Now that I have risen to the surface after having marinated in a five-hour seminar about retirement planning, I find myself smirking over the phrase “Knowledge is power.” Thanks to this seminar, I have knowledge. But I wouldn’t exactly call what I’m feeling “power,” unless power feels something like being hit in the head with a slapshot.
What I do have, however, is a greater sense of direction. Also, I have this 135-page workbook, complete with helpful worksheets, lists and just enough pictures and graphics to delude me into thinking this will be a quick read.
Only nothing about retirement planning is quick.
And that was maybe the major “takeaway,” as they call it.
If your knowledge about retirement planning consists largely of what you remember from the internet, then you probably think I’m talking about saving money and investing it. And yes, saving is the centripetal force of retirement planning. Without it, retirement cannot be planned.
Yet all these headlines about people not saving enough for retirement or about the 7 things you can do now this very minute to live comfortably in retirement, the studies and surveys and bar charts and listicles about saving and investing, they are only one component of comprehensive retirement planning. It involves more than just parsimony and not buying a latte on even-numbered days.
Retirement planning is, well, it can seem like a part-time job.
But before this pep talk careens into nihilism, I’ll share some of the revelations I took from this seminar, titled “Passport to Retirement.”
I need to take a closer look at the Roth IRA. Although some of my retirement money is in a Roth, most of my funds are in regular IRA or 401(k) accounts. Because withdrawals from a Roth generally are free of taxation, I may want to consider rolling over funds into a Roth. And in case you don’t know the difference between the two IRAs, read this.
So we have the IRA, Roth IRA, 401(k), 403(b), 457, SEP and more. Do you think people would be more likely to plunge into investing if we didn’t have as many investment vehicles as tax forms?
I need to take a closer look at annuities. Like some of you, I had been scared off by annuity horror stories, which usually involved variable annuities. A couple of months ago, I attended one of those dinners where, if you want a free meal, you have to sit through a sales pitch. (I will write about it in a future blog.) This one was about fixed annuities, which have been described to me a number of times as essentially the same thing as a pension. Well, I will have a pension, at some point. Maybe.
Will I need more guaranteed income? That’s what the aforementioned workbook worksheets will tell me.
You have to know how much retirement will cost. The bad news here is that, yes, you will at some point have to craft a budget to see where your money is going now. How much you will need in retirement cannot be determined unless you know … well, how much you will need in retirement.
What will you do in retirement? Here’s the thing that kinda stinks. It takes one set of best practices to reach retiremen — saving being the big one. Then once you’ve arrived, it takes another set of best practices, one of which is how you will receive all those accumulated retirement funds.
Health care. This was a real eye-opener. If saving and investing is at a “crisis,” then health care is a “crisis” wrapped in life and death. Before this seminar, I had a drive-by awareness of Medicare and long-term care. Now? Well, I feel I will be needing Medicare Part D sooner than I had ever imagined.
Is DIY retirement realistic? For most people, I don’t think so. For me, I’m frankly much less certain after this week. Which is why I’m looking forward to my free one-hour consultation with the financial planner who taught this seminar.
I think Joseph Coughlin of the MIT AgeLab (Yes, the Massachusetts Institute of Technology studies old farts.) is onto something:
“To retire well, money is critical, but not fully sufficient. Given the changing context of retirement, retirement advice must move beyond mere financial planning to longevity preparedness. With longer lives, changing family dynamics and entirely new ideas of what older age is, today’s retirement (or longevity) client has new expectations and needs. More than a financial adviser, today’s client is seeking a navigator to provide information to actively anticipate what is likely to come in older age, give recommendations and access to services to adapt to those transitions and, of course, effectively plan and invest to ensure adequate financial resources.”
Are we worrying about the wrong thing? Most of the retirement planning journalism centers on saving and investing and the lack thereof. But should we really be more worried about health care and taking more action here?
You probably are familiar with George Santayana’s aphorism “Those who cannot remember the past are condemned to repeat it.” As a journalist and history geek, I worry that those who predict the future are condemned to be wrong. (I’m still trying to infuse some poetry into that, but you get the idea.)
So when I think about all that I have read about retirement planning and the future of retirement in this country, I am reminded that the first story in The New York Times about the outbreak of World War I was fewer than 500 words long. Not very consequential at the time.
I also am reminded of a story buried in The Times way back in December 2005. City officials in Duluth, Minn., decided to do the math behind the city’s promise of free lifetime health care for workers: $178 million, more than twice the city’s operating budget. The headline over the story: “The next retirement time bomb.”
So that’s what worries me. Not what I read about how people aren’t saving anything for retirement, which is bad enough. It’s what I—we—haven’t read. The real time bomb, if one exists.
I don’t know whether what we are seeing and writing about is, in fact, a retirement crisis. If it is, however, I think what we’re seeing is only the tip of the iceberg. And in this metaphor, guess who is the Titanic?