Can't Retire Yet? Don't Despair

Last Updated Feb 9, 2010 11:29 AM EST

Next week I'm giving a presentation at a conference sponsored by the International Foundation of Employee Benefit Plans entitled The Future of Retirement. I can give you the short version of my speech: The future of retirement is work! But that shouldn't be a reason to despair.

The problem for most Americans is that the money and benefits just aren't there for the traditional retirement of "not working." Take a look at just a few statistics and trends, and you'll see what I mean:
  • Social Security and Medicare are underfunded, and benefit cutbacks are likely. These programs aren't overly generous to begin with--Social Security replaces just 25 to 45 percent of pre-retirement income, and Medicare only covers one-half to two-thirds of seniors' medical bills.
  • Only about half of all Americans are covered by a retirement plan at work.
  • Employers have been terminating or curtailing traditional pension and retiree medical plans for the last two decades.
  • For households headed by a person aged 55 to 64, 13.5 million households--69 percent of this group--have total retirement accounts of $100,000 or less. (A rough estimate of the annual lifetime income generated by $100,000 is $5,000--hardly appropriate for funding the golden years.)
For more in-depth statistics and analyses, see an article on my website titled Why Traditional Retirement Is Out of Reach for Most Baby Boomers ... and What We Should Do About It.
While it's natural to be depressed about these trends, I don't think they're reasons to despair. Instead of a traditional retirement, it may be more realistic for baby boomers to strive for new goals: life fulfillment, good health, and financial security. If we have insufficient financial resources for a traditional retirement, then the inevitable solution will be some combination of:
  • Working in your retirement years to make ends meet
  • Postponing retirement
  • Reducing living expenses before retirement to enable higher saving for retirement
  • Reducing living expenses during retirement
Any of the above solutions may be viewed as unpleasant or undesirable, but they should be assessed against the new goals espoused here. Will they jeopardize life fulfillment, good health, and financial security? It's highly possible that the answer could be "No!"

We'll just need to be creative to find realistic solutions to our retirement challenges, and that's my life's work. So stop by my blog often and see what kind of solutions I'll be offering to help you make the best of your retirement years.
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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.

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