retirement assets.

All of this reminds Mr. ToughMoneyLove to dedicate myself more than ever to these important aspects of my retirement planning.  First, I want to have a paid-for house to provide tax-free shelter services to me and Mrs. ToughMoneyLove when we retire.  Second, I want to continue to add to our “wait out the market storm” stable value fund so that we are never forced to dip into our retirement nest egg when the market goes down.  It’s too late for many of the soon-to-be unretired.  It’s not too late for you and me.

Meanwhile, let’s hope that all of those who need jobs can find them.  Whether they are victims of poor planning or not, anyone who seeks to solve their problem by hard work instead of government dependency gets credit from me.

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9 Responses to “Sad Worlds Collide: The Unretired vs. the Unemployed”
  1. Brian says:

    Great article. I reread the “tax-free shelter service” link and think that the argument for paying off the mortgage is greater, esp when the market has tanked and reeturns for the last ten years are so low and nowhere near the 8-12 needed to pay off the mortgage before retirement. The job market will be tighter then ever as the unretiree’s are needing work also, and there are only so many retail jobs available, US policy of allowing manafacturing bases to move overseas has been wrong for a long time as is the consumer demanding the lowest price for commodities.

  2. This is an insightful post. What I like best are the two practical ways you are being proactive about this situation. Lots of personal finance blogs can eloquently point out the obvious mine-fields we are mired in right now. I like how this one states the exact path the author is taking to ensure a better future in retirement. This blog could help a boatload of readers.

  3. @Brian: I agree about retail vs. mfg. I’m guessing the job applications at 50+ friendly retailers like Home Depot are way up.

    Stop: Thanks. I’m one of those that believes that not only do we as a nation need to improve our knowledge of economics, we need to act on what we learn to protect ourselves.

  4. RetiredAt47 says:

    Interesting discussion. I paid off my mortgage several years before I retired early. It wasn’t something I talked about much, but amongst those who knew my situation, I did face some of the usual arguments. Couldn’t I do a better job of investing that money than pay down the approx. 6% mortgage? My argument was that I didn’t know of an investment that could consistently and safely exceed my mortgage rate. I also acknowledge that there is an emotional component here – some of us just feel more secure without that monthly obligation hanging over our heads.

    As for the liquidity issue, anyone even thinking of retiring and living off some of their assets needs to do a lot of reading and understand asset allocation. A recession/bear market is scary enough without finding ourselves in a position where we must sell off stocks while they’re down.

  5. Notsofast says:

    Retired 15 yrs I sadly understand how people with the best of intentions and money too can unknowly fall into this financial trap from poor planning.

    ” Pray for the best! But plan for the worst! ” is fitting here. Plan for the ” unexpected ” ( worse case ) vs the expected ( best case ) scenario.

    In the BusinessWeek Article all three cases were examples of planning for the best case scenario that was fool hardy at best! Life is fall of downside surprises especially after retirement with health issues, etc.

  6. Notsofast: I agree. The folks in the article show us that sometimes it doesn’t always pay to be optimistic. A little pessimism would be have gone a long way toward helping them get ready for the future if things went south.

  7. Notsofast says:

    I had 35 yrs experience as a maint’ supv’ in our local paper mill which taught me to plan for the unexpected and have replacement units and/or repair parts on hand!

    This has/is of great help to me in my 15yr retirement life ! Planning for the worst case is neither ” oppimistic or pessimistic ” but the practical thing to do! e.g. …

    A rainy-day fund of three months income is a must-do, but how many do it? Americans are only now paying the price for ” owning nothing ” with everything a payment or two from going back including the hse, car, etc!

  8. Ahead of the curve? says:

    Just found this blog. Hubby and I (mid-40s) paid off our entire mortgage upon receiving an inheritance in 2004. (We’re in a market that has seen not so much decline in housing values–Denver) We talked with a few people and all thought we were nuts at the time, but I’ll tell you–having two jobs and no mortgage debt (and no other either)–knowing that we could survive pretty much anything and stay in our house–is absolutely priceless. I can’t tell you how much happier I am. Knowing that we can make far less and still keep our home makes it all worth it to me.
    Coincidently I am also a patent lawyer.

  9. @ NotSoFast: Congrats on the excellent planning. For the retired or “almost” retired, having a “wait out the market storm” fund is equally important as an emergency fund, so that you aren’t destroyed by a market turn down early in your retirement.

    @ Ahead: Welcome. Using that inheritance to pay off your debt was abnormal, in that most would have probably used it to upsize or buy a bunch of adult toys and bling. Congrats on that. Glad to see that great patent lawyers think alike!

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