Last week, [email protected] had a good article on savings and longevity and what that means for retirement. Although it only tangentially touches on creating an estate plan, it’s a good read for folks of all ages. Our system is set up based on outdated principals. Now, people are living longer. They are working longer. And the scariest part, they aren’t saving for their retirement. But without too many broad strokes, the final message of the article is important:
“Retirement, in the end, is as individualized as people.”
What Do The People Want?
With the advent of a variety of technologies, people are able to live and work longer than ever before. While some might assume this would mean a world with more retirees, in fact, the article points out that people want to work longer. They want to stay employed and be productive. Also, some people don’t have that choice. They can’t afford to retire so they keep working.
Working longer has a variety of outcomes. One of the more common that I see is clients embarking on a second career. After many years spent working for someone else, they are inspired to work for themselves. Maybe it’s a pet project that they always wanted to try. For some, they’ve spent so much time with realtors, they’ve decided they can become one too. Whatever it is, making sure you have a strong foundation, both personally and for your business, is the most important first step.
Crazy stat: “Demographers say the baby who will live to be 200 has already been born.”
~Olivia S. Mitchell, Wharton professor of business economics and public policy.
Problems with the System
Of course, preparing for retirement also requires a certain amount of financial literacy, not to mention an awareness that the only constant is change – in legislation, retirement products, inflation rates, performance of the markets, and the economy.
While medicine and technology allow us to live longer, there are some pretty large problems with our current system. When it comes to retirement,
- There’s not enough money for Social Security
- Defined benefit pension plans are almost all gone:
- There were 112,000 in 1985
- Only 47,000 left in 1996
- Just 25,607 remaining in 2011
- The government’s program to save pension plans is underfunded
Technology doesn’t yet have the answer for us. According to the article, robo-advisors aren’t the answer to our problems (at least not now). They found that the robo-advisors tend to ignore the complexities of our financial lives. They have a blind spot when it comes to recommending long-term care insurance.
Lessons For Us
All of these issues reinforce the importance of having professionals to assist you with your planning. Whether it’s choosing people on your team to help you start your business, or finding a financial advisor to help with your will, professionals are no longer a luxury. They also don’t have to be prohibitively expensive either.