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Gauging retirement readiness

Not everyone can retire early. In fact, most people can’t. ACT 10 and other economic pressures muddied the waters for Wisconsin public school employees—especially for those between age 45-55. Many wonder where they stand and what they can do to salvage their retirement dreams. But, it may not be as bad as you think.  

your$ magazine summer 2013Chris Silver is a teacher in River Falls and a participant in our 403(b) program. He called us concerned that we were sending the wrong message to our readers. Chris observed that our member stories of late tended to be about educators who retired early…in their 50s. “I find it discouraging because it makes me feel that if I can’t retire early, I’ve failed somehow. Don’t get me wrong, I think it’s great that they found a way to do it, but I just can’t relate.”

He had a point. While we have written articles about a variety of topics—taking care of elderly parents, finding a financial planner, keys to retirement satisfaction—many of our stories have featured members who retired before age 65. As a result, we may have unintentionally conveyed a false sense that this is the retirement norm.

Chris, 51, went on to say that with all the economic pressures, he wonders if he’ll ever be able to retire. “I know I’m not alone. I have friends and colleagues who are concerned as well. I think it would be helpful to know what we can reasonably expect.”

It was an eye opening conversation. We thought we were inspiring people by sharing success stories, so it was a little hard to hear that we might actually be putting people off.

The story unfolds

Time to get a plan: Act 10 and other economic pressures are taking a toll. Ages 45-55 are most impacted. But, there's still time to adjust.

Chris agreed to share his list of concerns and questions that contribute to his low expectations for retiring with Michelle Slawny, a Certified Financial Planner® and Worksite Benefit Consultant for Member Benefits. Michelle has worked in the financial services industry since 1994, and she has completed more than 500 retirement plans for Wisconsin public school employees over the last five years. She confirms that those who are able to comfortably retire in their 50s are more the exception than the rule.

“The reality is that most Wisconsin public school employees are not financially prepared to retire in their 50s,” she says.

This jibes with national trends as well. A May 2013 Gallup research study found that the average retirement age in the U.S. has risen from 57 in 1991 to 61, and the average nonretired American now expects to retire at age 66.

Act 10 has started to take its toll and while all Wisconsin public school employees will be financially impacted by Act 10, those in Chris’s age group—between 45 and 55—are hardest hit.

Act 10 reduced salary and benefits at a time when this group should be at their peak earning and saving. “Their younger colleagues have time to adjust their strategy to fit the new reality, and those over 55 are more likely to be taken care of by benefits that are still in place,” Michelle says. In addition to the added financial burden resulting from Act 10, this group also experienced two significant market crashes during their savings years.

The combination of these economic events puts a lot of pressure on current and future finances. If you find yourself in this situation, however, there are still plenty of choices you can make to maximize your retirement security. Let’s take a look at some of Chris’s concerns.

Debt happens

Plan to be debt free: Debt and retirement don't go together. Reduce debt now.

Gauging retirement readinessDebt is a reality for most of us. It’s hard to avoid borrowing money for large ticket items such as homes or cars. But, debt and retirement don’t go together. As you move closer to retirement, you need to be thinking about retiring your debt as well. Ideally, you want to go into retirement debt free.

“Most Wisconsin public school employees in their late 40s to early 50s have debt—a mortgage, varying degrees of credit card debt, and some have home equity loans,” Michelle acknowledges.

“These are the years to pay down debt, not accumulate,” she says. But, unexpected home or car repairs or other costly items like appliances or medical costs can make it easy to build up credit card debt, if you don’t have an emergency fund to tap into.

The reduction plan

Attack any credit card debt first because credit cards tend to carry the highest interest. Use a calculator, such as the Credit Card Paydown calculator at, to come up with a payment plan that’s realistic and doesn’t compromise your other financial obligations.

Finding the extra money to pay down your balance may require a closer look at your spending habits in order to balance the household budget.

“Once the credit card is paid off, immediately redirect that money to any other debt such as a home equity loan. Do not let it work back into your household budget,” Michelle urges.

Reward your achievements

Paying off debt is like dieting. It’s not fun and it might take a long time before you reach your goal. However, depriving yourself of all the joys of life isn’t realistic or healthy either, and it may jeopardize your long-term goals. “Everything can’t be for the future,” Michelle says. “Find a good recipe that allows you to live for today while preparing for the future.”

Michelle suggests breaking the big goal of eliminating debt into smaller milestones and setting up a reward system. “Maybe you take a vacation after paying off your credit cards. It doesn’t have to be an expensive trip, but it will give you something to look forward to. It’s important to take time to enjoy your family, relax, have fun, and make memories.”