Retirement, as we have known it, is broken… very broken.
It’s no secret that affording retirement in it’s traditional sense is becoming nearly impossible for the vast majority of Americans. Very few pension plans exist today. And of those that are still available, the benefits have been decreasing. In the past, both pension and Social Security benefits provided a guaranteed income stream over life, and in most cases was enough to provide a comfortable lifestyle. Most risk was limited to inflation risk; the inability to keep pace with increase in the cost of living. Additionally, employers typically provided health care benefits at a minimal cost to retirees for the length of their lives. But as life expectancy has increased, the ability to maintain these benefits has become to difficult, if not impossible, resulting in the shift of responsibility and risk from the employer to us as individuals.
In 1930, when Social Security was enacted, the average life expectancy at birth was 58 for men and 62 for women. The average retirement age was 65.
While the numerous factors affecting retirement have evolved, the way we plan and prepare for retirement has not.
Traditional retirement planning ignores the larger issues and continues to focus on savings and income distribution plans. Their “solution” predominately relies on saving more and optimizing investment strategy. Of course saving and investment strategies are important, it just does not go far enough. Saving more is just not the answer, at least on its own. We have to face the facts, no amount of investment wizardry can make the numbers work in a way that would allow the average American worker to retire without any pension benefits or earned income and live comfortably for 30+ years after only saving maybe 10% of their income over 30 years of employment. (You don’t have to tell me, I know the resources just aren’t there for most to “save more”.)
The good news is that you aren’t alone. Most of us are in the same boat. It may be nice to know that you didn’t do anything wrong.
But what now?
I think there’s a tendency when you realize you aren’t in a position to amass the resources to retire in the way you thought, to resign to the idea that you’ll have to work for the rest of your life, slaving away in a job where you don’t feel you are contributing in a way that matters. While I agree that continuing to work is most likely going to play a role in the solution. It’s the resignation and the not being able to work towards something that matters part, that doesn’t sit well with me and perhaps it doesn’t sit well with you either.
The way we think of retirement has to change. Much of what we’ve come to believe about retirement is based on assumptions that aren’t necessarily true. Such as, we’re happy not working or that the aging process is something to be feared because it equates to declining health. We’re stuck feeling powerless to change our circumstances. We’re paralyzed by fear of not having enough. Its time to change all of that.
It’s time to challenge the assumptions we’ve bought as fact and start asking, “Is there another way?” Let’s ask ourselves, “What would it look like to live life in a way that leads to meaningful purpose, connection and vitality, all with the assurance that our financial needs are met?” “What would it look like to live a life you loved, creating a meaningful and lasting legacy?”
It’s time to do retirement differently.
It’s time for a Retirement Revolution!
