I couldn’t help but chuckle at how well a recent article in the New York Times explained some of the frustrations of retirement planning. The article—entitled Our Ridiculous Approach to Retirement –does a great job of pointing out all of the challenges underlying our current system of retirement planning and savings. The author, Teresa Ghilarducci, writes humorously, eloquently honestly about the unrealistic expectations that the current system assumes, and explains why, in her opinion, our “ridiculous” approach to retirement will never work. I have to be honest, to some extent, I agree with her. As someone who does this for a living, I see the contradictions and craziness myself every day, but I rarely see it all laid out in a way that makes that craziness so clear. Consider the following excerpt from her article about what the average individual has to do to make our “voluntary, self-directed, commercially run retirement plans system” work the way it needs to work:
First, figure out when you and your spouse will be laid off or be too sick to work. Second, figure out when you will die. Third, understand that you need to save 7 percent of every dollar you earn.
If you aren’t laughing (and possibly crying) yet, just wait; it only gets better:
Fourth, earn at least 3 percent above inflation on your investments, every year. Fifth, do not withdraw any funds when you lose your job, have a health problem, get divorced, buy a house or send a kid to college. Sixth, time your retirement account withdrawals so the last cent is spent the day you die.
Sounds easy, right? While the author plays up the humor, her portrayal is not at all far from the realities of modern-day retirement planning in America. A state of affairs that makes securing the advice of a trusted and experienced wealth management professional even more essential.