I’m depressed, not very optimistic about retirement by R Quinn

I read Adam Grossman’s article Riding the Rails with great interest. He gave a well balanced perspective on retirement income strategies, but I came away thinking it’s complicated and scary no matter which approach is used – the point is these strategies are beyond the ability of many people and perhaps more so as we age.

There must be a better, that is, simpler way although I admit I don’t know what it is. Does anyone want to live in retirement knowing that to sustain their income at some point they may have to cut back on spending, perhaps even on core expenses? I doubt it. 

Dealing with inflation is hard enough. Dealing with the amount of income available is downright frightening.

I view this from the outside looking in, I don’t live off investments. I know the simplicity and calm of a steady income – plus investments accumulated in and out of retirement plans. 

We need to do a better job of integrating annuities into 401k plans. Today few employers offer them and fewer employees use them, but the law permits them, even attempts to encourage them by limiting employer liability.

Taking a chunk of money you saved and turning it over to an insurance company for the future, even your future, is not easy for sure, but what if that was not necessary? 

What if one option in a 401k could be used as a form of pension. The contributions gradually purchase an annuity over many years? The worker could see the annuity value growing each year. No major lump sum investment required. 

What if the employer match could be designated for an annuity? Needless to say this probably requires new types of annuities from insurers. 

Another possibility:

I once strongly disagreed with this, but I’m starting to think the retirement security answer for most Americans is greatly enhanced Social Security income – with taxes sufficient to keep it solvent indefinitely – a form of forced savings and a guaranteed annuity. We could require employers to pay more than 50% of the cost, especially those that don’t offer any retirement vehicle. 

Can the majority of workers plan and execute financing their retirement decades in the future? Individual responsibility sounds good, I often promote it, but I think the evidence is clear, most Americans are not, can not and will not do so.

Make no mistake, the HD community is not representative of the general population. Talk about the 4% rule, bond ladders, guard rails, Monte Carlo calculations even asset allocation, heck spreadsheets never mind SWRs with a friend and more often than not you will see a blank stare. 

Financial literacy and education need to be enhanced, but even that won’t do the job when living for today, immediate gratification and all else encouraging us to spend money now dominates our lives. 

Am I being too pessimistic? I hope not, but much of the research and surveys indicate otherwise. Where is the good news about retirement for the great majority of Americans? 

For decades we have not even been able to address the ongoing solvency of Social Security. Yet we expect average Americans to do better on their own. 

I think not😢