Introduction

I'm sitting here nursing another sore calf. I went running earlier today, and my calf tightened up for the third time this week. As my grandmother used to say, "The ol' gray mare ain't what she used to be."

It wasn't that long ago that I'd suffer an athletic injury and be fine in a day or two. But now that I'm older, it takes longer to heal.

That got me thinking that I'm closer to the next stage of my life - retirement. Look at me, I'm already talking about my health problems, so I'm halfway there!

The goal of this book is to help you take control of your retirement. I'm going to show you how to increase your income and lower your costs - without negatively affecting your lifestyle.

It's unfortunate that a book like this is necessary for most retirees and pre-retirees. But the fact is, your retirement will not be the same as your parents' retirement.

First of all, we're living longer and - in many cases - healthier lives. That means we're more active and more likely to spend money doing things we enjoy, such as going out with friends, pursuing hobbies, or traveling.

Secondly, many of our parents had pensions. Today, very few of us do. And Social Security isn't going to cover all of our costs. And don't forget the children. We always say we don't want to be a burden to our children, but our adult children are an increasing burden on us.

Today, one in three 18- to 34-year olds lives with their parents.1 It is the most common living arrangement for that age group.

Unless Junior is chipping in for groceries and other things that he uses, that's a further drain on the parents' finances.

Things are rough for many retirees and pre-retirees right now. But this book will provide some solutions to get you on track and keep you there.

And you won't have to drive an Uber to do so.

The Retirement Crisis

You've probably heard the statistic by now: 10,000 boomers are turning 65 every day. But how many of them are financially prepared for retirement and know how much money they need?

Recent research indicates that Americans are dreadfully underprepared.

And it's not just people who are approaching their golden years.

According to the Federal Reserve's 2014 Survey of Household Economics and Decisionmaking, 31% of non-retirees have no retirement savings; and nearly 25% of those aged 45 or older have not saved a dime.2

And 47% of respondents said they could not pay for a medical emergency costing $400 or more without selling something or borrowing money.

Another survey, this one by the Economic Policy Institute, showed nearly half of all families have no retirement savings at all. Households with people aged 56 to 61, just a few years before retirement age, have a median retirement account of $17,000.3

The Employee Benefit Research Institute and Greenwald Associates reports that 57% of retirees have less than $25,000 in savings and investments, not including their homes and pensions. Twenty-eight percent have less than $1,000.

This is terrifying.

That means there are millions of people who will either be living on Social Security alone or will have to continue working well into their senior years. In fact, 45% of all respondents said they expect to work in retirement - which doesn't sound like retirement at all.

According to AARP, currently only 19% of seniors are working.4 So the gap between those who expect to work and those who have jobs is wide.

That suggests that it may be tough for seniors to find work. It's likely one of the reasons that seniors are increasingly signing up to drive for Uber or other types of "freelance" jobs.

If you're not familiar with Uber, it's a ride service, like a taxi that you order from an app. Drivers are freelancers and work when they choose to. I cover Uber in greater detail in Chapter 6.

But I chose You Don't Have to Drive an Uber in Retirement as the title of this book to emphasize that if you follow the steps in this book, you won't have to be one of the nearly half of all Americans that will need to work in "retirement."

Many of the people who are not prepared for retirement worked hard their whole lives and took care of their families, but simply did not save enough for retirement or had investments wiped out.

Take Tom Palome, for example. At one time, the former vice president of marketing for Oral-B was earning $120,000 per year. He put his kids through college, helped his parents financially, and was living the American dream.

But he never saved for retirement.

When Bloomberg Businessweek5 tracked him down in 2013, the then-77-year-old Palome was flipping burgers for minimum wage at a golf club. His shift ends with him mopping the floor.

Pension? What's a Pension?

You're mistaken if you believe that you're all set and don't need to save much for retirement if you have a pension. Along with a retirement crisis, there is a very real pension crisis.

Citigroup estimates there is an $18 trillion shortfall in American pensions.6 That's trillion, with a T.

For example, the city of Philadelphia owes 64,000 past and current employees $10.5 billion. It currently has $4.8 billion of it.7

Two major pensions for workers in the city of Chicago are currently expected to run out of cash in the next decade. Some speculate this crisis could bankrupt the city.8

And as I write, the Central States Pension Fund is considering cutting Teamsters' pensions by 65%.9

It used to be that you worked for a company or government agency for 25 or 30 years, retired, and lived happily ever after, knowing that your income and healthcare would be taken care of until you die.

That is not the case anymore for many retirees.

In 1975, more than 55% of all workers had pensions.10 In 2011, only 3% of workers had a defined benefit pension plan with no contribution required by the worker. Another 31% contributed to their pension plan.11

I can count on one hand the number of friends or relatives my age or younger that have pensions. They all work for the government.

When my father retired after 35 years in the Yonkers, New York, public school system, we had a conversation that clearly illustrates the difference in expectations between his generation and mine.

Dad: I'll have to get used to living on just 75% of my income.

Me: Wait, you get paid 75% of your salary every year in retirement? That's fantastic!

Dad: Yeah, but it's less than I'm used to making.

Me: But you're not working and you're getting 75% of what you were making.

Dad: Right, but it's still less.

Me: But you're not working and you're getting 75% of what you were making when you got up early and worked all day.

It went on like that for several minutes.

His generation was told that if you worked hard, your employer and the government will take care of you in retirement. And for many people that's exactly what happened.

I knew he had a pension but was stunned it would replace so much of his income. As fantastic as my employer is, they're not paying me a penny in retirement (though they do match 50 cents on the dollar in my 401k).

And from the first day I started working and learned what that 6% tax on my paycheck was (it's now 7.7%), I have assumed that Social Security would not exist when I retire and that the tens of thousands of dollars I'll contribute over my lifetime will have been used to fund someone else's retirement.

When it comes to my retirement, I expect the government to tell me, like Willy Wonka famously said to Charlie, "You get nothing! You lose! Good day, sir!"

Source: weknowmemes.com

Maybe I'll get lucky, and in the next 20 years we'll elect leaders who are more concerned with solving difficult problems than with their own re-elections.

I'll wait for you to pick yourself up off the floor from laughing at that possibility.

Unless there is some real Social Security and pension reform, I don't see how the Feds can pay me and my peers our Social Security benefits, while they are still paying many of the baby boomers and will be for years. By the time it's my turn (I was born a few years after the end of the baby boom), the system will be broke or the government will take the money from somewhere else to pay Social Security.

Since my very first paycheck, I've assumed that I'm on my own when it comes to my retirement. No company or government will be there for me. If it turns out that I'm able to collect Social Security, that will be gravy. But I'm saving and investing as if it won't be there.

Now, I'm not preaching doom and gloom, but I'm not sure how Social Security can stay solvent when, in 2025, there will be just two workers for every retiree. That compares to 3.3 in 2010 and 16 in 1950.12

All of this means we have to look at retirement in a new way, to adapt to our new present and future. In the following chapters I'll share proven and simple techniques for generating income in retirement.

Some are...