Why Modern Business Requires Changes in Retirement Planning

The retirement tightrope

Most advice on retirement planning has traditionally focused on the basics of portfolio construction, risk management, diversification, maximizing contributions and other financial considerations.

The good old days
The good old days

But there is also another important aspect of retirement that only gets marginal coverage.  That aspect is happiness.

Various indexes, such as the World Happiness Report, now exist which measure the “happiest” nations on earth, as measured by factors such as stress, physical health, livability, job and physical security.  Millennials and Gen Y groups can take advantage of these indexes to break out of the mold to find alternative places to retire to outside of the U.S.

Among the current realities that should prompt many Americans to re-evaluate their current situation is stress.  A recent survey of 3,000 adults by the an American Psychological Association found that about 75% of respondents said they were stressed about money.  This was ahead of concerns about family, health and work.  About one-quarter said they were stressed about money all the time.  Among the most affected were Millennials, women and parents.  Their biggest concern was paying for unexpected expenses, and for good reason: In 2014, about 50% of American households said they could not cover an unexpected expense of $450 without borrowing or selling something, according to The Economist (Sept. 5, 2015, page 31).

Even Money Magazine in its July 2015 issue acknowledged the limitations of pursuing investment profits for a lifetime. The magazine’s editor, Diane Harris, called her lead story, “Never Worry About Money Again,” the “ultimate fantasy.”  (page 9, July 2015.)  By saying that people will not have to worry about money again a “fantasy,” she merely acknowledged what any experienced individual amateur investor already knows: making  or saving “enough” money to lie and retire is like chasing windmills.  If you hear about the “magic” retirement number or some other futuristic calculation, with or without such huge expenses as medical benefits and long-term care expenses included, the numbers will never be enough for the average worker to achieve.

So when retirement industry professionals today talk about low 401(k) balances and poor savings rates among plan participants, maybe they should realize that something basic has changed. Many workers are part of the new American working poor, people who live paycheck to paycheck and have very limited savings.  The problem is that I bet these facts never make it into the corporate-sponsored retirement education programs or those rare participant counselling sessions.

Instead, it’s very common to see experts throw out some “magic” retirement dollar amount, such as $1 million, that is needed in order to have a “secure financial retirement.”   Forget about the impossibility of saving $1 million per person that will elude millions. The very fact that this sum is widely touted as the “magic” minimum number effectively destroys the confidence and raises the level of cynicism of most who hear it.

Work Longer…For What?

While extending retirement past age 65 does earn you greater Social Security benefits, it may require a longer working period than many people planned.  It may also require that you remain in a location that is no longer appealing.  This makes the options of retiring early, moving to a different state or nation more viable than ever.  workers die cut_~shu0084

Yes, there are Social Security, federal tax, Medicare and other health care access considerations, but expanding global internet access, including electronic funds transfers, affords more opportunities than ever to spend your later years anywhere in the U.S. or anyplace else in the world.

Medicare also saves millions of Americans thousands of dollars a year in their health care costs. For a great description of these Medicare benefits  see Your Ultimate Guide to Medicare offered by Texas Medicare Plan.com.

Let’s face it: retirement for Millennials and younger workers is going to be very different from the benefits some Baby Boomers now enjoy, such as pensions. The problem is that the retirement planning industry has not incorporated these new realities into its retirement presentation.

Since no one want to be the messenger of bad news, it is no wonder the financial services industry has ignored this new reality and focused on pushing products.  Yes, sales goals are still being met, but younger workers are not being told what lies ahead by more knowledgeable and experienced financial professionals.

Worse, the retirement industry and its lobbyists choose to work against fighting the detrimental effects of  wealth inequality, wage stagnation, rising college loan and credit card debt and the continuous Republican onslaught against Social Security, Medicare and Medicaid.

The financial services  industry ignores the reality that Social Security payments go to 88% of Americans aged 65 or older and that Social Security keeps 33% of this population out of poverty, according to a recent report from AARP and the Financial Planning Association.  But even these anti-investor political concerns should not prevent  financial professionals from working in some new facts into their presentations to prepare younger clients for a softer landing as they approach retirement and afterwards.

The new reality is that maybe moving outside the U.S. to retire is not a bad idea. Workers in Germany get 20 days of paid vacation annually, which means they work about two weeks less than Americans.  Even shorter work days make for happier, more productive workers.  Futurist Sarah Robinson found that knowledge workers started making more mistakes after working more than eight hours.  She also found that more down time also means people can be more creative.

So the retirement industry’s dilemma is that it is using an old model that does not meet current realities. This is a disservice to plan participants who are not getting realistic advice, but the industry keeps delivering it as if they are on auto-pilot.  This is a classic case of bad communications and it’s a lose-lose situation for all concerned.




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Chuck Epstein has managed marketing communications and public relations departments for major global financial institutions and participated in the launch of industry-changing financial products. He also has written by-lined articles for over 50 publications, five books and served as editor and publisher of nation’s first newsletter on the topic of using the PC for personal investing and trading. (“Investing Online, 1994-1999). He also is a marketing consultant, writer and speaker on topics related to investor protection and opportunities in the very dynamic cannabis industry. He has held senior-level marketing, PR and communications positions at the New York Futures Exchange, Chicago Mercantile Exchange, Lind-Waldock, Zacks Investment Research, Russell Investments and Principal Financial. He has won national awards from the Mutual Fund Education Alliance (MFEA) and his web site, www.mutualfundreform.com, was named best small blog in 2009 by the Society of American Business Editors and Writers (SABEW).


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