It was 2011, and we had just deposited our youngest off for his first semester of college, stopped off long enough in Washington, DC to visit our daughters (both in college there at the time), and then sped home up the East Coast with reports of Hurricane Irene’s potential destruction and probable landfall(s) close behind. We arrived home, unloaded in record time, and rushed straight to the local hardware store to stock up for the coming storm.
We weren’t the only ones to do so, of course. And what we had most hoped to acquire (a generator) was not to be found – there, or at that moment, apparently anywhere in the state.
What made that situation all the more infuriating was that, while the prospect of a hurricane landfall near our Connecticut home was relatively rare, we’d already had one narrow miss with an earlier hurricane and had, on several prior occasions, been without power, and for extended periods. After each I had told myself that we really needed to invest in a generator – but, as human beings are inclined to do, and reasoning that I had plenty of time to do so when it was more convenient, I simply (and repeatedly) postponed taking action. Thankfully my dear wife wasn’t inclined to remind me of those opportunities, but they loomed large in my mind.
People often talk about the retirement crisis in this country, but like a tropical storm still well out to sea, there are widely varying assessments as to just how big it is, and – to borrow some hurricane terminology – when it will make “landfall,” and with what force.
Most of the predictions are dire, of course – and while they often rely on arguably unreliable measures like uninformed levels of confidence (or lack thereof), self-reported financials and savings averages – it’s hard to escape a pervasive sense that as a nation we’re in for some rough weather, particularly in view of objective data like coverage statistics and retirement readiness projections based on actual participant data.
Indeed, in a recent op-ed in the Wall Street Journal, Andrew Biggs, Resident Scholar at the American Enterprise Institute offers what is certainly a contrarian perspective these days: assuring President Trump (and us) that there is no retirement crisis (subscription required), at least not a “looming” one. And yet his point is basically little more than things are better than many would have us believe, based largely on data that indicates things are better now than they were before we worried about such things. Biggs, who previously testified before Congress that the use of the term “crisis” to describe the current situation was an “overblown non-solution to a non-crisis,” maintained that 75% of today’s retirees are “doing well,” and that Boomers are having a better retirement than their parents, who ostensibly lived during the “golden age” of pensions.
Another reassuring perspective was published earlier this year by the Investment Company Institute’s Peter J. Brady & Steven Bass, and Jessica Holland & Kevin Pierce of the Internal Revenue Service – who found, based on IRS tax filings, that most individuals were able to maintain their inflation‐adjusted net work‐related income after claiming Social Security. Not exactly an affirmation that the income was enough to sustain retirement expenses, but at least it showed that individuals were maintaining (and most improving upon) their pre-retirement income levels, at least for a three-year period into retirement.
Life is full of uncertainty, and events and circumstances, as often as not, happen with little if any warning. Even though hurricanes are something you can see coming a long way off, there’s always the chance that they will peter out sooner than expected, that landfall will result in a dramatic shift in course and/or intensity, or that, as with Hurricane Katrina – and apparently Harvey – the most devastating impact is what happens afterward. In theory, at least, that provides time to prepare – but, as I was reminded when Irene struck, sometimes you don’t have as much time as you think you have.1
Doubtless, a lot of retirement plan participants are going to look back at their working lives as they near the threshold of retirement, the same way I thought about that generator. They’ll likely remember the admonitions about (and their good intentions to) saving sooner, saving more, and the importance of regular, prudent reallocations of investment portfolios. Thankfully – and surely because of the hard work of advisors and plan sponsors – many will have heeded those warnings in time. But others, surely – and particularly those without access to a retirement plan at work – will find those post-retirement years (if indeed they can retire) to be a time of regret.
Those who work with individuals trying to make those preparations know that the end of our working lives inevitably hits different people at different times, and in different states of readiness.
But we all know that it’s a “landfall” for which we need to prepare while time remains to do so.
- Nevin E. Adams, JD
- As it turned out, we got lucky. An apparently random and unexpected delivery of generators happened at our local hardware store where my wife had only hoped to be able to stock up on batteries. We got it home, and in record time learned enough to run it, managed to get in a supply of gasoline (before the pumps and cash registers ran out of juice), got our windows covered with plywood, and hunkered down for what still feels like the longest night of my life.