A Reality Cheque

Posted on February 17, 2013 under Storytelling with 3 comments

I am in the retirement planning business so I have a front row seat in the drama that is playing itself out daily. For some strange reason, the baby boomers (I’m one of them!), seem to think that nobody ever retired before. Agreed, there have never been so many people retiring at once as this self-indulged, “me” generation, Prozac-fuelled group of post WW11 babies. A favorite expression from the early 70’s was; “you’ve come a long way, baby”. And, I would add from my perch, that you still have a long way to go. Somewhere along the line we were led to believe that this special group of high achieving, materialistic and driven folk was entitled to an early and prosperous retirement. The most damaging ad campaign of our generation was “Freedom 55”. We expected to retire young, rich and healthy and live forever. We have lived the good life. By and large we are a generation who have over-consumed. We have eaten too much and spent beyond our means. And the day of reckoning is upon us.
Retirement at sixty five is a notion that has survived for more than fifty years. Back when our grandparents performed serious physical labor, the average life expectancy was not much beyond 65. You basically worked until you dropped. Retirement coincided with interment more often than not! (Rearrange the letters of retirement and it looks at lot like interment). When the boomers arrived on the scene and began their work careers, the notion of “early retirement” gained a foothold and was embraced by one and all. Work hard, invest your money in the stock market and “presto”; we’re sailing off into the sunset in our mid 50’s. Those in the financial planning and investment world did their best to nurture this idea with slick marketing campaigns, catchy slogans, and promises of untold riches if we would just put money away and leave it to the experts.
So that’s what a lot of people did but other forces were at play. Some other marketing whizzes told us that we shouldn’t deny ourselves pleasures now… somewhat along the lines of having your cake and eating it too. You could have pleasure now and retire early. So the spending orgy began. The boomers spent and spent and spent some more and at the same time we insisted that our governments do the same. Household debt soared, especially when interest rates plummeted at the turn of this millennium. And somewhere in the last fifteen years, the stock market party ended with a thud. Pension plans are underfunded, government debt is massive, personal wealth has been eroded by successive stock market melt downs and now the boomers are staring at a very different retirement than the one that was advertised and heavily promoted.
Going for a pre-retirement planning session with a reputable financial planner can be a sobering exercise. A lot of people simply don’t know where they stand and are surprised and disheartened to find out that retirement might become a word that’s obsolete for them and many of their friends. First of all, a word about those who have already retired. Those who have been retired for a long time came from a different era and a different set of expectations. They didn’t expect a lot and as a result, by and large, are content with their lot in life. They were more “do it yourselfers” and have plenty of hobbies to keep them busy. And, of course, in that era of large families, they are surrounded by large extended families of children, grandchildren and great grandchildren.
The recently retired and soon to be retired find themselves in a very different situation. They are supporting adult children and helping ageing parents while still carrying debt. They hadn’t really thought about what they would do in retirement. In a lot of cases, it entails doing the same things they did while working… with a lot less money. Many have been forced to go back to work to make ends meet and this, I would argue, is not necessarily a bad thing.
So here’s my advice to the Boomers. Get a grip. Take the reality test. Get out a ledger, a few sharp pencils and an eraser. Instead of buying stocks, how about taking stock? Chart all of your expenses… and no cheating. Everything. The double doubles, the lottery tickets, fast food purchases and all of your other regular expenses. Do it once a week. Do it with your spouse or significant other. Do it when you are both well rested. What you discover about your spending habits may shock you.
Once you’ve done this over a reasonable amount of time, you will probably be forced to make some choices around needs and wants. And you may also come to the realization that you may have to work longer and retire with less. But you will still be better off than 95% of the world.
My advice; don’t buy the hype. Become “master of your own destiny”. We are no longer entitled to our entitlements.

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