For 35 years, Lee punched the proverbial clock at a utility company in northeastern Ohio, where he worked in sales and customer management. But in 2002, at age 55, he was offered a buyout package. After evaluating his options and discussing the package—which included severance pay plus retiree health coverage for him and his wife—with a financial planner, he decided to accept.
“I probably would have worked a little while longer, but I was offered a great package,” says Lee, who asked that his last name not be used to protect his identity. “We thought this might be the last time I get this opportunity. So it made sense at the time.”
With the help of a local financial planner, Lee reinvested his money into the stock market. When the stock market took a turn for the worse last summer, however, Lee, now 62, found himself re-evaluating his retirement plans.
“Now I’m out looking for a full-time job,” says Lee, who estimates he may have to work full time for another five to 10 years before he is able to retire comfortably. “It’s hard at my age. I think [finding a job] is easier for someone who’s a bit younger.”
Lee is experiencing a situation that has become all too familiar to retirees across the country, as last year’s stock market crash has wreaked havoc on their retirement savings. After thinking he was done with work for good, Lee must now find full-time work to supplement what is left of his retirement funds.
Lee’s son Ryan, a 33-year old manufacturing engineer who lives in Oakland, Calif., says he realizes how much of a toll the struggling economy has taken on his dad’s retirement savings. “But I know [my parents] still enjoy a reasonably comfortable way of life,” Ryan says. “I haven’t seen it impact his lifestyle yet.”
Although he doesn’t feel pressured to help support his parents financially at this point, Ryan says he does worry how things like unexpected medical bills or family illnesses could impact his mom and dad’s stability. He also accepts the idea that he may eventually have to move back to Ohio and help support his family.
Like Ryan, many in their 20s and 30s are beginning to see their parents struggle with money, debt and retirement savings—and it’s influencing the way they view investing and saving.
Mel, a 27-year-old from Cleveland who also asked that her last name not be revealed, is using her parents’ experience as a cautionary tale. Growing up, Mel watched as her parents relied on credit cards to pay for family dinners and nights out, while spending little energy saving for their future.
“I couldn’t tell you how many credit cards they had,” she says. “My mom would never think twice about opening an account.”
When Mel’s father lost his job a few years ago, the family had virtually no savings, and was eventually forced to file for bankruptcy. Her father, now in his mid-50s, currently works full time and picks up odd jobs wherever he can, working long hours and weekends just to get by.
“They’ll never be able to retire,” says Mel. Although she and her 26-year-old husband have many years in the workforce ahead of them, her parents’ example has made them focus on their own financial future. When planning their wedding, the couple made sure they had enough money on hand to pay all of their expenses upfront to avoid getting into debt. They avoid making large purchases unless absolutely necessary and avidly invest in their employer-sponsored 401(k) plans.
“I’m just much more conscientious about saving than my parents were,” Mel says.
She’s not alone. In “Preparing for Their Future: A Look at the Financial State of Gen X and Gen Y,” a study jointly sponsored by AARP and the American Savings Education Council, nine out of 10 respondents at least somewhat agreed they had financial goals for themselves, with 75 percent listing putting away money for retirement as a goal.