April 26, 2020

Messing Up Your Retirement



Back to the subject of retirement for this post. I wrote this about two months ago before everything began to change. I am leaving it as is, though obviously we might not be able to follow these five "rules" today. The importance of each still exists for now and well into our retirement future.



I subscribe to a dozen different Google Alerts to help me get ideas for blog posts. It works like a newspaper clipping service used to operate. Once a day Google sends me links from the Internet and relevant blogs that contain information based on key words I supply. For example, any time the words "retirement blog" or "Senior Health" appear in a blog or a news story, Google sends me a link.

Unfortunately, the number of links that contain negative information have dominated these alerts. The majority of financial stories are not encouraging for our age group. The inability of too many seniors to retire, or the negative effects on health from stress and worry fill these emails. The future of Social Security and Medicare are back in the headlines. If I believed all these alerts are the full story I'd pull the plug on Satisfying Retirement, since apparently no one is having one anymore.

Like you I know that negative news more often replaces any good news: "If it bleeds, it leads" is still true. Politics is a prime example. While our government continues to function well overall, what fills our days is worrisome news about the future of the economy, coronavirus, the latest tweet storm from the Tweeter-in-Chief or a dustup with someone somewhere. Don't get me wrong: things in our government right now are in dangerous disarray, but not everything is going down the drain.

So, if you want to ruin a perfectly good retirement only allow these type of stories into your life. Believe that everyone is close to living on the street, we are all eating dog food, haven't been to a doctor in ten years, and divorce is right around the corner.

Actually, there are five more common ways to mess up what can be the best years of your life: insist things be the way you want them to be. Can you relate to any of these?

Insist that your retirement look like your parents' retirement. The world is a different place than it was just one generation ago. Retiring with a solid pension, a good health plan, a dependable Social Security check and Medicare coverage made mom and dad's retirement years generally rather safe and steady. Golf, travel, some volunteer work, sleeping late, and lots of reading filled their days.

Well, wake up and smell the new reality. Those carefree days are gone and not likely to return. Importantly, most of us wouldn't be content with such a laid-back lifestyle for the next 20 or 30 years anyway, though the security and stability would be nice. Hold out for what dear old mom and dad enjoyed and you will be disappointed.

Insist that that it follow exactly your plan. Control is something we crave, expect to maintain...and are kidding ourselves. Plans are important, but not necessarily reality. John Lennon had it right: "Life is what happens while you are making other plans." By insisting that the retirement you plotted out for yourself oh so carefully follows that script without deviation is folly. A satisfying retirement requires flexibility.

Insist that "they" are responsible to provide you a nice lifestyle. There is no more "they." Neither business nor government can guarantee you anything. Life doesn't work that way. If you don't take responsibility for your own investments and savings, for living beneath your means, and bypassing immediate gratification for a more secure future, I'm afraid 'they" will not be there to rescue you. Life isn't particularly fair, but blaming someone else will really get you nowhere.

Insist that you will not get sick and need help. There is no need for health insurance, long-term care plans, or preparing for the time when a nursing center becomes necessary. You have great genes and a family that will take of you. Both those facts may be true, but if you don't plan for poor health you are buying yourself a boatload of trouble. The human body is designed to wear out. Our lifestyle and dietetic choices hasten that process. You can do a lot to delay the decline and improve the quality of your later life. But, the prudent person also makes plans for when all else fails.

Insist that no one else saves much and they are fine. We read all sorts of stories of 50 year olds with $25,000 in their retirement account, or folks living off just Social Security and doing fine. Both stories can be true, but what is missing is the quality of the retirement these approaches produce.

If you are in your 50's (even 40's) and have saved virtually nothing for retirement you have two choices: have a rich, older relative who has you in first position in his/her will, or plan on working until you die. Those are the only ways having such an insignificant savings account will work.

Yes, you may be able to exist on just Social Security with Medicare help, but your daily lifestyle will be quite restricted. With the average payment just over $1,200 a month (before Medicare deductions) you will have little or no discretionary income. After the necessities are paid for the money will be gone.


These problems don't have to happen. Each of the five is largely controllable by you. Can the economy or government screw ups, bad luck in the health department, or an unavoidable accident ruin even the best laid plans? Absolutely. But, why contribute to the odds of problems? Don't mess up your chance at a truly satisfying lifestyle by denying personal responsibility for what happens. If you look for a scapegoat it is very likely that it will look a lot like you.

Dedicate yourself to proving all of the bad news Google alerts are wrong.


17 comments:

  1. All good comments Bob and my experience is that all are true. It's interesting how it goes in retirement, though my retirement is mostly as I imagined it, even the C-19 hit to our investments isn't game changer. I had been expecting a major market correction at some point and my retirement portfolio was structured accordingly, I just didn't expect it would be a pandemic that would do it.

    On the health front it's interesting how it goes. My father was a health conscious non-smoker non-drinker who exercised regularly. My mother paid no attention to her health at all, a heavy smoker into her 60s when she finally gave up, inactive and very overweight (they split when I was 19). My father has passed away while my mother carries on into her 90's and doesn't require any medication at all despite her long time less than ideal lifestyle. As for me, I exercise regularly and try to maintain a good weight and 5 years ago I had a clean bill of health. Now I have some medical issues, nothing too major, that require a couple of prescription tablets each morning to keep them in check. Don't count on the fact that you are the picture of health now to protect you into the future.

    Of course the pandemic has highlighted how little control we actually have. It has affected our retirement financials, our social behaviour, and potentially our health prospects. Things can change in an instant so enjoy life while you can. Plans are good to have but be prepared to adjust as necessary because you just never know what might happen.

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    1. We were overdue for a correction. Unfortunately, what we have is a bombshell. Before the pandemic we were drawing down about 3.5% of our investments each year. Now, we are closer to 2%. That means our investment are actually either growing or staying even.

      Health is the great leveler. Few of us manage a long retirement without some issues, often at least one biggie. So, we do the best we can and adjust as needed. Your dad vs mom story is the type that people without the best habits cite as proof that genes make the difference. Maybe so, but I am glad I quick smoking 35 years ago.

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    2. I didn't think my mom versus dad story would have people put their faith in having good genes, I certainly don't. I was thinking more about how you can lower your risk of death and disability by doing the right things, and please do those right things, but it's no guarantee. As Bill Bryson wrote in the concluding chapter of his recent book The Body... "Exercise regularly, Eat sensibly. Die anyway". It happens to us all.

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  2. We spent the month of February in South Carolina and made a conscious effort to avoid the news and pretty much all of electronic media. We focused on family, the beach, local culture. It was very relaxing and definitely improved our mood. However, we were surprised to say the least when we got home and were hit with the Coronavirus pandemic. Whaaaat?!? Maybe there's a happy medium between living our lives and paying attention to the world. Or, as I think you've pointed out . . . we should focus on the things we can control and not worry too much about the things we can't.

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    1. It is interesting that you were so disconnected that the pandemic came as a shock. That speaks to a very disciplined approach to your month in South Carolina, and maybe a bit to that state's response early on. Of course, things didn't really start taking a noticeable turn for the worse in this country until early March. So, your timing was perfect.

      What a welcome home!

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  3. Bob, your point about the impact of negative news stories strikes home. From this side of the border, the news stories about your leader’s antics, gun violence, the expensive and inequitable health care system, and pervasive racism paints a not very flattering picture of your country. However, whenever I visit the USA, I see beautiful cities and parks, meet lovely and welcoming people, and am impressed by the cutting edge developments in science and other scholarship. It reminds me about the negative bias of news stories and to think twice before drawing conclusions based on the news.

    Jude

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    1. "If it bleeds, it leads" applies. Bad news is what grabs people's attention. There is no shortage of those stories today. I believe Mr. Trump does not represent more than a small fraction of this country's values, intelligence, and openness. Hopefully in less than a year he will be a nasty footnote to our history.

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  4. This blog post if full of SMART advice :-) and I'm not even fully retired yet! I agree that the world has changed since our parents retired (and that was before the pandemic threw a huge monkey curve into the equation!) The good news at least in my opinion is that I am a good planner so I can plan for lots of the eventualities that you mention...but then as we all must, I have to stay "flexible" with the plan.

    So as an optimist I'm looking forward to the years ahead but have taken lots of steps to make sure it will be as good as possible. (including staying sheltered-in-place) regardless of whether any news station or any politician says otherwise!)

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    1. If any of us needed a reminder that retirement doesn't follow our plans, the last few months have made the point quite powerfully. Over the years I have continued to make plans, but I tend to think of them as desires and guidelines. Rigidity is no longer part of the process.

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  5. I have some friends who retired just before the virus hit. Although we don't discuss finances, I really hope they had a solid nestegg before leaving work... not just enough and no more. Although we would do just fine without a social security check (we are very lucky), my fingers are crossed the Medicare will still be there when I become eligible (early next year). But, it wouldn't surprise me if the Right used this crisis as an excuse to try to dismantle many of our social programs.

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    1. Can you imagine the outcry if after a medical crisis there was a move to cut or restrict even more health insurance in this country? That said, you may be right. Certain segments of our government have made it clear that old, sick, poor, or non-white folks don't deserve what rich, white people of any age are entitled to.

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  6. One of the most frightening financial conversations I've ever had was with a co-worker who was leaving our company for a job in another state. We were both in our 30's and I was trying to convince my co-worker to rollover the 401K with our company to an IRA instead of cashing it out as was the plan. When I asked what my co-worker intended to do when it came time to retire, the reply was, "My nieces and nephews will take care of me." That conversation still haunts me to this day.

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    1. That is known as the "bet everything on black pie-in-the-sky" retirement planning approach. Terrifying for both that co-worker and his relatives.

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  7. Your article along with the pandemic is a great retirement wake up call Bob. The system is broken and we better know how to swim. We are responsible for our retirement futures and while it currently is a rough ride we will get through this. Have faith, do the right things and retirement will turn out ok.

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    1. June will mark the 20th year of my retirement. I have been through the end of the dot.com mess, the 9/11 recession, the 2008 meltdown, and now the current crisis. I am still here and still financially quite viable. Flexibility and a sense of humor are required.

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  8. Man plans; God laughs. So true. So many people are trying to hold onto the "old" normal, whether that was the old normal of years ago or just weeks ago. Like you observed in the last post (love that photo and the post), we are adapting to "now" without knowing what the future normal is going to look like, not just years down the road, but months or even weeks down the road. What a great opportunity to get to know ourselves better, not the "us" that we have dressed up with a particular set of circumstances as our identity, but the us we are when our foundation shifts, when life doesn't "look like" what we thought or expected. As we are adapting in practical day to day ways, I hope we will not overlook the chance to go deep and see what we discover.

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    1. In a rather perverse kind of way, the pandemic experience and what it is doing to our lives is really just the normal type of adjustments and changes a typical retirement entails...except on a very accelerated timetable. Economic questions, health concerns, how we live, what is important to us, are all questions we are grappling with now, just like we do over the course of our non-working life.

      Each time we are forced to make changes in our plans (while God laughs!) there are opportunities to assess how we are living and then do things differently. I will admit, however, that those adjustments don't normally come with life-threatening possibilities.

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