Retirement Lies We Tell Ourselves - Pt. 1 (WSJ)

The Wall Street Journal recently had an excellent column titled “Retirement Lies We Tell Ourselves.”

Over the next few weeks, I will put a piece of that article here to provide you the opportunity to think about these different “lies” and to reflect if you are telling yourself this or not.

We (the Wall Street Journal) asked financial planners, educators and economists across the country to share with us some of the most risky assumptions — or outright lies — that people are crafting as they approach retirement. The thinking usually goes something like this: “I might not be in the best shape when it comes to planning for later life, but that’s OK because…”

“I’m going to work in retirement.”

The idea of working in later life is one of the most prominent features of what’s frequently called the “changing face of retirement.” A number of surveys have shown that about two-thirds to three-quarters of baby boomers expect to work for pay after retiring. It certainly sounds good; staying active as we age can promote mental and physical health. And the added income, obviously, could help patch any cracks in your nest egg.

The problem is that you might not be able to work in retirement. You might develop health problems; you might not find the kind of work you want, or jobs in your area could be in short supply. Indeed, many workers in their 50s and 60s are having a tough time keeping the jobs they have — never mind finding new jobs in retirement. A study published this year by McKinsey & Co., a consulting firm, found that 40% of surveyed retirees had to stop working earlier than planned, a consequence primarily of layoffs and poor health.

Predicting what boomers actually will do as they age is always a chancy exercise. But one way to gauge expectations about working in retirement is to look at the experiences of people who have already collected their gold watch. A survey published earlier this year by the Employee Benefit Research Institute in Washington found that just 27% of surveyed retirees had ever worked for pay while in retirement. A similar study published in September by the Pew Research Center, also in Washington, found that only 12% of current retirees are collecting a salary.

REALITY CHECK: For the moment, “there’s a big disconnect between what people say they will do, or might do, versus what people are doing,” says Cary Funk, senior project director at the Pew Center.

Yes, that could change: The sheer size of the baby-boom generation could mean that more boomers, in contrast to their parents, will end up working in retirement. But if you’re counting on a paycheck in your 60s and 70s to help compensate for inadequate retirement savings, you could be in for a nasty surprise.