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March 20, 2008
Retirement, Like Death, Happens to Other People
People don't think retirement will happen to them. That's my conclusion in scanning some harrowing stuff from a new study on whether people know how much money they need to retire. I was particularly taken by this chart showing the factors people claim to take into account in thinking about what they need to save for retirement:
Most people look at one thing and one thing only: How much they imagine spending. Current investments, current savings, health, age, etc.? All non-issues! And, even more harrowing, more than one-in-four respondents had no idea where to even start with respect to the factors. Oye.
[via MarketingCharts]
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I wonder what this would have looked like pre-Social Security. I bet "help from children" would have scored high, as it would even today among several first-generation immigrant groups.
Well as long as they account for all those things in their expenses, they can do fine, but whether they do is doubtful.
on the whole, the idea of retirement has become just a myth.
no one in the future will ever retire, given the overall lack of preparation by the vast majority. combine the lack of preparation, with a dollar that is crashing in value, and you have a massive decline in standard of living ahead. Just visit any Walmart today. Its already happening. See who is stocking new goods on the shelf, and checking you out at the register.
the old days of working a job, and getting a pension plan that will cover a happy life of playing golf every day and traveling the world will truly no longer exist. for the vast majority of folks. it really has become a myth.
and its curious to see all the political candidates making promises as if they can restore that kind of standard of living. unless they can manufacture some kind of post World War II standard of living bonanza out of thin air.
There seems to be a bit of blame the victim here. For most people the idea of saving -anything- has been a joke for some time. Never mind retirement. Almost all the money goes to the top now.
As a 25 year old, I am often met with disbelief by my peers when I tell them I'm attempting to max out my 401k for the year. Many distrust the system in general - overwhelming amount of data without guidance, high fees, a lack of investing education or information from trustworthy sources (hint: the company selling it to you does not count), and the 40+ year time horizon all contribute to their skepticism.
I recently read that those born today have an 83% chance of reaching age 65. Hardly wonderful odds. Perhaps with all of the risk above the lack of investment in 401ks by the youth of today is actually founded in economic rationality, despite the 'promise' of an 8% return for the rest of our lives.
As someone who is prepared for retirement, I increasingly take into account that I'm probably on some level going to need to fund other people's retirement by being taxed up the wazoo when I get there. That's what is frightening.