Removing the clouds that have us blind
On June 7, Michael Fischer asked, “How Prepared for Retirement Are American Workers?”1 According to the 2017 Aegon Retirement Readiness Survey, the American public compares favorably among fifteen nations spanning Europe, Asia, Australia, and the Americas. Ranking second behind only India, U.S. workers exhibited, “a medium level of readiness.”2
Still, there were challenging statistics reported throughout the survey. While 89% of Americans are aware of the financial need to be ready for retirement, more than 40% admitted they were not making sure they were saving for the future. A quarter of the American workforce has no retirement strategy and 41% stated their plan was unwritten. Finally, more than one-half have no backup plan if they should become unable to work due to health issues or job loss.3
While the United States fared better than 13 nations in the study, the nearly $14 trillion retirement savings deficit reveals a blindspot that must be addressed.4 As Johnny Nash wrote and sang in his 1972 hit song, we will be able to see clearly when the dark clouds that blind us are gone. Part 1 of preparing us for retirement is to eliminate some of the myths that cause us trouble!5
Retirement probably will not be a breeze!
While some eagerly embrace their departure from the workforce, many find this prospect scary and even disorienting. It is virtually always a complex experience that results in a vastly redefined routine and identity. The original dream may have been care free days relaxing on the beach or morning coffee in the sunroom, but for many it becomes a constant balancing act between hobbies, repair projects around the house, and the expectations imposed from others.
Retirement arrives at the “magical” age of 65
Prior to the establishment of Social Security, conventional wisdom held that men had certainly begun to decline in work capacity by the age of sixty, and it was time to yield to the next generation. Many economists and politicians disagreed with the economic feasibility of a younger retirement age, so the Social Security Act in 1935 instituted the official retirement age of 65…while the life expectancy for the American male population was 58.6
Reality reveals the correlation of retirement and age 65 is shrinking. “Retirement happens earlier than expected for half of retirees. Sixty percent of those leave due to health issues, and others leave because they were let go due to downsizing or had to quit to care for a family member.”7
Retirement is about the needs of my spouse and me
The retirement dream mentioned earlier of lazy days on the beach or morning coffee in the sunroom is largely built upon the concept of the empty nest. The children are now supposed to be on their own, caring for their children and fulfilling their own career. The parents/grandparents of the dream retirement are left to wonder why they do not see the family as much as they wished!
The reality of 2017 has brought with it the creation of the sandwich generation. “With an aging population and a generation of young adults struggling to achieve financial independence, the burdens and responsibilities of middle-aged Americans are increasing.”8 Statistics reveal that 35% of working Americans and 25% of those retired are having to contribute financially to one (if not more) generation(s) of family.9 Providing this safety net is laudable, but it makes it difficult to save for, or maintain, sufficient retirement funding.
I can see all the obstacles in my way
As an offensive coordinator prepares the game plan for the upcoming Saturday afternoon opponent, he learns where the opposing defense may be superior and where it is known to be inferior to the personnel of his team. Knowing where the obstacles will be enables him to attack the opportunities. The same is true as we envision and plan for our retirement years.
These are but three myths that we have developed, or have been shared with us by others, about retirement. Now, as the myths that may confuse us are revealed, we may examine them, assess their weaknesses, and discover the opportunities before us that will enable us to overcome them. Seeing the future clearly, we may plan appropriately for retirement.
1 Fischer, Michael. How Prepared for Retirement Are American Workers? June 7, 2017. ThinkAdvisor.
2 Aegon Center for Longevity and Retirement. The Aegon Retirement Readiness Survey 2017. transamericacenter.org.
3 Aegon, ibid.
4 Rhee, Nari. The Retirement Savings Crisis: Is It Worse Than We Think? National Institute On Retirement Security. June 2013.
5 Nash, Johnny. I Can See Clearly Now. songfacts.com
6 Laskow, Sarah. How Retirement Was Invented. October 24, 2014. The Atlantic.
7 Swafford, Ali. Debunking the Top 5 Retire-Myths. May 2017. kiplinger.com
8 Parker, Kim & Patten, Eileen. The Sandwich Generation. January 30, 2013. Pew Research Center.
9 Passy, Jacob. This one important and emotional issue hurts Americans’ ability to invest. May 31, 2017. MarketWatch.