Saturday, December 15, 2007

“Legends” of the Fall?

I went to see “I Am Legend” over the weekend. It’s the third cinematic version of the post-apocalyptic story that Richard Matheson wrote in 1954. This weekend’s reviews will (rightfully) be mostly about Will Smith—but Vincent Price was the first to take on the role in 1964 (in “The Last Man on Earth”), as did Charlton Heston in 1971’s “The Omega Man.” Each film, of course, is different—and I’m not just talking about the generous application of CGI. So different, in fact, that while I had read the book and seen the prior two film interpretations (Matheson influenced the 1964 version, but had nothing to do with “Omega Man”), I was distracted by things not happening the way they were “supposed” to happen in the story.

The “story” of this nation’s retirement has been similarly well-chronicled. For the very most part, the stories of late have been of the apocalyptic variety—and with some justification, IMHO. Last week, the Government Accountability Office (GAO) published the latest version, titled “Low Defined Contribution Plan Savings May Pose Challenges to Retirement Security, Especially for Many Low-Income Workers.

Gee, ya think?

I don’t mean to disparage the work of the GAO in this regard. They’re not the first—and they certainly won’t be the last—to attempt to project the consequences of our nation’s current preparations for retirement. Most, including the GAO projections, paint a dire picture indeed. In fact—and this was the headline for most of the coverage of the report—GAO projected that, for workers born in 1990, nearly 37% would reach retirement with no savings at all!

Now, I have a daughter who was born in 1990 (she actually went to see “I Am Legend” with me), and while she surely is an exceptional child, I have a hard time imagining that 37% of the kids her age will come to retirement with no savings at all. Not that I see it as an impossibility. Let’s face it, we live in an era where about half of working Americans don’t even have the opportunity afforded by a workplace retirement savings program, and where, on average, a quarter of those who do, don’t take advantage of it.

Still, one could at least argue that today’s workers are still “counting” on Social Security, that some have (and too many presume they will have) the underpinnings of a defined benefit pension, that many espouse the notion of working past the confines of a traditional retirement age as a choice, rather than a necessity. If they’ve been slow to respond to the call, perhaps they’ve been “encouraged,” perhaps even deluded, by our unwillingness to be straight with them about the need and their growing responsibility.

The Boomers remain a relatively optimistic lot when it comes to retirement, despite a litany of surveys and projections (including those like the GAO report) that suggest many are merely whistling past the proverbial financial graveyard. Time will tell if the urgings of those Cassandra’s are an accurate prediction too long ignored; a fundamental misapplication of averages, standard deviations, and longevity tables—or some of both.

The next generation—for this is the Boomers’ brood, after all—may fare no better, it is true. But they’ll surely do it with less justification—and despite access to a growing array of tools and resources—than their parents.

- Nevin E. Adams, JD

1 comment:

  1. Just a reminder that a happy retirement is dependent on a number of factors as detailed in my book How to Retire Happy, Wild, and Free (Retirement Wisdom That You Won't Get from Your Financial Advisor).

    In Chapter 1, I give eight good reasons why the large majority of retirees, whether they live in Canada, the U.S., or other Western nations, can live on far less than 80 percent of their pre-retirement income. Indeed, government statistics indicate that retirees live comfortably on 45 percent to 62 percent of their pre-retirement income.

    Here are the eight reasons why retirees don't need as much money as financial planners recommend:

    1. Most retirees have their homes paid off and no longer have to pay a mortgage.

    2. Retirees no longer have the expenses associated with employment such as daily commuting and the need to purchase clothing suitable for a work environment.

    3. Because their income is lower, and they wind up in a lower tax bracket, retirees pay much lower taxes than they did when they were working.

    4. Retirees can move to a new location where the cost of living is lower.

    5. Retirees’ children are grown up so they don’t have to pay for their education anymore.

    6. Retirees can get seniors’ discounts on practically everything they buy.

    7. Retirees don’t have to earn extra income to set aside for retirement savings.

    8. In their later years, most people are not as insecure and ostentatious as they used to be; thus, they don’t need material goods to validate themselves in the eyes of others.

    For those interested, I actually give away over half of How to Retire Happy, Wild, and Free - the top half - on my webpage Creative Free E-books at the Real Success Resource Center.

    Ernie Zelinski
    Author of How to Retire Happy, Wild, and Free (over 75,000 copies sold and published in 7 foreign languages)
    Featured on The Retirement Quotes Café at