KEY POINTS:
Sick of the same silly New Year's resolutions year after year?
Here's something that may be a little different. Commit yourself this year to getting serious about planning for your, ahem, senior citizen years.
Most (though not all) of the people I know in the investment business have
already put a lot of time and thought into this.
It's their stock in trade, after all, and they work every day with the necessary tools and ingredients.
Among the rest of the population, though, research consistently shows the amount of attention devoted to the problem is patchy at best.
"No big deal," you may say. "I have a plan where I work, and I make sure to keep feeding it enough every year to get the maximum matching contribution from my employer."
Well great, that's a start. But chances are it is only a beginning. And as important as money is bound to be in any plan for retirement, it's only one piece of a bigger puzzle.
Most of the countless discussions I hear plunge into the subject without defining what is meant by "retirement". The atmospherics in a typical financial services advertising pitch suggest it is a stage of life devoted mainly to world travel, golf and fly fishing.
That's the fun part of the deal. From a distance at least, it looks wonderfully flexible and strictly voluntary. If I cannot afford to retire at 62 or 65, no problem - I'll just work a while longer.
This misses some vital parts of the matter. In its most compelling meaning, "retirement" is a euphemism for "old age".
There is nothing optional about old age, nor about many of the expenses, burdens and other liabilities it may bring.
A common mantra these days is "I'll never retire - I enjoy my work too much". That only serves, however, until some medical problem or other infirmity renders one unable to do the job as it must be done.
"Retirees of the present and future, on average, will be wealthier and healthier" than any past generation, notes a commentary in In the Vanguard, a newsletter published by the mutual fund manager Vanguard Group.
Good news, that - but tempered by a realisation that longer-lived retirees may have to make their money and other resources work for decades, not just a few "golden" years.
As healthier people live longer, they perversely may need more and more expensive medical care than ever. Inflation, compounding year after year, will have a greater chance to eat away at their money's purchasing power.
From a big picture, "macro", point of view, this is already shaping up as one of the major economic stories of the 21st century.
In the US, the irresistible force of 76 million baby boomers meets the immovable object of old age - starting, oh, any minute now. A similar process has been set in motion in other developed countries.
American boomers are accustomed to using their political and financial clout to reshape the system according to their needs and wishes. We want education, they said in the 1960s, and it was so. We want jobs, they said in the 1970s, and society accommodated them.
Imagine the fuss they will create as they check out the available choices in senior assisted living, geriatric medicine and such. You think healthcare is in crisis now? Just wait.
Faced with an approaching melee, social institutions have effectively ducked for cover. Reform Social Security? Oh, let's not do that yet. Shore up the old pension system? While we grapple with that, let's transfer as much of the burden as we can to private pensions. "More than ever, you are responsible for funding your own retirement," says discount broker Charles Schwab & Co.
It's a scary job, trying to meet the liabilities of an unknowable future with assets that must be gathered far in advance.
By the time you find out for sure whether your preparation has been adequate to the task, it's usually too late to do much to fix it.
- BLOOMBERG
