How to Restore Your Retirement Confidence
Working Americans' confidence in their ability to retire is at an all-time low, according to the 2011 Retirement Confidence Survey released earlier this week by the Employee Benefit Research Institute (EBRI). After the survey came out, fellow CBS MoneyWatch blogger Carla Fried offered some great tips to help restore your retirement confidence, showing that people who actually run the numbers to see how much money they need -- and then save more money -- will be more confident about retirement than people who don't take these steps at all.
But even if you feel more confident, there's still a problem. Millions of aging boomers just don't have enough retirement savings to be able to retire any time soon, as indicated by EBRI's report. And even if they could crank up their savings over the next few years, there may not be enough years left for them to save enough money to make much of a difference.
As a result, many Americans are coming to the logical and correct conclusion that they'll have to work longer, and also work in their retirement years, again as reported in the results of the 2011 Retirement Confidence Survey. But, as Carla Fried notes, you can't always count on work being available, or that you'll be healthy enough to keep working
So if you can't save enough money and you can't find work, what can you do? Something's gotta give.
First, I believe that you can find work in your later years, but you'll need to put in a lot of effort. You'll most likely have to do one or more of the following:
- Update your skills
- Set your sights lower for the amount of money you'll be able to make
- Think about self-employment or starting your own business
- Look for work with nontraditional employers
The other part that's gotta give is your living expenses. Take a good hard look now, before you get desperate, at just how you spend your money. Explore how you can live on a lot less and still be happy. Start with the highest cost, your housing. I'm predicting we're going to see a lot more interest in "communes" and the "Golden Girls" solutions out of sheer necessity to save on living costs.
One other option: moving in with your kids, relatives, or friends. This happens frequently in other countries around the world, and it was common in this country a few generations ago. If you think this might be a possibility in your future, then it's critical you think about how you can make this a positive experience, rather than being a burden to the people you're moving in with. What can you offer in return? How can you be a help rather than a hindrance?
My concern is that many Americans are giving up on the possibility of retirement, and using that as a reason to do nothing to improve their future. Instead, we'll really need to make the best of what we've got, and we'll need to rely on our social capital -- our families, friends, and local institutions -- to help give us the life we want. To that end, here's a recent quote to be inspired by:
"I hope from the bottom of my heart that the people will, hand in hand, treat each other with compassion and overcome these difficult times. Do not abandon hope."
These wise words were recently spoken by Japan's Emperor Akihito, as he was referring to the monumental tragedy there. Now that's a real crisis, caused by events out of anybody's control. When you think about it, we don't really have a retirement "crisis" -- we just have problems of inconvenience. We might need to work longer or accept a lower standard of living. Our "problems" are actually caused by collective behaviors within our control -- our savings and spending habits. These problems are much, much easier to fix than the events in Japan. And the sooner we face our problems and start thinking creatively about solutions, the sooner we'll feel confident about our future.
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