If you’re viewing retirement as some far-off future event that you don’t need to think about now, you’re fooling yourself. Likewise, if you feel smugly confident that you’ve made shrewd investments and will be in great shape when you finally decide to retire, you might face a rude awakening. Almost the only factor you can count on about retirement is that you can’t count on matters staying as they are.
You probably already know that the concept of retirement has changed considerably over the past few decades–as has the recommended approach to preparing for it.
One major event that triggered massive change was the financial crisis of 2007-2008, which had global impact. It was blamed for causing a devastating recession that many people considered the worst since the Great Depression of the 1930s.
That event wiped out the retirement reserves of many Americans. You or someone you know could have experienced that disaster personally. If you were young enough at the time, you’ve had a chance to work at recouping those losses. Otherwise, you’re most likely engaged in a struggle to reach the point where you can even contemplate retirement–if you have a choice.
Sometimes you don’t.
You’re fortunate if you’re gainfully employed in a good-to-great job that seems secure and you’re consistently putting aside at least a modest amount in retirement savings. (If you’re not, that’s another story.)
Before you get complacent, though, take a good look back at that financial crisis I mentioned above. A lot of innocent people (that is, not guilty of wrongdoing or stupid financial decisions) suffered a frightening impact on their retirement situation. Some of them were close to retirement, while others weren’t quite there yet.
Regardless, even if they had a good job at the time and weren’t on the brink of retiring, their retirement picture changed dramatically. It’s always a good idea to keep in mind that you can anticipate and prepare for some risks ahead of time, while others can rear up and smack you in the face when you don’t foresee any problems at all.
Before you throw up your hands and decide your retirement is doomed, take a deep breath. Yes, there are undeniable challenges and some of them are major; however, that’s not the whole picture. As a recent article in Consumer Reports mentions (“The New Rules of Retirement Planning“):
“Now that the era of the gold-watch goodbye is clearly a thing of the past, a host of new forces are altering the traditional approach to retirement planning. Rising healthcare costs and historically low interest rates for fixed-income investments, for instance, may mean that many of us will have to dial back our lifestyle expectations. But other changes are more positive: Market innovations, such as target-date retirement funds and computer-based robo-advisers, are helping us make smarter, low-cost investment choices.”
Take into consideration the probable and possible challenges you can anticipate somewhat. Then add a fudge-factor for the ones you can’t envision. I doubt whether even the greatest financial wizards of today can figure out everything about planning for the future, but some of them have certainly done better at it than many of us!
A big part of the road to sound retirement planning involves awareness and commitment. If you don’t have a solid plan yet, that’s a good place to start. You won’t get far without one. Of course, you also need to implement your plan–a plan that’s only on paper doesn’t get the job done on its own. Like it or not, you’re the manager of this project, so get to it!