People are scared. Embarrassed. Ashamed. They don't want to tell anyone. How could it be that everyone else but you seems to be on the right financial track heading into the retirement tunnel known as the post-work years?
The answer: everyone else isn't.
44% of Americans born between 1946 and 1965 are not confident that they'll have enough money to live comfortably in retirement, according to a new Associated Press-LifeGoesStrong.com poll. More than half (57%) say they lost money during the recent economic downturn and many who were affected (42%) say that's why they're delaying their retirement.
Economic anxiety has certainly taken its toll on us. Pensions, social security, and individual savings plans like 401k accounts aren't secure enough to float the average midlifer's retirement boat. The recession and its aftermath have not only tarnished our anticipation of the Golden Years but in many cases eliminated the option.
While more than half (55%) of us say we have at least some confidence that we'll have the financial resources to live comfortably during our retirement, only 11% are deeply confident that we're financially prepared.
INSIDE THE NUMBERS
The poll shows that those of us who are married (61%) feel more prepared than our unmarried counterparts (46%). Among households with incomes below $50,000, just a third (35%) express feeling financially ready for retirement, compared with more than two-thirds (66%) of those in higher income households. Midlifers who give themselves poor grades when it comes to personal money management skills are simply terrified. Nearly half (47%) say that they have no confidence at all that they'll be able to pay for retirement.
The reality is that as we midlifers are starting to retire, our financial worries are growing. Once reliable sources of retirement income are disappearing. Market volatility and downturns are more frightening because there's less time and opportunity to recover. We're living longer but rather than outright celebrating, we are worrying that we risk outliving our retirement savings. The poll numbers show our median retirement savings stand at $40,000 — a figure hugely impacted by a quarter of us who have not saved anything for retirement. Among those who have saved something, the median savings is $100,000.
Disappearing pension plans, dwindling Social Security benefits, and the challenge of adequately funding one's own retirement creates an understandable fear. Though the word "fear" can stand for false evidence appearing real, when it comes to money and retirement, the word "fear" really does stand for its more common definition: a distressing emotion aroused by impending danger, evil, and pain. We midlifers are the age group most likely to have our retirement savings affected by the recession. The AP-LifeGoesStrong.com poll shows that more than half — nearly 6 in 10 people born between 1946 and 1964 — lost money during the economic downturn.
HOW'D WE GET HERE?
Those of us born in the middle of the 20th century grew up in the wealth building and relative peace following World War II. We experienced a rapidly changing world and had our share of tragedies (JFK, RFK, and MLK assassinations), victories (civil rights, man on the moon) and controversies (Vietnam, Mexico 1968 Olympic protest). We were raised to aspire to and, in some cases, expect a higher education; it was the era for which there was money other than our own to pay for it. America was feeling its wealth and showing it.
That's the reality of how we midlifers who are starting to retire now entered the job market, and the mentality with which we gained considerable financial success. We gathered and acquired. We sent our children to college. We helped our parents transition to elders and managed their elder needs. We were onboard the getting-ready-for-retirement train and on the right track — then along came this deep economic derailment called a recession.
It's understandable why more than any other age group, our generation's anxieties are high about the money needed in retirement. As the poll alarmingly shows, 65% say Social Security (which was only created to be a supplement, not one's main source of retirement income) is "extremely" or "very important" when asked to rate the relative importance of different sources of income in retirement.
Even among those of us who believe we will be able to retire, many (67%) plan to work for pay once we have retired. More than a third (35%) say we will do so in order to make ends meet.
IT'S NOT TOO LATE! 9 THINGS YOU CAN DO RIGHT NOW
There are other ways to bridge the money gap you may anticipate in retirement:
Think "right sizing" instead of "downsizing" which we've come to associate with negative implications. "Right sizing" is a positive move. Rather than stretching to maintain everything you've acquired, think: What can you choose to get rid of? What has to happen in order to retire on a fixed income with health insurance?
- Write down everything you spend for an entire month; what it is and how much it costs. You have to know where your money is going in order to make changes.
- Actively look for and find ways to save money.
- Get a financial advisor. Denial about money problems isn't healthy and will only make dire circumstances worse.
- Look at the little things as you shop. Buying bulk, like you used to do when the kids were at home, could be a habit that needs transforming.
- Are you a one or two car (or more) family? The average auto runs you $500-$1,000 a month (car payment, insurance, maintenance, and gasoline – and, in some places, the additional cost of garage space). If you can do away with one car in the family you can save an immediate chunk of money. It requires a little effort to coordinate schedules but isn't impossible.
- Instead of driving everywhere, take public transportation. Subways, buses, and light rail systems can put you on the road to huge savings for your retirement.
- Re-examine recurring charges/expenses — phone bills, groceries, health and beauty, Friday night happy hour.
- Luxury things don't have to be eliminated; they just need to be amended.
- What you're paying for in comfort today, you won't be able to afford tomorrow. So scale back your lifestyle. The poll shows that 34% of us expect to have to do just that.
People in general are reluctant to alter their behavior and habits. But as the clock moves each of us closer to when to call it a career and not work the daily 9 to 5 — we must.
Valerie Coleman Morris is the author of "Mind Over Money Matters: It's Your Money So Take It Personally" which is available on Kindle now and will be published in hardcover this year.