Years ago, I spent a long weekend in Florida at a hotel with a dandy beach bar that seemed to be patronized almost exclusively by retired guys from Michigan. Ever since, that scene has represented to me the good old days of retirement, when pensions prevailed and post-work life was a beach.
But maybe I've got it all wrong. According to a recent report by the Investment Company Institute, today's retirees have more than two and a half times the retirement assets (inflation adjusted) of retirees some 30 years ago.
That golden age of pensions? Only 39 percent of private-sector workers were covered in 1980. That said, workers did pick up a few pensions (often small ones) after 1986, when legislation required employers to shorten the vesting period for private-sector plans. Those pensions are still a key component of retirement income for baby-boomers, whose careers spanned the transition from pensions to 401(k)s.
True, rising health care and long-term-care costs could inflict real damage on retirement income. Low interest rates will mean less income from money invested in annuities, the do-it-yourself pensions offered by insurers. As for savings, the Employee Benefit Research Institute projects that about 43 percent of boomers born between 1948 and 1964 and Gen Xers (born between 1965 and 1974) are at risk of not having enough to cover basic retirement expenses and uninsured health costs.
Despite all that, says Richard Johnson, director of the Program on Retirement Policy at the Urban Institute, "the sky is not falling." Among the bright spots: As employers automatically enroll workers in 401(k)s, retirement saving has improved. The population has become healthier and better educated, allowing more people to work longer, if they are willing (and in most occupations, employers can't force them to retire). "Working longer is the best way to bolster your retirement security," says Johnson.
In any event, we live in the times we live in, not some glorious, mythical past or scary future. Sure, we need to save more, set goals and tackle systemic problems. But if we don't end up hanging out at the beach bar, at least with luck we'll stay productive and engaged a little longer. I'll take that outcome any day.
(Jane Bennett Clark is a senior editor at Kiplinger's Personal Finance magazine. Send your questions and comments to email@example.com. And for more on this and similar money topics, visit Kiplinger.com. Kiplinger's has a new service to pinpoint the ideal time to claim Social Security to maximize benefits. Visit http://kiplinger.socialsecuritysolutions.com.)