Retiring on Long Island: How much savings is enough?

Long Island workers approaching retirement face a complex set of choices, made all the more difficult by the region's high cost of living — and they're feeling the stress. 

Company-paid pensions, long a bedrock of stable retirement income, have become a rarity, replaced in large part by market-dependent savings and investment accounts such as IRAs and 401(k)s.  At the same time, longer lifespans mean retirees must prepare for the possibility of living for decades without steady income from work.

Islanders in their 60s said there’s much to worry about when it comes to retirement, including concerns about the strength of their nest egg, the price of health care and long-term care, inflation, where the stock market is headed, and if it will be possible to live on Long Island in retirement.

There's also the question of whether it’s better to take smaller Social Security payments early, at age 62; hold out for bigger payments at age 67 — full retirement age for those born in or after 1960;  or wait for maximum payments at 70 but risk not living long enough to make that choice pay off.

“You really have to start planning for it years in advance,” said Susan Dennehy, 61, a nurse living in Smithtown, who said the process of researching her and her husband’s options for retirement has been overwhelming.

“It’s not very easy to get information, and when you do get it, it’s sort of mind-boggling. There are so many rules,” said Dennehy, who’s hoping to retire in a few years. “Whatever decisions you make, you have to make sure they’re the right decisions. You can’t change it.” 

Even with the bureaucratic and financial maze that often confronts would-be retirees, the number of retired Americans has outpaced projections since the COVID pandemic.

While the pandemic led to a large spike in retirements — called the Great Retirement Boom — in recent months the number of new retirees  has seen another surge, reaching a post-pandemic record in December. There are now around 2.7 million more retirees than predicted, according to economic forecasts from the Federal Reserve Bank of St. Louis.

Despite that jump, fewer than half of working-age Americans have any retirement savings, according to 2020 U.S. Census Bureau data. A July 2023 report by the Transamerica Center for Retirement Studies found that nearly half of Baby Boomers and around 40% of Generation X workers expect to retire after 70, or not at all.

Mario Melito, 59, a freelance architect from Huntington Station, is with them.

"My reality is ... I’m probably going to be working the rest of my life," he said. "Social Security is not enough to cover my mortgage or even a reasonable rent on Long Island. Medical expenses are high. Utility bills are high. I have to work."

Working longer is indeed more common on Long Island than in the state or the nation.  Nearly a quarter of Nassau and Suffolk residents 65 and older — 23.6% — are still in the labor force, according to Census data. That compares with  19.7% in the state and 18.7% nationally. 

George Mahler of Lynbrook is still working at 70, running an at-home window dressing business.

"For the first 25 years or so of my career, I operated a family-owned retail business. It didn’t do as well for me as it did for my parents, and I wasn’t able to save a nickel," he said. "If I were to stop working, I’d have to be on a tighter budget. You don’t know how long you’re going to live or if your health is not going to hold up. You never feel like you have enough."

Stressful choices

“People are not facing their parents’ and grandparents’ retirement situations,” said Teresa Ghilarducci, economist and policy analysis professor at the New School for Social Research in New York City.

Ghilarducci, who researches the economics of retirement, said the theory that older Americans can simply work longer doesn’t hold up.

“We’re finding the stress of the unknown toward the end of your life is causing cardiovascular disease,” said Ghilarducci, author of the new book "Work, Retire, Repeat." “Retirement age has increased, but people’s ability to work longer hasn’t increased as fast.”

Over the last 40 years, with the decline of private-sector pensions, the country has moved “way over on the spectrum of do-it-yourself retirement, of self-reliance,” Ghilarducci said, putting Americans in the position of having to understand the complexities of saving and investing for retirement.

“People in other countries don’t have to spend all this brain power and money for financial advisers because they have very simple and safe places to save for retirement,” she said  

Countries like Denmark, Finland and the Netherlands, Ghilarducci said, have better retirement outcomes because they have mandatory retirement accounts, cover more workers, and have simplified retirement savings instruments. 

“I can’t express how uniquely American it is to feel like you’re going to be ripped off of your retirement savings,” she said.

Many people are overwhelmed and seek help from a financial planner or investment adviser, fueling an entire industry devoted to retirement planning. But it can be hard to know if a given professional is competent or won't make dubious decisions with investments, Ghilarducci said.

Financial advisers who work with Long Islanders said the biggest mistake they see among older workers is waiting too long to begin planning.

“They wait too long and say, ‘I don’t have enough money to work with a financial adviser,’ but what happens is they wait too long, and they haven’t planned soon enough,” said Katherine Dean, financial adviser with Opal Wealth Advisors of Jericho.

“People can be in retirement for 30 years,” she said. “You need to plan for that.”

Circumstances kept Debbie Patricia Mavrich, 61, a driving instructor in Centereach, from putting aside for retirement when she was younger.

"I had to take care of my dad for eight years, so at one point I couldn’t even get a job. I had to pick jobs that worked around my kids’ schedules, and the jobs I could find were not great. They didn’t offer retirement plans," she said. "I just started a retirement fund, but at my age … I’m hoping that something will fall in place. I figure if I work 'til I drop, I have insurance to cover my burial."

How much savings is enough?

While there is no one-size-fits-all-guideline, planners recommend making a realistic calculation of what your monthly expenses will be in retirement.  Will your home be paid off? What if you need long-term care? Will you be able to stay on Long Island? 

For some, like insurance broker Tonya Deville, 65, of Wheatley Heights, that last one is a hard no.

"I know that once I do retire, I can’t live here in New York," she said. "I don’t see myself paying $15,000 a year in property taxes. Do you know how many vacations that is? I just can’t see my money being wasted that way. I’m looking between North Carolina and Delaware." 

AARP offers a calculator tool that can help provide a snapshot of where you are and what you'll need at aarp.org/retirement/retirement-calculator/.  A very rough rule of thumb says you'll need savings equal to 10 times your household income, so if you live on $100,000 now, you'll need $1 million saved for retirement.  But many individual variables can affect your needs.

Deciding when to start claiming Social Security is a key decision — and somewhat of a gamble.

The earliest you can start collecting benefits is 62. However, the Social Security Administration reduces benefits by 30% for people who claim at 62, meaning they receive just 70% of their full retirement benefit each month for life.

For people born in 1960 or later, "full retirement age" — the age at which you are entitled to 100% of your retirement benefit — is 67.

And the Social Security Administration pays people to delay taking benefits. You can receive an 8% bump in your benefits for each year you wait. If you wait until age 70, you can get the maximum: 124% of your retirement benefit. 

“By far the majority of people would do better off by waiting, particularly if you have a spouse and you are the higher earner,”  said Wes Triani, a financial planner based in Bayport. “Do you have children that may be special needs? Big thing to think about before you pull the trigger.”  

At the same time, he said, someone in dire financial straits or facing health issues might be better served by claiming their money sooner. 

“Is it a good time to retire now in 2024? It depends,” Triani said. “That’s going to be the answer to everything retirement-related.”

 As of December, the average U.S. retired worker received $1,905 a month in Social Security benefits, according to the Social Security Administration. The maximum payout, for high earners who delay taking benefits until age 70, is $4,873.

The health care wild card

Adding to the stress of retirement planning is the costly impact of unforeseen health issues.

Long-term care, whether it's requiring the services of a home health aide, assisted living facility or nursing home, can all be prohibitively expensive and can easily devour retirement savings. 

“Someone could be a great saver but if something goes wrong with your health it doesn’t matter how much you save,” said Edward Kotak, executive vice president of the Quintessential Experience in Financial Services, a Hauppauge advisory firm.

Kotak said long-term care insurance plans can help cover health costs, and that purchasing those plans at a younger age can be cheaper. 

"A lot of those insurances help, especially on Long Island,” he said.

The median price of a month's stay in an assisted living facility in New York this year is estimated to be $5,005; a month's stay in a nursing home with a private room is $14,460; and the cost of a home health aide was estimated to be $6,042 per month, according to data from Genworth, a long-term care insurance provider.

But long-term care insurance can be steep too, costing thousands a year. Often, premiums go up over time, with some policyholders seeing increases as high as 30% in a single year.

Just 3% to 4% of Americans age 50 and older had long-term care insurance in 2023, according to data from LIMRA, a research trade association for the insurance and retirement industries. 

Husband and wife Leonard and Melva Morlo, both 61, of Islip, said they worry about how they will be able to afford living on Long Island in retirement.

“Even in talking about retirement, we have also talked about part-time jobs,” said Leonard Morlo, who works for a mental health services nonprofit. “When we’ve talked about selling in a high housing market, we said, ‘OK, let’s say we do that, but can we realistically find a decent place to live in New York?' ”  

While the Morlos have retirement accounts such as 401(k)s and Roth IRAs, Melva Morlo said she still worries about how much will be enough.

“How are we going to be able to maintain our expenses once we retire?” she said. “Our income won’t be the same. Will we be able to be comfortable? Are we going to be able to travel? ... Let’s hope we made all the right decisions.”