The myth of retirement

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Since my company has a 401K plan, every few months I meet with an adviser who keeps us out of legal trouble and helps me make good decisions about what investments we should offer.  I had one of those meetings today.

As we went over the numbers, he expressed concern that I have employees that are not saving enough to have a reasonable chance of retiring.  I asked him if that was pretty common and whether the whole concept of a 401K being a vehicle toward retirement was just a myth anyway.

Three years ago, I am sure that he would have immediately said no.  But today, he paused.  And with good reason.  First of all, he said that based on his experience with 401K plans, less than 10% of participants are saving enough money to retire.  And that was before the recession started.  Today, contributions to 401K plans are much lower than they were a few years ago.

He mentioned that the hardest part of his job was trying to help people that have no real hope of accumulating the money to retire–the people in their mid-40’s with maybe $8,000 in a 401K.  As he put it, those people had better be nice to their children because they are going to end up moving in with them.

The second reason he paused is because he knows very well how the stock market is a very imperfect way to invest money for retirement.  You may know that the last decade was essentially flat for the stock market.  I can imagine how there were hundreds of thousands of people in their 50’s in 2000 who needed stocks to just be average for the next decade so that they could retire today.  For those people, sadly, their hope of retirement has evaporated, or at best, been put on hold.

All of us know people in that situation.  And because of the damage done to retirement accounts, many that actually did retire have had to go back to work.

During the 90’s no one really appreciated the enormous risk of stocks.  But now, we have been handed a wake-up call and it is time to rethink the normal retirement strategies.

And it is possibly time to rethink the whole concept of retirement itself.  Never until the last century did the concept ever even exist as a goal for an entire population (of course it has always existed for the privileged few).  Perhaps it is really not economically feasible for people to stop working 10-20 years before they have to.  We now know that the US economy cannot support the aged population with the work force that will be in place during coming decades.  The whole concept of Social Security has turned out to be unsustainable.

I cannot imagine retiring.  I am happiest when working.  I would be miserable without the tension in my life that comes from the work that I do.  If you disagree with me, I hope you get to retire.  But take some time to research what you have to save for it to be a feasible goal.  There are great free tools online that can help you.

And my best advice is to find a way to enjoy your job or find another job that you will enjoy.  A person who enjoys what they do never really works anyway.