The Rest of the Retirement Story

Another sobering about retirement, or lack thereof: Households that expected to find retirement just around the

corner will have to work longer. The main reason? Debt, debt, and more debt: mortgages, home equity loans, kids’ college expenses and credit card debts are saddling 60- to 64-year-old households who expected their retirement-age years to be stress-free. This is not the first article I have ever come across about baby boomer debt. Since 2008, many studies have surfaced about the plight of older adults and how they have fared during this recession and housing meltdown. It is heartbreaking to read about decades’

worth of retirement planning going awry.

Ah, but perhaps I misstated the problem: Is this really decades’ worth of retirement planning that has all of the sudden crumbled due to a few recessionary years and an upside down housing market? I would venture to say that is not the case: the operative word here is “decades.” I wonder how many households who are delaying their retirement and having to work into their 70s actually started planning for retirement back in their 20s. The likely scenario of lack of preparedness probably goes something like this:

  • Age 20: “I am in college and can’t even think about retirement right now. There is plenty of time for saving.”
  • Age 30: “I am established in my career but I just put all of my money on a down payment for this McMansion This should double in price in 10 years and count toward my retirement investments!”
  • Age 40: “How am I supposed to save for retirement with a mortgage and two car payments and kids’ sports and school activities? Wait until the kids are grown and out of the house and then I can save more.”
  • Age 50: “One kid is in college but needs help with expenses. The other is living at home and trying “find himself;” he needs help with his cell phone bill and car insurance I can’t just cut him loose yet. Plus I still have 10 years left on the mortgage.“
  • Age 60: “Wow, the house did not appreciate like I thought it would. I thought I was supposed to be able to retire on my home equity. I don’t have near enough in my 401(k). What happened?”

This is not to say that every household that cannot fulfill their retirement dream has not planned ahead. But to be blunt, these reasons for not saving are all too common: high expectations for housing prices, high expectations for living standards, and high expectations for children to go on to college on their parents’ dime. (Yes, many parents in their 50s and 60s are paying off their kids’ student loans.) The “culture of consumption” has finally caught up with a generation that wanted to have it better than their parents did, and want to give their kids more than they will ever have. Perhaps that is not such a good thing if it means working until you drop dead.

Comments (10)

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  1. Joe Barnett says:

    Hope they got a viatical settlement (cash for insurance) before dropping dead.

  2. simon says:

    Procrastination rarely works…”there is always tomorrow to start saving for retirement”

  3. pat harrington says:

    Pam – you are spot on. I could not agree more.

  4. pat harrington says:

    Pam – you are spot on. I could not agree with you more. My husband and I have saved and he is retired and i will in 3 more years. We started saving early but we should have started in our 20’s rather than in our 30’s. It is true in life things just happen and you find yourself helping out your children especially when there are grandchildren involved. We are doing just what our financial planner advises us to do and it looks like we will make it. We do not live a lavish life style but are happy to have our bills paid and our home paid off.

  5. Al Kreps says:

    The spend everything buying toys and non-essentials and the throw away generations has now caught up with them. The idea bubble that values will increase, inflation will get us the margins to keep going has burst. It does not appear that the old times of growth in values will come back for many years to come if ever. And, now it seems as if those of us who did prepare for our retirement age will be penalized for doing so by an administration that is socialist. Thus, those who did nothing to prepare for retirement are being rewarded for their lack of planning.

  6. Amy Hopper says:

    Yes, we wanted more than the 4 room house our parents had paid for and more than one car and bathroom we did not have growing up, and we thought getting a college education would give us the best opportunity to make a better life than what our parents had. My father was dead at 69 but his father lived until 88. At 70, we do have a reasonable IRA from a private practice, but our house is not paid for, and we have a condo in Florida we cannot get back what we paid although it is a great place. My husband continues to work 4 to 5 days a week, and I(who worked for him for 30 years) try to make the money last. We had a lot of fun, but now we wonder what the future holds. We do have to pay the Piper!

  7. BRAD DUNN says:

    High expectations for housing prices, High expectations for living standards, and high expectations for children to go on to college on their parents’ dime that’s why I am looking for retirement plan heard from my buddies that bankers life insurance & casualty is good.. have good ones. Any other opinions?

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