Livin' on a prayer!

Bon Jovi was echoing in my head as I read another Alliance Bernstein "Mind of the Plan Participant" survey. This survey focused on how confident participants were about retiring. 64% voiced tepid or terrified concern about retiring. And why is that?

The first concern brought up by participants was whether they will have saved enough to live comfortably. But what does it mean to live comfortably? Also, where might this comfortable living happen and how much does that place cost? Participants are being asked to think about something they typically spend less than 15 minutes a year thinking about. They are also being asked to predict the costs of something rather nebulous. Does comfortable living include a yearly trip to Tahiti? How much will that cost in retirement? Is comfortable living possible if you live in Death Valley, CA?

Predicting the unknowable is daunting and stress-inducing. No wonder folks might want to bury their heads in the sand on this one and not think about it. Not thinking about it can lead to the tepid or terrified level of concern. One solution could be to try to be specific about goals/ dreams/ desires in retirement. If you have a significant other, include them in this thinking. You will not know the exact numbers (ie, July 2 - 9, 2040, the Four Seasons in Bora Bora will cost $750 per night) but you can guesstimate. Financial planning programs also can help with this. Get specific. Don't try to wing it. Livin' on a prayer is not a good solution.

The second concern brought up by those surveyed was whether they would outlive their money. Not knowing expenses in retirement certainly does not help. And at the same time, participants are having to think about how long until they die. This is not a fun topic either. The result can be again ignoring the matter which leads to a lack of retirement confidence.

A different approach could be to look at your family tree for a guess as to life expectancy. It is helpful to factor in variables that might have resulted in a person living longer or shorter. Ask yourself how you compare to your relatives vis a vis these factors. In the absolute worst case, you can use the IRS Life Expectancy tables from Publication 590 as a starting point.

A valid third concern was not wanting to be dependent on anyone. Most Americans, I suspect, would agree that they would prefer to be independent as long as they can. Being a burden is not fun at best and embarrassing at worst. What I say to my 401k employees over and over is to save now and save as much as you can.

In 34 years in the industry, no one has ever said to me, "Timothy, I have too much money". Sadly, I have heard the flip side to that as in "I need to keep working. I don't have enough". What I would like to hear is, "I want to keep working because I enjoy what I do".

Seek out professional guided advice to help bring as much clarity to this topic as possible. Ignoring it, or rather "livin' on a prayer" is not the answer. These are meaty topics to consider and ones that will need thought and revision. I would rather put the time in now on those topics than live in a state of worry.