The headline “He Wants to Retire … but She Doesn’t” was one of the most popular articles in the April 9 Wall Street Journal.
What struck me most was the author’s comment that many of the people she interviewed said the issue of when to retire was a point of disagreement with their spouses or partners. I guess I shouldn’t be surprised. It’s a decision fraught with land mines. The question being asked isn’t just when to retire and where to do it, but something more fundamental—should we retire. And that question is being asked with much more frequency than I can remember.
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A while back, I wrote about how people often miss the impact of investment costs on wealth accumulation. Today, I want to make sure readers know that it’s as critical for retirees (people spending money) to think about how costs hit their portfolios as it is for people who are still saving. In fact, you might say that by taking a bite out of both income and wealth over time, costs actually hit retirees with a “double whammy.”
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The latest figures are out from the Employee Benefit Research Institute (EBRI) in Washington, D.C. Unsurprisingly, “retirement confidence” remains down from its peak in 2007, and is at levels similar to what we saw during the Great Recession.
What’s going on? In 2007, fully 70% of American workers were either “very” or “somewhat” confident about their retirement. By 2011, this group had fallen to 52%, a decline of 18 percentage points. Similarly, the number of workers on the negative side of confidence rose by 18 points—from 29% in 2007 to 47% in 2011. In short, we’ve moved from a 70/30 confidence/no confidence world to a 50/50 world.
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A new report just came out on the retirement prospects for baby boomers.* Its top-line result was that 40% of all boomers aren’t prepared for retirement.
Whenever the topic turns to retirement in America, the language is fairly dismal. Last week, I saw a flyer from an investment company that highlighted a crisis in retirement savings. Then I read an article offering expert views on how retirement in America is endangered. This type of news coverage is pretty common. And yet, is it right?
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In response to my most recent post, “Give ‘thoughtomation’ a try,” I received this helpful idea from a reader:
“Why don’t you post a spreadsheet with comparisons of saving early vs saving late in life? That is the most important thing young investors need to see.”
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