The older you get, the more apt you are to think about your retirement. And according to some recent indicators, you are also thinking, perhaps even worrying about your children’s retirement. The dilemma is not easy to answer and in some instances, will not truly unfold until many of are able to anything constructive to fix the problem.
The difference between your kids and you, and I am referring to “your kids” as the generation now known as Y and you, the group widely spread over Early and Late Boomerhood, is that the older you are, the better the chances that you had some help with your retirement along the way. The Gen Y’ers are the first group to have had any help from a pension.
Pensions, as I have often suggested are the great economic equalizer. While many people bemoan the state of public pensions (an argument that seems to be spiraling into a jealous rage with unsustainable and unrealistic as the buzzword), along with the private pension system, has allowed numerous people the opportunity to do what their defined contribution cohorts are unable to do: spend.
Without the worry of a future retirement benefit, the pension-ers have been able to control their personal financial considerations (homes, mortgages and debt) with less sleepless nights. Unlike their 401(k) counterparts, not making deductions or worse borrowing from the plan to make ends meet or even worse, cashing these plans out has thrown the whole system into disarray.
Is it any wonder that the youngest workers among us worry to the point of inaction? These are the retirement wonder years and they are being squandered. The first DIY investors simply refuse or underfund their futures, a problem that will play itself out decades removed.
Not only to the rank among the highest group for unemployment but they are also the least likely to seek advice or help for their problem. In part, because, if you buy into the most recent chatter coming from the world of retirement, they know they will never be able to. So why bother?
Parents of these future realists worry that their retirement will be impacted, even infringed upon by their children’s lack of interest in the concept. But their version of the future is to be expected when you consider the following:
Older workers are working longer and even are being encouraged to continue working, presenting not only employment issues but also the potential of losing those necessary “early investor” years.
Older workers had the advantage of pension at some point in their careers or were able to take advantage of the epic bull market from 1982 to 2000, which gave them just enough of a head start to make all the difference in the world in terms of retirement. Without it, they would have been faced with two market crashes in ten years and a recovery that seemed robust only to seem to have never existed.
Older workers have become scared and this fear has translated into early investment conservatism. Which is sad considering your children will probably come to you for advice. Your new-found skittishness will warp any sense of risk they should be taking in large part, because of your fear of loss.
Older workers are focused now on how much they will need to offset health issues, debt, and the increasing cost of living longer than we may have calculated and have made this astronomical number the goal. Each market downturn leads to another step back in their eyes.
Does this mean that pensions should make a comeback? It’s not likely. Most people have bought into the argument that pensions aren’t portable – they aren’t but numerous first time workers may find the job they find now may be one they will keep for decades which is long enough to make pensions viable – or people want control over their investments – a worthwhile conversation but not a very good one in light of how well people do with that control – or pensions don’t have the benefit of borrowing – which is the worst argument of all.
So what can we, as older workers do to fix this problem? Lie. Tell them to take risks, the same risks you may have become adverse to taking. Tell them to invest more than they think they will need, which might force you to fib somewhat about why this is a good thing. Hide your worry about your own future. By this point you have made some unsavory decisions about your future and are still somewhat fearful. Scaring them won’t help. And lastly, don’t pretend you know what you are doing when far too many is don’t have a clue. In spite of all of the education available on the subject, we still make very human mistakes.
You can find some additional reading here.
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