Hey, did you know that Oct.20-26 was National Save for Retirement Week? I did, and I swear I was going to write what seems to be my annual blog about how unprepared Americans are for their golden years that week, but, well, I was working on other projects.
Apparently, I’m not the only one who may be too busy working to get cracking on that retirement plan. A recent AP poll found that 82 percent of working Americans 50 and older imagine it’s “somewhat likely” they will cash in paychecks during retirement, while 47 percent expect to retire later than originally targeted by about three years.
Another survey conducted by Swiss Re revealed a similar trend line: 57 percent of American workers anticipate working beyond the traditional retirement age of 65, or never retire at all.
Yet we Americans are a contradictory bunch. When AP polled older Americans on the possibility of gradually raising the full Social Security retirement age as a way to shore up the program, a majority pretty much said, “You can take your proposal to raise Social Security collection age and…” You get the idea.
So what gives? Baby boomers and even Gen Xers and Millennials seem resigned to the possibility of working longer than their parents ever did. But they certainly don’t want to be told they must keep working longer.
Yet I wonder if this is growing “Work till I drop” mindset is the result of the market crash of 2008-09 that decimated a slew of 401(k) accounts, leaving many workers no other choice but to keep on working and saving. If the market takes a colossal upturn (hey, a gal can dream, can’t she?), then perhaps Americans’ will decide, “Whew…I can chuck this cubicle at 60 or 62.”
It also may be due to improved longevity projections. Americans are living longer because they are healthier and better health means they can work longer. Furthermore, boomers appear intent on remaking the whole idea of retirement. Instead of heading to the golf course of planting themselves on a rocker, they want to work part-time or follow a whole new career path.
What this all means to advisors is unclear. Since I don’t advise people on their financial affairs, but I do talk to a lot of those who do, I can only speculate.
First, deferred income annuities (DIAs), which are now a small part of the annuity universe, may take on increased importance as boomers and Gen Xers plot their retirement income needs far in advance of their actual retirement.
And the line between accumulation/decumulation may become even more blurred. In other words, your clients may be working and building up their assets at the same they need those dollars to support their retirement or semi-retired lifestyle. It’s no longer an either/or situation. How do you plan for that?
Again, those are just my guesses and you are welcome to submit your own.
But going back to those contradictory polls mentioned earlier: It seems obvious that most Americans really don’t have any idea when they will or can retire, and that’s completely re-writing the rules of retirement planning.
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