When I meet with working clients, talking about retirement tends to illicit two polar opposite responses:
1. “Get me out now! I want to retire as soon as possible.”
2. “I love my job and will work as long as my mind is sharp.”
For those of you in camp #1 who want to retire as soon as possible. There is a new reality building in the US. Most people know my first point, that thanks to advances in science and technology we are all living longer. The chart below shows the probability of men, women and at least one person in a couple living to age 90. There is nearly a 50% chance of one spouse living to age 90.
The concern is that with the growing cost of childcare, the student loan crisis and the lack of wage growth, fewer and fewer young Americans are capable of putting away money for their future selves. The chart below makes me pause. In the US, the average retirement savings is expected to last just 14 years with an average shortfall of 7 years. When we consider that one spouse may live to 90 or older, can you imagine working into your 70’s or 80’s?
We are so consumed keeping up with our day to day worries that very few of us are building a nest egg that gives us peace of mind in retirement or that allows us the flexibility to work part time, stop work altogether or enjoy our children, grandchildren and hobbies. I find myself wondering if this is what life was like in the 50’s, 60’s and 70’s. Were our grandparents and parents this far behind?
When prospective clients ask why they should work with a financial planner, the answer is not about investment returns. It’s about managing irrational behavior and receiving ongoing coaching and encouragement to make smart decisions today for your future self. Everyone needs an advocate for their future self, that’s what we do.
Source for graphs: J.P Morgan Guide to the Markets 9/30/2016.