January 28, 2013

Retirement & Congress: No, Not What You Think

This post will have little to say about Congress and it's potential impact on our satisfying retirement. There has been plenty written about entitlement reform and debt ceilings and the like. Because everything at this point is speculation I see little to be gained by stepping into that swamp.

Rather, I would like to draw a parallel between how Congress seems to be performing and two similar problems that can affect our retirement. I welcome your comments but let's avoid blaming one party or another or the president. This post is not pointed that way.

Most people would agree that Congress is not handling the functions it was designed to handle. The latest poll numbers I saw put the approval rating of this body lower than it has ever been in history. In fact, the pollster joked that cockroaches have higher approval ratings than Congress! That's a little snarky, but the point is valid. Congress has become so partisan and focused on job protection rather than country protection that it can only do two things well: Nothing or kick the can down the road.

How does that relate to our retirement? Too many folks have one of the two attitudes about their own retirement. It is causing problems now and will cause terrible problems in the future if things don't change.


*Do Nothing  Those who take this approach to retirement believe the payoff to years of work and sacrifice is ....to do nothing. That may mean literally to do nothing except watch TV and sleep in a big, overstuffed armchair. Or, Do Nothing can mean to do nothing new: develop no new interests, pursue no new dreams, leave any relationships locked in place without attempts to improve them, make no adjustments to financial plans, even figure your health is OK now so why change how you have always lived.

Personally, I see this type of retirement as being a waste...a waste of potential and opportunity...and really a waste of a good chunk of one's life. Don't misinterpret what I am saying. Relaxing is great. Sleeping in is pure bliss. A daily to-do list that is blank is just fine. Being "productive" all the time isn't necessary.

But, I do not believe we were created to just take up space and kill time. A long walk in the country, watching the birds at the feeder in your backyard, enjoying a cup of tea in front of the fire, even watching Downton Abbey every Sunday night is so much more than doing nothing. So is learning a new language, travel, volunteering, going back to school, or writing a book of poetry for your grandchild.  A life that is allowed to just peter out as days "dwindle down to a precious few" is a life that is missing a solid close.

What you do with the ten or twenty or thirty years that retirement gives you is entirely up to you. It is one of the few times in your live when you have a real say in what your existence looks like. Grab it. Don't do nothing.

*Kick The Can Down The Road is another horrible choice for your retirement. We know what the expression means for Congress: put temporary patches on long term problems, let others worry about the country's future, never really solve a problem if it is too difficult or politically dicey.

The same approach to retirement will have the same negative consequences. Putting off the hard choices doesn't mean the tough decisions never have to be made. Sacrificing short term pleasure for long term gain doesn't come easy to some. Satisfying one's instant gratification is thought to be a birthright. Spending less than one makes is seen as foolish. After all, isn't that what credit is for?

Consider these terrifying numbers: The average American nearing retirement has only $30,000 in savings and investments. Poorer Americans average less than $17,000 set aside. For reasons that I will never understand 75% of Americans have less than $50,000 earmarked for retirement. Do they figure they will work until they die? Do they believe there will be decent jobs available to them at 70, 75, 80, even 85 years of age? Or, do they believe in the financial tooth fairy?

"Healthy food doesn't taste good. My grandfather lived to 100 and ate meat all his life." Well, you can certainly try that approach. There are folks who smoke and never get cancer or drink heavily and have a healthy liver right until they die. But, the odds are not in your favor. Ignore your eating choices or your body's signals of impending problems and you very well might find that the road you are kicking the can down comes to a dead end. 

Doing nothing or avoiding the tough choices will not work much longer for this country.  And, it certainly won't work as a retirement approach. 

A satisfying retirement is a proactive one. It is one that excites you, fulfills you, keeps you just a bit on edge wondering what is coming next. It is about as far removed from doing nothing and kicking the can down the road as I can imagine.


25 comments:

  1. Bob,

    The only person I know who fits into the first category for retirement is my mother-in-law, who is 83. She has enough money to live a satisfying retirement "as we define it," but she chooses to live quietly. Maybe it's a generational thing.

    In terms of the second group. My sister and her husband just visited a retirement planner for the first time in their lives. They are 52 and 60 years old. I suspect they have considerable savings, but mostly I believe they will rely on pensions for their retirement. So, the national average for savings would not necessarily reflect their overall situation. I am sure there are a lot of folks in this category.

    As small business owners, we had to rely solely on ourselves for retirement savings. We planned for an early retirement and had some luck along the way that made it possible. Now, like everyone else, we watch our savings being depleted because of economic conditions including non-existent interest rates.

    Rather than live as we planned, we are making necessary adjustments to accommodate the new norm. Our satisfying retirement still looks better than most, I am sure, but for us it is still an adjustment.

    We are not bitter, but we are disappointed that partisan politics punish everyone, including people like us who created jobs.







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    1. There is the rule of "unintended consequences" that applies to all of this. Something that wasn't anticipated after an action is taken (or not taken) has long lasting consequences. Whether it is retirement planning or Congressional decisions, there is a ripple effect that often can't be predicted.

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  2. With regard to the average American's lack of retirement preparation; based on my own anecdotal conversations and observations, I see a high level of denial, and an unwillingness to forego pleasures today for pleasures in the distant future. I also see a difference in what are considered "needs" vs "wants" as compared to the mindset we held when working and building toward retirement.

    Needs for us in the 80's and 90's:
    Money to cover our mortgage, insurance, groceries add used car payments, with enough left over to contribute at least 10% to retirement. We got by with $10 each in weekly "mad" money for years and years.

    Wants for us in the 80's and 90's:
    Electronic gadgets, dining out, new car (vs used), travel, frequent new clothes.

    We did not get to the "wants" on our list for many, many years. I would offer that many folk today are absolutely unwilling to give up the wants, as we did, confusing them with needs.

    With regard to the do nothing; we are all different, of course, as are our needs. The key, I believe, is to listen and assess our satisfaction level on a regular basis and make adjustments as needed. For me, as an example, I relish a down day after a day or two of being on the go. Two down days, however, and I start to lose my sense of satisfaction, so clearly I need a fairly regular dose of activity to remain centered.

    Regarding kicking the can down the road; I'm careful to try and not have judgements on how others choose to live their lives, but I'm also unwilling to entertain comments that suggest one is a victim of their personal choices. If you choose it, you own it.

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    1. "If you choose it, you own it" is a perfect summary. In both choices noted in the post, there will be consequences...some good, some not good at all. Not all are under our control, of course, but too often we want to say "They did it."

      Thanks for your in depth and thoughtful comment, Tamara. If there is one couple I know who will never fall into the "do nothing" category it is you and Mike.

      BTW...RV trip this Thursday. Just 3 days but I gotta move. We are planning a 3 week trip for April...can't wait.

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  3. My father-in-law certainly fits the first scenario, and you know how I feel about that. I intend to continue learning and trying new things, as well as doing what I love, writing and creating art. As for Congress...they are a great example of what not to do.
    b

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    1. I was frankly amazed to hear a news story this morning that there may be bipartisan support for some meaningful immigration reform. The cynic in me says that is because the GOP realizes they can't continue to insult the largest minority in the country - not because they suddenly had a change of heart. But, whatever the motivation, maybe cold, hard reality will make cooperation a more frequent occurence.

      We'll see.

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    2. Ooops...got a little partisan there didn't you Bob?

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    3. Now let's hope we see the same realized progress on gun control. (finger's crossed)
      b

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  4. Good post, Bob. I'm wondering what our society will look like with millions of Baby Boomers living in near poverty in their senior years.

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    1. Couple the refusal to save when they can and in meaningful amounts with the government's absolute likelihood of reigning in entitlement spending, and things could get really ugly over the next decade or two.

      The solution is really not that tough but it involves self discipline and an understanding of delayed gratification.

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  5. Many of the situations Americans find themselves in is due to a lack of education. I am not faulting the schools in this country, but the individuals themselves, since elementary and secondary schools only have a limited amount of time to teach the basics. No, it is due to people who, for want of a better description, are too lazy to do all the reading and self-educating required to become savvy on the topics of saving and investing. IF the survey responses are accurate (I am starting to look more suspect at peoples responses lately) than many Americans do not have a clue as to what is required to be fairly secure in retirement.

    Perhaps Americans need to see more and more people in dire straits in this country due to their poor choices. It might be what is needed to jar many out of their lethargy. As always, a good post, Bob. I am frankly surprised you do not have more responses; maybe you hit too close to home for many.

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    1. I'm never quite sure what type of posts will generate comments. Sometimes I'm quite surprised at those that do and those that don't. The views for this post are good so I'm happy!

      There would seem to be a tremendous business opportunity to teach people the basics of preparing for a satisfying retirement but I guess not enough would take that step to make it viable.

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    2. Don't you think its rather like eating healthy? People already know that eating cream puffs and bacon on a regular basis isn't good for them, but they still do it for whatever reason.

      Surely people already know that their retirement funds are not going to appear out of nowhere, they but they still don't address it, again, for whatever reason.

      We all have the right to make decisions about our lives . . . both good and bad. Financial help is there already for anyone that wants it via our public libraries, and ever easier, the internet, radio and TV. You can lead someone to water, but you simply can't make them drink it if they don't wish to.

      I think ChuckY is correct in that things will need to get much uglier before those Americans living in denial are finally motivated to make sacrafices today in order to have a better tomorrow.

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    3. I hope Chuck isn't correct, but I am moving to an acceptance of a basic reality of modern culture: until a specific person's comfort zone is violated he or she is unable to perceive the bigger picture and wake up to the problem.

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  6. A timely and apt analogy! Nicely done.

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  7. Steve in Los AngelesWed Jan 30, 01:24:00 AM MST

    Bob - "Do Nothing" and "Kick The Can Down The Road" definitely do NOT define how I approach my retirement planning and living. Doing a lot and and NOT kicking the can down the road (i.e., planning for the future) clearly and definitively do NOT describe how I planned for my future. Retirement planning is something that each person should address. Failing to plan for retirement can have serious, negative consequences.

    I was fortunate that both of my parents taught me, starting at an early age, about the importance of saving for retirement. My Mom and Dad were my best teachers. My parents also grew up during "The Great Depression" of the 1930's. I obviously do not know the extent of my longevity, but I have a strong belief that I will be around for a LONG, LONG time as I am in excellent health. I am in my latter 50's and I can and do walk fast and even can run when necessary. My mind is sharp. I can recall things that I did and learned even decades ago. My finances reflect my belief in an extensive longevity.

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    1. An active life is the answer, isn't it! Planning and learning from the experiences of others are very smart choices.

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    2. Steve in Los AngelesWed Jan 30, 11:12:00 PM MST

      I completely agree with you! Thank you. I also learned a LOT from the experiences of my parents as well as from the experiences of other people.

      Maintaining an active lifestyle is of major importance. One thing that I keep in mind is that as long as I keep on walking (regardless of my age), which in my case is usually at a moderately fast pace, I am VERY MUCH ALIVE!

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  8. I feel like I always learn something reading not only your posts Bob but people's comments you really do have GREAT readers and SMART! On this topic I feel split personality and here's why, my husband and I are approaching 60, both went to college he does security for a major hospital and I am a nurse(nope met at 16 not at work lol).Here's the thing we were fine in 70's lived in an apartment and in those days we were paid weekly so budget wise 1 weeks pay for rent then all bills from rest but the thing was our cars were 2nd hand bought in cash we had a phone(land line)rent included utilities food and gas.Weird huh? then bought our 1st house, the "starter house" small redid for a very good profit and then our brains kicked in and bought next house(1300 sq ft on 1 acre)with very frugal ideas.So early on we did not save or think about retirement and I have to say it has taken us 30 years to right the ship for early years of madness.We are very lucky because our employer has a defined benefit plan as our pension, I have 401K, hubby has 403b, mortgage has been paid off for awhile, one car paid for and 2nd car one more year both in fantastic shape low miles.So I think we are on the right track and reformed our bad habits but I constantly assess our decisions on things like eating out,travel,purchases you know wants versus needs.I learned a ton of wise living skills from my grandparents but I am swayed sometimes but technology or my own weakness.I can not even imagine how hard it is for some people with little resources.Thanks for sharing such great info.

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    1. It really is possible to learn and grow from our youthful indiscretions...most of us are living proof. Certainly you and hubby have moved forward in a positive way.

      I know my late teens through mid 20's were my "stupid" period. Luckily, I met Betty when I was 25 and suddenly had to grow up fast.

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  9. Bob, like most of your readers have said, lots of Americans are kicking the can down the road and doing nothing. A crisis is looming and no one is talking about this. I'm afraid we who have taken the time to save, will be footing the bill for the retirement plans of those who did not. In fact I truly believe that some people are counting on being "saved" by the Federal Government (taxpayers), and therefore do not bother to save. I also think that there are people who just simply cannot save any money due to children, family obligations and/or lack of funds.

    The scariest scenarios are the people who think they'll be able to live on social security alone. In most cases that will be less than $1000 per month. I have family members that survive on disability, and it's a real struggle for them. I suspect that as more boomers grow older, you will see more people either marrying for financial reasons, or advertising for a roomate.

    Personally, I've used online financial calculators that tell me I'll be fine, but not flush. I've also consulted with a financial planner provided for free by my employer who has also assured me I'll meet my goal. Yet I still worry that I won't have enough saved. It seems that each month, I tweak my savings and add just a little more to the pot in case the experts are wrong.

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    1. Steve in Los AngelesWed Jan 30, 11:29:00 PM MST

      Gail,
      Thank you for your comments.

      When you stated that we will see more people marrying for financial reasons, I came to the realization that I probably never will get married. Marriage should be for true love and companionship and should not be strictly for financial reasons. Furthermore, one of my complaints about Social Security is that it is possible for a person to marry another person for 10 years (or more), divorce the other person on or after those 10 years, and then qualify for current or future Social Security benefits based on the other person's Social Security earnings record. To that possibility, I say "no thanks"!

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  10. To Steve in Los Angelos, I have to agree with you regarding why one should get married. It's too bad more people don't feel that way.

    Good luck in retirement!

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