Monday, June 2, 2014

Hashtag #BrokeRetirees: Majority are Falling Short with Their Retirement Funds … but Who’s to Blame?

Hashtag #BrokeRetirees: Majority are Falling Short with Their Retirement Funds … but Who’s to Blame?
To put this in today’s social media language, the trending hashtag in the field of retirement planning is #BrokeRetirees, referencing the fact that the vast majority of folks – I mean, the overwhelming majority – are at risk of failing miserably at their attempts to have a secure income during their retirement years.

In their latest Retirement Confidence Survey, the Employee Benefit Research Institute asked a very simple question:“Overall, how confident are you that you (and your spouse) will have enough money to live comfortably throughout your retirement years?”

Here are the results: 
  • Only 18 percent of working Americans are very confident that they will have enough money to live comfortably throughout their retirement years. 
  • Among folks who are already retired, the number is 28 percent.
Compared to 2013 (when the numbers were 13 percent and 18 percent, respectively), these numbers seem “a bit better,” but I personally think they are still horrible. Think about it this way: 72 percent of retirees are seriously missing the mark after all those years of working, saving, and investing for this very purpose. That’s seven out of 10 folks! The other thing I’d like to point out is that ten years ago, roughly 41 percent of retirees and 25 percent of workers were very confident about their financial sustenance in retirement. Clearly, things seem to be moving in the wrong direction, don’t they?

The natural follow-up question then becomes: What is causing this deplorable situation? Of course, the answer depends on whom you’re talking to. Though, the financial press time and time again seems to point the proverbial finger at the hard-working retirement investor for, you know, not saving nearly enough money, selecting the wrong funds, and failing to rebalance their portfolios appropriately, among others.

But are these really the main culprits? I beg to differ, because while those may account for some instances of retirement insolvency, the crux of the issue, in my opinion, is that the vast majority of financial advice to which folks are being exposed is, quite frankly, nothing more than utter myth. Obviously, that’s up for debate, but I wonder why practically no one seems to question the financial advice side of the equation? There is a right way to do things and a wrong way to do them. Throwing more money at the wrong process won’t make the process work – it will just guarantee that you’ll be wasting money on a process that doesn’t work.

If we’re really serious about ending this rather terrible trend, isn’t it time we looked at all angles?
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