This has been one wild and crazy day. I got up at 6 a.m. as usual, had my latte and toast in bed while reading the newspaper, watching the TV news, and doing a Sudoku (all thanks to the kindness of my gentle partner David), dressed, and headed out to work. I then went about my business as I would on any other normal day. Indeed, this was a more than normal day because I was out doing a presentation with some colleagues. Mid-day I got an e-mail (instant delivery wherever I am; a blessing and a curse for sure) from the CBC (that’s the Canadian Broadcasting Corporation for those of you not fortunate enough to be living in Canada) saying that they’d evidently stumbled upon this very blog and would like to interview me for a story they were doing on the impact of the stockmarket plummeting all day with the demise of the Lehman Brothers. I arranged to meet the TV guys at my home right after work – and before I had to get to the university to teach a night course. It was a quick interview: they set up the shot where the light is best, primed me with a few practice questions, then it was “camera / action”. Actually, until this whole thing got underway I hadn’t been too wrapped up in thinking about the potential implications of this “market adjustment” but … now that the question had been raised I was left wondering. Can I actually afford this thing called retirement?
I am a very lucky woman. Not only am I lucky, but I’m lucky enough that I actually do know that I’m lucky. I stumbled into a career as a teacher and have had a 30+ year career that has been personally, professionally, intellectually, emotionally, and financially rewarding. When I started teaching I earned about $12,000/year. Over the years, moving up in income both because of longevity and through earning additional credentials and degrees, this has given me a fairly comfortable living. Being a single Mom raising three children without any other ongoing financial support, I’ve had to supplement that income much of the time by teaching university courses at nights and in the summertime. It was only about 10 years ago that, for the first time, I didn’t have to work in the summer to make ends meet. And now, in about six more weeks, I’m looking at a calendar without meetings scheduled around other meetings, without post-it notes reminding me to take care of myself, and filled with the things that I really want to be doing (at least that’s what I’m hoping it will be filled with since right now it’s mostly empty squares on a page which is just fine with me).
When I began this blog, in an early posting, I made note of the fact that financial planning would not be one of the topics I’d focus on. However, after yesterday’s plummeting stock market news how can I continue to avoid asking the key question: can I afford to retire? That might seem like an obvious question that I should have been asking myself long before I decided to let my Director know that I’d be leaving at the end of October. Of course, that would have meant that I had to seriously think about my long-term financial position and that’s something I’ve pretty much managed to avoid doing for these many years. Sheila Tobias (author of Overcoming Math Anxiety) talks about women being socialized to have an indifference about money. She says: “It’s like anything distasteful that I don’t have to do myself – clean my house, when I can get someone else to do it, or do the bookkeeping, when I can have an accountant. It’s the boredom of it that we seek to avoid.” That might explain part of my antipathy toward financial planning, but not all of it I think.
Smart Women Don’t Retire – They Break Free gave me some real insight into why I haven’t done more around financial planning in my life in a section called “The Emotional Side of Money”. The authors note that we’re more likely to discuss our sex lives with strangers than tell our friends how much money we have. I think that’s likely true, although personally I’m not going to tell strangers about my love life either. For months and months – maybe even longer – I’ve been asking other people who have retired from public service with pensions (and having chosen a career that came with a solid pension plan is one of the reasons I haven’t thought much about financial planning for retirement) how much their incomes really dropped and how much they had to work to make up for that shortfall. I’ve read in several places that most financial analysts claim that you should figure on needing roughly 75% to 85% of your preretirement income to get by after you stop working. Given that my pension is calculated as 2% of my preretirement income multiplied by the number of years of pensionable service; in my case – having been an educator for 30 years – that means I’ll have 60% of my income when I retire. Yikes! Does this mean I’ll need to continue to earn 40% of my current income to stay afloat? Evidently not. I have been told that 60% of my salary will turn out to be more like 80% of my take home because I’ll be in a lower tax bracket (for those of you who are reading this from outside of Canada you can take some comfort in the fact that our tax rates put me – a slightly better than middle-of-the-road earner – in close to a 50% tax bracket) and won’t have to pay union dues or pay for medical/dental coverage which comes as part of my pension. Is this really true? I don’t know, and suddenly I’m starting to worry about it … a lot.
Yes, I know, I’m very very lucky to have a pension plan to rely on. Will yesterday’s stock market “error” change my plans for retirement? That’s not even an option. The paperwork is done. I’m not certain, but I’m guessing that by now some colleagues are planning a retirement goodbye party. There’s no road to travel but this one, and if truth be told I’m really glad that’s the case. That said, what would make this a lot less nerve-wracking would be some advice from retirement experts – from women who are already living this new part of life. Bonnie Bostrom, in Women Facing Retirement: A Time for Self-Reflection, says it this way: “Our spirits have been on hold, waiting to move out of the cocoon of work to continue the quest. Like new life emerging from the chrysalis, we unfold our wings and move toward full spiritual development as women.” The chrysalis just hangs around. The butterfly takes flight. Which will I be?