Editors' pick: Originally published Oct. 18.
Did you know that this is National Retirement Security Week, by fiat of the U.S. Congress? Probably you didn't. No big deal. But here is the big deal: do you know what you need to be doing - now - to prepare for your own secure retirement?
Don't say there is plenty of time. For one thing, Baby Boomers, many of them, have already run out of time. But if experts have a loud message about retirement planning it is that we need to start now, even if you are a Millennial.
The reasons are two, said Catherine Collinson, president of the Transamerica Center for Retirement Studies, who said her current - urgent - goal is "to provide a reality check."
Reason one: We are living much longer - and the over 65 age cohort now is the fastest growing demographic in the U.S.
And maybe we haven't yet seen the financial consequences of that extended life-span. Lynda Gratton and Andrew Scott - professors at the London Business School - offer a smack in the face with their new book, The 100 Year Life. The point: plan now for living a lot longer than you probably imagined and try to determine how much money that will take.
Understand: most of us believe we will have a comfy retirement. New Transamerica research said: "62% of American workers are confident they will be able to retire comfortably."
Does a reality check substantiate that optimism? Another Transamerica factoid: 68% of us say we don't know as much about retirement savings as we should.
Doubts arise because the sources of our retirement dollars are in flux. Transamerica research for instance said: "77% of workers are concerned that Social Security will not be there for them when they are ready to retire." The younger the worker, the more skepticism about Social Security. But cross off Social Security, and that is a major cut in the retirement income planning of many of us.
Another cut: the era of the defined benefit pension is effectively over. Gen X (those born between 1965 and 1968) are all in with 401(k) style employment retirement plans, since, for them, defined benefit plans essentially never happened outside the public sector. Ditto for Millennials. A big difference between the types of plans: with defined benefit plans, the organization told employees exactly how much they would get in retirement. With a 401(k), it depends - on how much the employee puts in, how big the company match is, how well investments do, and more. That's a world of uncertainties.
Mix together our greater longevity with uncertainty about cashflow and, said Collinson: "We are seeing tremendous warning signs. Something has to give. There's a lack of savings. There are big strains on Social Security. Costs may well be transferred to individuals."
A bottom line: the retirement you get is the one you create for yourself. Starting now.
Here's where many experts said a retirement reality check needs to begin: "Step One in planning for retirement, no matter how old you are, is to take an honest assessment. This means you need to gather all of your statements, and I do mean all of them," said Birmingham, Ala.-based Cary Guffey, CFP, financial advisor for PNC Investments. Reality begins in reality and that means doing a financial inventory.
The next step: picture in details what you want retirement to look like. Where will you live? What will this cost? Be unflinching in running the numbers. Where many of us go into fantasy land - said multiple advisers - is that we severely underestimate what the retirement we dream about will cost. Reality is rooted in real numbers.
How will you connect your retirement dream with your financial reality? That's the challenge.
While you at this, reality may mean retirement won't happen for you, at least not on the timetable you hoped for. "Realize working longer may be necessary," said Pat McClain, a senior partner of Hanson McClain Advisors, a California-based financial advising firm, headquartered in Sacramento. "Retirement at 65 may not be feasible for everyone. Some people are completely capable and should continue to work to bring in income to support themselves during a long life span."
You just may not have enough money to retire at 65, maybe not even at 70. So plan to keep working.
Don't think any of this is easy. Wanting to embrace retirement reality is one thing. Being real is another. And often it may involve a kind of fiscal tough love.
Mitchell Langbert, an associate professor of business at Brooklyn College, elaborated: "Saving for retirement means cutting back on consumption, and given the wide array of tempting consumer goods on the market, to include smart phones, computers, and Teslas, few of us have the self-discipline to save.
"Many Americans give in to short-term time preference: We tend to prefer consumption today to consumption tomorrow."
And right there is the short cut to a derailed retirement reality.