Sunday, June 2, 2013
What, Me Worry About Retirement?
I remember back in the late 1970s when I interviewed for a job at the company where I eventually went to work, everyone there bragged to me about the great benefits that were offered. The company had its issues -- the office was out in the middle of nowhere, and the company wasn't considered the leader in its industry -- but the pay was pretty good. And there were those benefits.
Honestly, at the time, I didn't give a hoot about the benefits. I needed a job! So okay, it was nice to have good medical insurance. But what did I care? I was young and healthy. And when you're 30, who even thinks about retirement? The idea was laughable to me.
Then the years went by. And boy oh boy, by the time I left, I sure was happy that I'd been included in their great retirement package. To be honest, it wasn't as great as it had been, back in the 1970s and '80s; and I didn't get the whole package because I got laid off before I qualified for retirement. But still, it was a lot better than what I would have done on my own.
Most young workers probably never think about retirement. It's such a vague notion, and so far off. People are focused on starting their careers; then starting families, buying a house, and buying things for their kids, and maybe opening up a college fund.
Even if retirement does somehow make it onto your radar screen in your 30s or 40s, it's hard to save money when you have so many pressing immediate needs -- especially if you're trying to raise a family on $40K or $50K a year, as a lot of people are.
When I started working, there was no such thing as an IRA or a 401K plan. Those saving plans at least do help people face the reality that there is such a thing as retirement in their future. Would it help if high schools and colleges required courses on personal finance, so people learn the skills necessary to save and invest for their future? It might. But not everyone has a "head" for money ... just like not everyone can draw, or play music, or are good at math.
I know some friends and relatives -- people in their 50s and 60s -- who have absolutely no concept of how they will support themselves in retirement. They readily admit they have little to no financial knowledge, and no ability to make investment decisions. Some of these people -- those who are smart and realistic about it -- have hired a financial adviser to help them negotiate through the thicket of financial options. But finding an honest and upfront financial adviser is about as easy as finding a good car mechanic. Yes, they're out there; but they're hard to find.
So what can we make of all this?
Saving money is hard. So is eating your vegetables and doing your exercise. But we should all do it, one way or another. And if we don't, we're going to pay the price.
Let's face it, investing your savings is not all that difficult. (You've heard of the low-cost index mutual fund, haven't you?). All you need is the ability to do math at about the 10th-grade level; along with some healthy skepticism about the advertising, marketing and salesmanship that you see on the subject. And there is plenty of material out there to help you get educated, starting with John Bogle. Nevertheless, some people are just not interested; or they have a blind spot about money. And so these people really should find themselves a good finance mechanic. (If they're lucky, they have one at their place of work, in the form of a good retirement program.)
Also, just maybe it makes sense for some lower income people not to try to save too much for retirement . . . and not feel bad if they can't. If you're scraping by, living hand-to-mouth, when you're in your 40s, you'll probably be scraping by, living hand-to-mouth, when you're in your 70s.
According to Social Security statistics, "among elderly Social Security beneficiaries, 53% of married couples and 74% of unmarried persons receive 50% or more of their income from Social Security." And "23% of married couples and about 46% of unmarried persons rely on Social Security for 90% or more of their income."
Does it help to try to make people feel guilty about it? Nobody ever promised that Social Security was going to afford us a comfortable retirement, just that it would keep a roof over our head and a meal on the table. We always knew if we wanted to travel, that would be on our own dime.
Finally, while a lot of people brag and boast about being able to retire in their 50s, there's no reason why anyone should feel bad, or feel like a "failure" if they can't afford to retire at age 55 or 60, or 62, or even 66. My own dad worked until he was 72. He didn't suffer for it. I have some friends today who find it rewarding -- and who also gain some self-respect and direction in their lives -- while still working into their late 60s and early 70s, even if it's not a high-paying career-type job.
I guess what I'm saying is, there seems to be so much pressure on us these days about retirement. Maybe because Baby Boomers are starting to retire, it's become a bigger subject, because everything Baby Boomers do becomes a bigger subject. But let's not have a heart attack about it.