Rethinking Retirement

In the United States, and most of the rest of western developed society, a view of retirement has developed. The basic paradigm is that we work until our mid-sixties. If we have done well, we try to retire a little earlier. Once we retire, we are in our “golden years”. Presumably, this is a period where we are financially independent, and we are free to indulge our time as we so choose. The retirement paradigm is part of the American Dream. If we work hard and are productive, our reward will be the payoff of a living out the remaining years after our working lives free from economic worries. Strangely enough, …or not, this is similar to the narrative that if we are good in this life, we will go to heaven. The narrative for children is that if they are good, Santa Claus will reward them, otherwise they may just get a lump of coal. I have no experiential or observational data as to a heavenly afterlife. However, it is pretty clear that based upon professional experience, news of current events, and hard research data, that many people who have presumably worked hard during their working lives, cannot expect, and are not getting much more than the lumps of coal. For all purposes, this is a significant anomaly that is inconsistent with the paradigm of retirement that most of us have been accustomed and acculturated to. Unfortunately, a rapidly diminishing number of people will ever be able to realize this dream.

An important question is whether a shift in the paradigm of the American Dream and the golden retirement years is needed. Moreover, if so, can such a shift offer other possibilities leading to a more achievable, more meaningful and fulfilling life than we otherwise may feel captive to. In answering this question, it is important to realize that a huge commercial infrastructure has been built upon perpetuating the prevailing paradigm of financial well-being and retirement. One only need view the television advertising of major financial institutions falling over themselves trying to convince you they can provide you the “roadmap” to a dream retirement. However, we only need broaden our view by remembering the financially catastrophic crisis of 2008, facilitated by many of these same institutions, to wonder what bill of goods we are actually being sold.  Our beliefs about the “good life” have been so internalized in our culture that they permeate our relationships, and are assumed to be inherent truths. Just like with the paradigm shifts in science and other areas, it is the accumulation of “anomalies” that precipitate the paradigm shift. The anomalies are growing bodies of evidence that fail to be reconciled to what one would expect from the dominant paradigm. Eventually enough people experience this discrepancy, compelling a need for a change of viewpoint.

A recent survey of 9000 people in the United States and Europe, funded by the Dutch insurance company Aegon, found that 71% of the people polled believed that future generations will be worse off in retirement than their parents. Only 15% of those polled believe they were adequately preparing for retirement. Interestingly enough, most of those polled who did not feel confident about their retirement were not doing anything about it. The results of this poll contribute to the view that the paradigm of retirement we have adopted does not correspond to the reality many people believe they will be experiencing. This represents a growing body of data that precipitate a paradigm shift as it becomes accepted and adopted by more and more people.

The fact that many people who were not confident in their retirement preparations were not doing anything about it opens a number of possibilities for interpretation. A typical interpretation that might be expected from the model of retirement preparation we have become accustomed to is that people who are not adequately preparing for retirement should be saving more. From what I have seen in over twenty years of professional practice in retirement planning, and what the statistical data will also support, is that the reality is for many, if not most, there is little chance of increasing their savings sufficiently enough to adequately prepare for retirement. This was true before the global economic downturn, and is even truer in a sluggish economic growth environment with poor employment and earnings prospects, as well as investment retirement account values. In short, many people, faced with a task they believe they will not be successful at, have simply given up. That is at least one interpretation, and while undoubtedly true in some cases, other people with retirement savings shortfalls are adopting other strategies. For example, as reported in a May 12, 2012 New York Times article, the number of Americans over age 65, and working, has doubled over the last 15 years to 7.2 million. Some are working because of the economic necessity, and others are working because that is what they enjoy doing.