Go Back Drinking the Kool Aid? Marketers of retirement products and the media have instilled in consumers the idea that retirement is going to cost millions of dollars. But is it true? Everyday it seems there is another story chastising Americans for not saving enough. As a result many people have just given up on the idea of retirement. Given the high cost of gasoline, food and the other necessities of life, people feel as if they are swimming upstream. How can one possibly save for retirement under today's circumstances? Even those who have some retirement money saved have become disillusioned. Saving for retirement is a daunting prospect. There seem to be many advisors, mutual funds, and brokers in the marketplace who want to help you (usually for a sizable fee). But who are they really helping? (Hint: not you!). None of them can tell you exactly how much money you'll need to retire. They just make an estimate and those estimates always tend to be on the high side. That way they can never be wrong. As a result, your retirement goal is always slightly out of your reach and you keep running on the hamster wheel. That's good for the advisors, mutual funds and brokers (you'll be a customer longer paying those sizable fees), but it may not be good for you. We all know that saving money for retirement is very important. But has the bar been set too high? Who Said You Need Millions? The idea for the book "Who Said You Need Millions? Retirement Strategies for the Rest of Us" came from a retirement test-drive in 2001. My wife and I took a year off after a corporate lay-off and found that not working wasn't as expensive as I had anticipated. Although it is not our nature to live extravagantly, after a year of travel and relaxation, I was stunned at how little it cost. I realized that those who had been advising us about what we would need for retirement were dead wrong. I came to the conclusion that those people who are currently planning to retire would be better off spending less energy worrying about building up a huge nest egg and devoting more effort to finding a retirement lifestyle that fits their budget. Sure, you'll need some money saved in order to retire. But, let's not fool ourselves. Most of us are not going to be wealthy when we retire, so don't become disheartened if you haven't saved millions for retirement. How Did We Get Here? In the last few decades the entire concept of retirement has changed. No longer are retirees always imagined as people late in life enjoying a glass of cold lemonade in a rocking chair. Today, people believe they'll be younger and more active when they retire and that their retirement will last longer than it did for past generations. Mutual funds companies and others in the business of selling retirement related products have noticed this change and their products are now marketed with this new concept of retirement in mind. Gone are yesteryear’s staid images of retirement. Now retirement products are being marketed as "cool." The print and television ads usually show a slightly graying but still attractive couple, the man is wearing freshly pressed khaki pants, a golf shirt, and perhaps no shoes; the woman is well-coiffed and dressed in a cotton sun dress that screams leisure. The wind is blowing lightly in their hair. Their smiles are wide and confident, as if they have a secret. They're always doing something active, like cycling, surfing or rock climbing. These people could be you, the ad says, if only you invest at such-and-such mutual fund company or buy a million-dollar condo at Sunset Acres. But why are we buying into this baloney? The retirement lifestyles these advertisements are portray would require millions of dollars in savings to maintain. At about $39,000 per year, the average wage in America, it would take almost 26 years just to earn a million dollars. That doesn't take into consideration eating, clothing, and housing yourself and maybe a family during those 26 years. The dream retirement that Americans have been conditioned by advertising to expect is just that—a dream—especially if you want to retire early. Reality Check. In researching the book, I discovered that most retirees don't have millions. Actually, it surprised me how frugally many retirees live and how little time they spend worrying about money issues. I also found that retirement millions don't necessarily translate into a happy retirement and that retirement is not a one-size-fits-all proposition. There are as many successful retirement lifestyles as there are retirees and there are plenty of ways to retire that don't cost much. And lots of retirees, it turns out, are perfectly happy without the millions. Want to learn more about retirement and retirement strategies? Then order Who Said You Need Millions? - Retirement Strategies for the Rest of Us. Go Back (c) 2008 by Jonathan D. Edelfelt. All rights reserved. |
| Who Said You Need Millions? Challenging Conventional Wisdom About Retirement Saving by Jonathan D. Edelfelt |
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