While most people are intrigued about the secrets to living a long, healthy life, what we really need to focus on is do we have what it takes to go the distance. Unfortunately, most people are not only unaware of what today’s retirement requires and entails, they’re most likely totally unprepared. In some respects however, it’s really not their fault. Few people have had any formal training or education on how to prepare for today’s retirement journey.
Let’s start by addressing the cost of retirement. Believe it or not, most Americans today think they can retire on $250K! Some of you may be saying, a year? No, total. Well clearly these people are in for a big surprise because the estimated out of pocket healthcare costs alone are somewhere in the neighborhood of $250K – just for healthcare. But where are people supposed to learn this? We’re not teaching this in the school system, so the only exposure most people likely have to this is based on a personal experience — or that of a friend or loved one.
The other issue that plays a major role in all this is how long people are likely going to live. Most people have no idea — and as a result, the majority will guesstimate what that number will be. Sadly however, they generally underestimate how long that’s going to be. And if/when we base our finances on a low ball number, that’s going to be a problem.
In many respects, we live in a financially challenged society. While the majority of Americans will see their dentist on an annual basis, less than 20% will see their financial advisor — IF they even have one. Additionally, most Americans view money and finances as very complex – which explains why they often procrastinate over financial matters. And two-thirds of Americans have not prepared a retirement plan — people don’t plan to fail, they fail to plan.
So in many respects, most people are taking a crap-shoot at their retirement. People spend more time planning a two-week vacation than they do one-third of their life, which is the average amount of time spent in retirement today. So as one who analyzes trends, I look at that and say why would that be? Why would people spend more time planning a two- week vacation than they do one-third of their life? My guess would be, they expect to have a good time on that vacation – they’re not so sure about the retirement, getting older idea so they don’t want to go down that street — and they don’t! As a result, herein lies the psychological aspect behind retirement planning –- planning and sacrificing for a phase in life most people are not that excited about — or perhaps misinformed about, generally results in no action at all.
But there may actually be a reason for this stagnation — all the studies on aging up until the last 30 years or so ago, were done in the nursing homes! Anybody see that as a problem? That’s certainly a convenient place to study one side of aging, but the only side? As a result, have people been conditioned to believe age is a time of decline? Do people age because they expect to age? For example, you go to the doctor and he/she says, “What do you expect at your age?” Or someone comes up to you and says, “Hey, you look pretty good for your age?” And your reply may be, “Really? What does my age look like?”
So again, herein lies the psychological aspect of retirement planning. We’re completely outdated with our notions about longevity and in order to go the distance, it’s time to get current with the facts … our life, legacy, and retirement depends on it.