The broad societal view of retirement as a life of leisure with few financial concerns differs from current reality. Some estimates of the shortfall - the retirement deficit - exceed $6trillion. This is the difference between actual retirement savings versus what resources "retirement age" individuals will need during their lifetimes.

In 1940, a 65 year old male had a life expectancy of 77. By 1990, it was over 80. Today, it exceeds 82. Many individuals will live well into their 90's and retirement savings simply aren't designed to meet those demands.  Does this necessarily mean retirement is endangered? No, but adjustments, both in terms of lifelong savings, as well as the amount of withdrawals are needed.

 Let's dispose of some myths.

§  First, there are no magic formulas that will allow one to achieve financial independence without saving (deferring gratitude) along the way. Two-thirds of those eligible for 401(k) type retirement plans don't save anything. Those that do defer some of their current earnings, contribute at fairly low levels (average less than 6%).

§  Second, you can't make up for the dearth of savings through higher investment returns.

§  Finally, don't believe for a minute that retirement spending will be a fraction of pre-retirement spending. If anything, spending may actually increase at least initially.

Going forward we need to "re-imagine" what retirement will look like. For many (perhaps most), work in some capacity may extend to at least age 70 or beyond.  (Attached is a brief article discussing the history of Social Security and how the initial retirement age was determined. It is of interest that even in 1935, half of the state pension systems used age 70 as the retirement age.) The building blocks of retirement include pensions, Social Security, all forms of tax deferred savings accounts (401(k) plans, IRAs, etc.) taxable savings and any other investments such as real estate. The longer one can put off withdrawing from retirement savings, the shorter the period the funds will need to last. If full retirement is delayed until age 70 or beyond, the ability to successfully navigate retirement is enhanced. We must also remember the ravaging impact of inflation on our resources.

Our role is to assist clients with developing and funding a realistic retirement "picture frame" complete with mid-course corrections as needed. The challenges of retirement can be met with proper planning and advice.