Adam Watson

Adam Watson, left, said retirement allows him to spend time with his daughter Reagan, shown taking off her skates Wednesday at Bode Ice Arena in St. Joseph. Watson said a state pension, as well as financial planning, helped make it possible.

Adam Watson had worked nearly 30 years for the Missouri Department of Transportation when he decided it was time to retire.

Watson, MoDOT’s area engineer, was still in his early 50s when he walked out the door for the last time.

”It just wasn’t fun anymore,” Watson, now 53, said.

Two years later, Watson has few regrets about a retired life that features Tai Chi classes, ceramics and plenty of duty as the “dad taxi” driving his daughter, Reagan, to figure skating classes and other activities.

“Reagan has made me promise to live until I am 111,” Watson said. “I told her I would do my best.”

Statistically, Watson is just one ripple in a tide of retirements. Nationwide, the retired population increased by 1 million a year from 2008 to 2019, a result of the aging baby boom generation.

Then came the coronavirus pandemic, which sparked a “Great Resignation” among younger workers who switched jobs or simply left the workplace. It also affected older workers who reevaluated their priorities amid lockdowns and stay-at-home orders.

For some, it pushed them toward retirement.

”We have definitely encountered more people thinking about retirement, though not necessarily retiring,” said Charles Hinde, a wealth manager with Heritage Investments in St. Joseph. “One of the more interesting trends we’re seeing is the part-time retirement. So individuals transferring to maybe half-time work as kind of a bridge to that full retirement. The pandemic has coincided with a pretty big change in people’s emotional viewpoint on work and what that means.”

The Pew Research Center found that more than half of U.S. adults over the age of 55 were retired in the third quarter of 2021, up from 48% in 2019. About 3.5 million people retired in the last two years.

For those on the cusp of retirement, the pandemic proved significantly different from the financial crisis more than a decade earlier. During the Great Recession, housing prices crashed and stocks sank. Fewer people left the workforce amid financial uncertainty.

In 2020, the pandemic caused a brief, sharp economic downturn, but rising housing prices and a bull market created a sense of wealth that made retirement seem more of a possibility.

Financial professionals still recommend a focus on long-term goals, rather than rash decisions.

”If they’re on the cusp of retirement, another two or three years makes a huge difference,” said Mark Matthews, a financial adviser at Edward Jones in St. Joseph. “You have time to accumulate more, maybe pay some things off that need to be paid off and build up your Social Security payments.”

Current retirees face a couple of complications that didn’t exist a decade ago. One is inflation, which reduces the purchasing power of those on a fixed income.

The cost of living will double in 25 years, assuming a 3% annual inflation rate. Last year’s inflation rate was 8.4% in March, the highest in 40 years. Matthews said inflation will make it important to have some assets in stocks, even during retirement, to realize gains that exceed the rise in living expenses.

”That is a big factor,” he said. “Prices are rising now and you aren’t working and don’t have a wage increase to make up for that.”

The seeds of another change in the retirement landscape were planted almost four decades ago. In 1983, President Ronald Reagan signed H.R. 1900 into law to bolster the long-term solvency of Social Security.

This year, a centerpiece of that financial reform takes full effect. For those born in 1960 and later, the age for collecting full Social Security benefits is now 67, although people still can retire with partial benefits at the age of 62.

The change raises questions about the future of Social Security and how much today’s workers can count on it.

Current projections call for Social Security to make full payments to beneficiaries until 2037, at which point trust fund reserves are expected to become exhausted. Social Security statements make it clear that in about 15 years, the government can only pay about three-fourths of benefits.

”Right there, they’re letting you know, here’s your number, but don’t count on it,” Matthews said.

That will bring calls for the kind of bipartisan agreement that extended Social Security in 1983, though that often comes with difficult choices like raising the age of retirement or increasing payroll taxes.

U.S. Sen. Josh Hawley, R-Mo., said the first thing Congress needs to do is display fiscal discipline.

”For years both parties have used Social Security like a slush fund and have used it to fund other things,” he said.

Whatever comes of Social Security, one of the common mistakes in retirement planning is not starting early, according to Hinde. Social Security only pays about 40% of your pre-retirement income.

”I think people should start thinking about retirement much earlier,” Hinde said. “The preparation process takes much longer than you think. Making sure you’re on track is incredibly important.”

Watson thought long and hard about retirement and believes his finances are solid due to his state pension and personal savings.

”I am going to be able to make it through emergencies,” he said.

The bigger challenge has been adjusting to a quieter and more introspective life. Sometimes the former highway engineer finds himself talking about roundabouts and traffic signals, then realizes he is no longer in the game.

“I enjoy it,” he said of retirement. “But it is amazing how much of your social life is working.”

Greg Kozol can be reached at greg.kozol@newspressnow.com. Follow him on Twitter: @NPNowKozol.

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