Yes, so it\u2019s a bit presumptuous of me to announce this, but it\u2019s something I\u2019ve been think about.<\/p>\n
You likely have heard of the \u201cThree Legged Stool\u201d concept of retirement: \u00a0your retirement income comes partly from Social Security, partly from your employer, and partly from your own savings. \u00a0Just as a stool can\u2019t stand with only one or two legs, so, too, retirees need income from all three sources, and can\u2019t rely solely on Social Security or their employer pension.<\/p>\n
Yes, this analogy is rather old, and just doesn\u2019t make as much sense in a world of 401(k) plans in which employer contributions are contingent on employee contributions, and all go into the same account. \u00a0There is, in modern retirement savings, no way that an employee really could<\/i> think \u201cmy employer pension is all I need\u201d \u2014 except, of course, for public pension plans in which pay replacement is so generous that personal savings is much less important.<\/p>\n
Now the experts try to propose all kinds of replacement \u201cstools.\u201d \u00a0And, in that spirit, here\u2019s mine, a three-legged stool to address the Big Picture of retirement:<\/p>\n
Leg One<\/b>: \u00a0adequate assets at retirement. \u00a0This includes everything, whether it\u2019s a 401(k), other savings, your paid-off house, and, if it exists, the value of any pension. <\/p>\n
It is clearly important that Americans increase their assets at retirement, and that the government make this more achievable, or, at least, don\u2019t make it harder.<\/p>\n
But here\u2019s leg two<\/b>: \u00a0Americans need better ways to convert these assets into income during retirement. \u00a0For all that the experts tell us to save, save, save, and the government is busy trying to create new vehicles for saving, there is a serious deficiency here. \u00a0\u201cAnnuities are garbage,\u201d we\u2019re told, with too many fees to be worth the money, a scam by financial advisers who want to help themselves to your money as commission. \u00a0\u201cWithdraw 4% a year\u201d \u2014 but with no guarantees that the money will last, and no good answers as to how to allocate assets (especially in the current economy, with bubbley stocks and in-the-toilet bond interest rates). \u00a0And for the most part, it\u2019s my impression that retirees, in general, just make their best guess, or quite often, treat the IRS\u2019s mandatory annual distribution (which really just means the amount you have to move to an after-tax account) as the amount to spend for the year.<\/p>\n
Senator Harkin\u2019s \u201cUSA Retirement Funds\u201d tried to deal with this by means of pooled retirement plans. \u00a0Alternatively, there are proposals for mandatory annuitization (yeah, yeah, \u201cit\u2019s my money so how dare the government force me to annuitize it\u201d) in part because only when annuity purchasing is commonplace will costs go down.<\/p>\n
This is a complex issue, but it still needs to be addressed every bit as much as the goal of increasing Americans\u2019 asset accumulation.<\/p>\n
And, of course, one aspect of post-retirement income can be<\/i> a part-time, low-pressure job, or even delaying retirement altogether, but you can\u2019t predict whether this will be possible for you, or whether job loss or disability will prevent this.<\/p>\n
And leg three<\/b>: \u00a0you know this one if you\u2019ve read my posts about my parents. \u00a0Americans need better resources for living well in retirement, and Americans need to better plan for how they will live in retirement. \u00a0It isn\u2019t as simple as going to a retirement party, getting a gold watch, and then playing golf and playing with the grandkids until you kick the bucket. <\/p>\n
But life can get in the way. <\/p>\n
Maybe you have a hobby \u2014 you like to go sailing, for instance, or skeet shooting. \u00a0What will you do when you can\u2019t sail any longer or when the skeet shooting place nearby closes its doors? \u00a0Maybe you like to spend time with your grandkids. \u00a0What will you do if they move away because of a job transfer?<\/p>\n
Maybe you have a home that you\u2019ve lived in so long that you\u2019ve paid the mortgage. \u00a0What will you do if you struggle to climb the stairs?<\/p>\n
How will you keep your mind and body active?<\/p>\n
And, even if you do everything right, what if your spouse, well, doesn\u2019t, and you spend your \u201cgolden years\u201d being a caregiver? \u00a0(Which can happen, of course, even if you do\/your spouse does everything you\u2019re supposed to do to prevent it.)<\/p>\n
This is a real challenge, for Americans as they think about retirement, whether they understand this or not, and for policy-makers of all kinds. <\/p>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"
Yes, so it\u2019s a bit presumptuous of me to announce this, but it\u2019s something I\u2019ve been think about. You likely have heard of the \u201cThree Legged Stool\u201d concept of retirement: \u00a0your retirement income comes partly from Social Security, partly from your employer, and partly from your own savings. \u00a0Just as a stool can\u2019t stand with […]<\/p>\n","protected":false},"author":2209,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[450],"tags":[25],"class_list":["post-149","post","type-post","status-publish","format-standard","hentry","category-actuarial","tag-retirement"],"yoast_head":"\n