Guest Post by Brett Arends
The lights have been green for the baby boomers all their lives.
They were born just after World War II, between 1946 and 1964, and raised during the biggest, most sustained economic boom in human history.
They were sent to college, and grad school, by their doting parents when it was still cheap — or nearly free.
And then, when they went out to work, they were able to accumulate stocks, bonds and real estate just as prices began to skyrocket. The Dow Jones Industrial Average DJIA, -0.68% was just 1,000 in the early 1980s, when most boomers were first entering the workplace.
So after all this good luck, where are they now?
A new study has the numbers. And they aren’t pretty.
“Boomer Expectations for Retirement,” a new annual study from the Insured Retirement Institute — a trade body for the annuity industry — makes shocking reading. Most boomers are unprepared for retirement, even as they approach it or enter it. Amazingly, barely one in 10 has enough saved up.
This is hardly the first study to report on Americans’ poor retirement savings. But the IRI survey stands out because it focuses specifically on boomers. They interviewed 804 people aged 56 to 72.
In a nutshell, based on their numbers, about 11% have at least $500,000 saved for their retirement. That’s hardly a king’s ransom, but it may have to do.
The remainder don’t even have that.
Nearly half don’t have any retirement savings at all. None.
Yikes. Good times ahead. About half of those who make it into their early 60s will live past 85. How they’re going to get by without savings is anyone’s guess.
OK, OK. Financial surveys about retirement planning are generally produced by organizations in the financial services industry, and naturally they have a point of view. The IRI represents annuity providers. And, yes, the survey results suggest that, all in all, more people really should buy annuities when they retire. Make of that what you will. But the study is useful all the same.
Among the benefits: It shows an astonishing seven “deadly sins” of retirement planning which have led so many to this dismal situation.
Here are seven things not to do when planning for your retirement.
1. Not saving enough — or anything. Yes, it’s the most obvious but it’s worth repeating. According to the IRI survey, an astonishing 23% of baby boomers have no retirement savings… and never did.
2. Draining your retirement savings. Another 17% did save for their retirement once… but then spent the money, either in desperation, or carelessness, or maybe both.
3. Not calculating a retirement savings goal. It’s a lot harder to save enough for retirement if you haven’t first at least tried to work out how much that’s supposed to be. Astonishingly, just 25% of boomers who do not have a financial adviser have tried to run the numbers. And even 25% of those who do have a financial adviser still haven’t set a target. Um… what?
4. Underestimating health costs. Here’s a sobering item: A 2018 analysis estimated that a healthy couple in their mid-60s may need to budget between a third and half a million dollars for their health care expenses, including supplementary insurance, copays and other out of pocket expenses. Yet most near-retirees don’t have a clue. According to the IRI survey, more than half of boomers think their health care costs will come to less than 20% of their retirement income, and more than one in four think they will come to less than 10%.
5. Ignoring long-term care costs. Yet nearly 70% of those in their mid-60s are going to need some kind of long-term care, and the average cost a year is $89,000 a year. Who’s going to pay? “Medicare,” say 46% of baby boomers surveyed. Yes, really. Uh… folks: Medicare doesn’t pay for long-term care. Not a nickel.
6. Mishandling your retirement date. On the one hand, some people have been forced to postpone retirement because they couldn’t afford it. Some 29% of those aged 62 to 66 have postponed their retirement, and a remarkable 33% of those aged 67 to 72. On the other hand, others overestimate how long they’ll be able to keep working. Some 31% of boomers predict they’ll work past 70… but studies have found fewer than 10% actually do.
7. Not setting affairs in order. Possibly the most astonishing revelation in the survey is buried in the footnotes: About two-thirds of boomers have taken no steps to protect themselves if they suffer diminished capacity or dementia. They haven’t spelled out their wishes for their care and end of life. They haven’t sorted out a power of attorney for when one is needed. And as anyone who has been through this process can tell you, the chances are pretty high that if you wait to do this stuff until it’s needed, it’s going to be too late.
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The head-in-the-clouds retirement theme:
1964 was a long time ago. The song was a good one to get real close to a girl at a school dance and give her a twirl.
Two years later I left the South with pennies in my loafers for college in the Golden State. The Haight seemed dismal when I visited. Hippies I knew succumbed from “die yuppie scum” epithets and became republicans; or burned out on drugs and alcohol.
yeah, but did we ever have fun….
I feel like a broken record – I’ve said it all before:
The Great and Continuing Recession of 2007 has never ended. Many middle aged (50+) lost their jobs, were discriminated against in getting new jobs. These people used / exhausted their savings just to exist.
Also the go-go real estate market hammered people to ‘use the equity in their homes’ – then the market tanked and they were left with a HELOC, 2nd mortgage.
The retirement at 65 – is a fantasy. Why is anyone allowed to be unproductive? 65 was the age in 1930 – today in 2019 it’s more like 75.
All of us wage earners have been ass raped by ever increasing taxes, and new creative ways to tax. Thus white, successful wage earners are supporting ni66ers / illegals / fuck-ups. Christ, at 70, I have to pay tax on my wages and I have to pay tax on my SS – that I paid tax on my contributions.
Insane increases y-o-y of healthcare. Nobody can keep up with this.
Fixed costs: It costs me about $1,500 a month to live in my paid for home: $1,000 mo/property taxes-insurance, $100 water/trash, $180 elec, $150 natural gas. Then add $230 * 2 for Medicare Part B = $1,900.
This is $1,900 after tax dollars just to live. No food / car repairs / new roof? / the list goes on an on.
Retirement is a cruel scam, promoted by the financial industry, in hopes of them getting their hands on some of our money, and getting a commission for ‘investing it’ – with no guarantee of performance.
Find a cheaper state. My property taxes are $900 … per year … (2400 sq ft 1977 ranch house). Fixed per month costs compared to you …
Trash/Water $30 … Elec $100 … NG $0 … etc.
WTF you talkin’ about. I have good software contracts here, also my daughter and SIL, and beautiful home on a lake, and friends. I’m not moving to ‘west bum-fuck’. That’s not a solution – for virtually nobody.
In other words, you have a great life but you hate it because you are squeezed?
Livin’ in a stone house with a stone garage, a stone’s throw away from a lake, in the land of 10,000 lakes doesn’t come cheap does it?
Not just that but the stealth inflation is draining away our income. Sure, you can buy stuff at Wally World but you can bet your ass Kanye doesn’t buy that cheap stuff. (Look up “ridiculous” and you will see a picture of Kanye flying across the Pacific Ocean in an empty airliner.) Five dollars now buys a cheap cardboard burger and fries when it used to buy dinner at Bonanza’s steakhouse back when BB was a virgin at a Rush concert. I bet he paid $5 for the ticket. Soon, we will drop the whole paycheck at Walmarts just to get some fake groceries and a holiday appropriate t-shirt: “Kiss me, I’m transgender” SMFH, build the wall.
The SO and my first date was a Rush concert- at Red Rocks. 2011. Tickets were $80 a piece.
Don’t tell Iska.
Never been to Red Rocks but it looks cool enough that I could even tolerate Rush. With earplugs, of course. I think my first concert was Bad Company.
I saw Bad Co at the Choctaw casino a few months back. They still got it going on… ?
First Rush concert was 1981 at Brendan Byrne arena in NJ. The ticket cost under $20 and was lower tier. Last Rush concert was a few years ago at MSG. Ticket was over $100 and was upper tier. Inflation sucks.
Who the hell is Rush, and why is he/she/it worth $80 a pop?
rush limbaugh,b4 he became a republican & became a talk show host–
HeHe
Just came back from spending over a hundred bucks on groceries. One package of hamberger is $3.89 for the cheap stuff.
I buy the 93% stuff, but only when it is on sale-sale usually is $3.99/lb but sometimes it goes off at $3.64. EDLP is >$5; if I want burger I go into the freezer to find patties or pre-cooked stuff for tacos, spaghetti, whatever.
Read about dr salsbury. Then buy 73% beef.
Just wait till the blowback from the floods in the midwest and south this spring take hold. You ain’t seen nuthin yet. And did I mention that there ain’t no squirrels left? Gotta switch my mind over to geese, turkeys and thousands of robins. Shit, what do you shoot robbins with and not ruin the meat?
what do you shoot robbins with and not ruin the meat?
12 gauge or 30 ought 6.
There’d be no damn meat left! Even the 20 ga is a little harsh. Dead yes, supper no.
Airgun. Not one bought from Walmart.
Completely agree, except I’d argue we’ve been in a financial depression since 08.
I built the perfect low fixed cost home in about as low tax area as you can get in nys. The downside: a good friend of mine just died of a stroke. 45 minutes for the ambulance to arrive. Another friend of mine in buffalo had 2 strokes. Five minute ride to hospital. Problem with out in the sticks is if you need care fast you might not get it. Another friend closing the bar at 2 a.m. slammed the outer door, dislodging a pane of old single pane glass. He almost bled out from a cut to his arm. The after treatment for a touniquette application is horrible. Every vein gets opened and the dried blood removed. Over a year and he is still just recovering.
I’m going to sell it. Its beautiful and perfect economical and new and too far from medical care to retire at. Medical care i wont even be able to afford.
I found myself in the unusual position of offering my boss advice. Old Pangloss lived in a trailer in the desert. He was considering moving into town and leaving the trailer to his kids. While he dithered, I argued that he might need to live closer to a hospital in his old age.
Yer gonna die sometime … might as well embrace it.
I’ll add another one for those who have plenty: not disbursing your assets while you’re still alive. Waiting until you’re in the assisted living facility and they suck your life savings dry leaving your children with nothing to inherit, not exactly what you wanted.
Nope ,I paid 6:00 for that rush ticket .Late that same summer 6:25 for a kiss tickets !I was 17 and life was good. Now not so much. The thing about all this retirement is the government is going to steal all those retirement accounts to keep this scam going.They will do it to make so poor and hungry we want be able fight. When people are dirt poor and starving they probably won’t be thinking about war. Ask the Russians. Of course the Jews we be laughing. The more I learn about these vile damn bastards the more I hate them.
I saw Rush in 82. Then I grew up to punk rock (fuck the gubbamint punk rock). Don’t hate me.
Love Husker Du, saw them, thanks. Try Fugazi:
Does include equity in a primary home? Most people have most of their wealth in their home. If you have significant equity in your home and you live in a big shitty, you have many options.
Everyone wants to retire and live like when they were working full time. Good luck with that. Stupid ass article.
A vote for Bernie will fix all that.
What? Baby Boomers, the most ME-centered (de)generation ever, didn’t bother to actually think about themselves during all those years they were thinking solely about themselves? And now it’s pretty much too late? BWAHAHAHA! You might have wrecked America for the rest of us, but at least you get to embrace the suck, too. Don’t worry. We Xers will continue to hold things together until the (laughter) Millenials (more laughter) come to the (ridiculous laughter) rescue. Once they finish instagramming their latest bowel movement, they’ll get right to work on saving you. (more laughter)
Oh, good, yet another “The sky is falling, so give your money to the ‘experts’ (financial advisor, gold-hawkers, or whoever) to save yourself” article.
1. Not saving enough — or anything.
Concur, you will always have the ants and the grasshoppers, but see the following points.
2. Draining your retirement savings.
Have these people ever HAD kids? Have they
priced
college costs? I love the advice they offer: “Don’t use your retirement savings to help pay for their college.” Sure, I’ll saddle my kids with $75K+ to begin their working lives. Why else do people drain their retirement savings? Serious health problems, loss of employment? How can you possibly AVOID using your retirement savings for those events? Nonsensical advice.
3. Not calculating a retirement savings goal.
Based on what estimate of my costs for living after retirement? Will I spend 40%, 50%, 60%, or more of my pre-retirement income? What inflation factor should I use, 1%, 2%, 3%, 5%, 10%? What earning estimate should I use for my savings, 1%, 2%, 3%, 5%, 10%? My crystal ball doesn’t work that well, and neither does any of the “experts”.
This is an IMPOSSIBLE task for the average person. Sure, you can use historical averages, but we’ve been through non-historical trends for decades now.
4. Underestimating health costs.
Yes, it will cost more and more, and allowances need to be made…but what percentage of my post-retirement income? “A 2018 analysis estimated that a healthy couple in their mid-60s may need to budget between a third and half a million dollars for their health care expenses, including supplementary insurance, copays and other out of pocket expenses.” is a nonsensical sentence…a third of WHAT? Total post-retirement income? Or does it mean 1/3 of a million dollars (since the next part estimates half a million dollars!)? Can anyone really predict where this ridiculous health care cost spiral ends?
It’s virtually impossible to predict future health care costs.
5. Ignoring long-term care costs.
See above.
Admitted, this one won’t appeal to others, but I’m a realist: My solution is high-speed lead poisoning when I start to face the inevitable loss of ability to care for myself. I refuse to be a ward of the state, or to burden my family with the costs of my future decrepitude. (Future generations of taxpayers, you’re welcome.)
Your mileage may vary.
6. Mishandling your retirement date.
I paid into Social Security for my entire working life, and I intend to use it as the supplement it was intended. I never expected it to be (solely) enough to live on, so I’ve planned accordingly. Many others are much more reliant upon SS for their income after retirement. SS is the third rail, so I don’t intend to start any arguments over it here.
But I want to have SOME life for myself, so I WILL bail out of employment at 65 if at all possible, despite not being at full retirement age, and I will accept the reduced benefits. Based on my estimated remaining lifespan (genetics, yay!), if I make it to 80, the difference in benefits is negligible anyway. (Women live much longer, but I’ve unburdened myself of THAT toxic baggage, thankfully.)
7. Not setting affairs in order.
My mother is in her mid-80s and STILL doesn’t believe that she’s ever going to die. Can you blame younger people for their similar delusions?
Still, I agree with this observation and I need to get a durable power of attorney for health care, a regular power of attorney, and a will signed before I retire.
Good luck, folks…it’s going to get very, very bumpy for the next couple decades.
“Admitted, this one won’t appeal to others, but I’m a realist: My solution is high-speed lead poisoning when I start to face the inevitable loss of ability to care for myself.”
There is something to this Shark. Why on earth do people go to extreme measures to keep the flesh alive when the spirit longs to be elsewhere?
why wait?
do it now… the lead thing you seem to be fixated on,
if it will solve your problems in the future, it should work just fine right now.
and live stream it.
smuck.
If I had a nickle for every time I heard the “final solution to life’s problems, is me killing me”
Where’s El Coyote? I’ve got one for him.
MC called him an asshole and he got butthurt and left. I’m covering for him.
Gotcha… Pass this along, if you would.
https://youtu.be/BPl6-dbIkiU
I’ll make sure Don gets the enunciation edification…
pronunciation
Why wait? Do it now? Live stream it? That’s sick and completely fatalistic.
Well, I prolly don’t have enough saved, either, based on how shit keeps getting more expensive, and how the banksters screw me out of any interest income for what meager savings I have squirreled away.
Then, too, retirement ‘investment’savings took a 30-40% haircut,
BOTH TIMES, in 2000 after the .com tech meltdown,
and in 2008 after the housing crisis, with Wall Street firms doing their shell game of theft.
Add to that the insurance industries sucking our lifeblood slowly and at ever higher amounts.
Health (sick) care, Auto coverage (file a claim, and see premiums spike higher, BESIDES the annual increases.
But Gee, food costs haven’t gone higher in the last few years, have they? Kiss my ass.
Then, lets look at income tax, sales taxes, property taxes, licensing fees to put a sticker on a plate on a bumper, homeowners insurance, disability insurance, long term care insurance, utilities, etc.
Small wonder why very few people have become independently wealthy, with no worries about income during their sunset years.
ALL OF THIS, and most every other financial difficulty that any person, company, municipality face,
is a direct result of the Federal Reserve Bank(s), their fractional reserve policy, their fiat, their skim / vig,
and the corrupt sell-out political and business leaders who play along. The elites.
So, it’s back to work. Back on that hamster wheel, for more bread and water.
Stopping to rest from time to time, peering outside of my cage, longing to be set free in green pastures.
-Probably to be scooped up in the talons of a hawk, and be eaten alive.
You cannot predict the future, future cost of living, future cost of healthcare. Cannot predict inflation, either. And no way to predict the Crunch – the loss of confidence in the fiat currency, long overdue from trillion-dollar deficits and overprinting to cover them.
About all you can predict is that is will get worse – and you will probably have to fight for your life against drug-crazed addict / junkies, ordinary criminals, good people driven to desperation when the Crunch hits, your own LEO / government when things collapse badly enough, or someone else. We seem incapable of actually USING that brain between your ears, to avoid the same mistakes of the past writ larger and larger.
Black swans are unknown impacts as well – like those Midwest floods now devastating the farm food chain for the next year or two. Retirement depends on PEACE, which is becoming ever more doubtful. Plan as you can and you will, but expect vast changes to upset your plans.