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There has been quite a bit of attention as of late in business publications and websites such as the Wall Street Journal, Bloomberg and CNBC in regards to our retirement funding crisis.  This crisis is being framed in the context of the failure of the various different vehicles people utilize to build up their proverbial nest eggs.  Whether it be IRA’s, pensions, 401k’s or even social security, wizard of smart pundits are looking to place blame and lament the fact that the concept of retirement is impossible for many rather than our belief that the concept itself is becoming obsolete.

According to Boston College’s Center for Retirement Research the savings issue is getting worse.  Fifty-two percent of U.S. households are at risk of running low on money during retirement.  This is based on projections of assets, home prices, debt levels and Social Security income.  That increase is up 31% since 1983.  The National Institute on Retirement Security states that an astounding 45% of all households have saved nothing for retirement.

An axiom used by politicians and unscrupulous salesman alike is, “Never let a good crisis go to waste.”  The current retirement savings debacle is no exception and the usual suspects are coming out from under their rocks in an effort to expand government once again.  Teresa Ghilarducci and others on the left have been pitching a government takeover for years; I highlighted her efforts back in 2010 in my column Retirement Raid.  At that time she and others of the similar demented and sad mindset where using the market sell-off of 2008-2009 as the crisis to push their agenda of having the Social Security system take over retirement accounts which in essence would be another government Ponzi scheme.

They call it Guaranteed Government Accounts and the proposal made me throw up in my mouth.  It goes like this…Government takes retirement money, lends it to itself and pays you artificially depressed interest rates that are nowhere near the real rate of inflation.  You are supposed to bend over and assume the position like Kevin Bacon in Animal House and get repeatedly paddled while thanking your big government over-lords chanting, “Thank you sir!  May I have another!”  Our government will be happy because it now has its hands on everyone’s savings, over $20 trillion that they can waste as they see fit.

Social Security was never designed to be a retirement plan.  The IRA and 401K was never designed to be a retirement plan.  The pension, which for a few decades was a retirement plan if you worked for the government or an auto company, is disappearing fast.  13% of all private-sector workers have a traditional pension today whereas 38% had them in 1979.  The reality for people who did not work for the government or the auto companies were much smaller pensions that could shrink if there company failed and got turned over to the government’s pension insurer.

Many are lamenting its demise, and placing the cause of death on evil businesses wishing to increase profitability.  The reality is that mathematics wrecked the pension system.  Contrary to the belief of many of our courageous leaders 2+2 will never equal 20.  People are living longer and healthier lives.  The returns of many pensions have been well below expectations due to poor management and also artificially low interest rates.  Pensions need to keep a significant portion of assets in cash or cash equivalents, which for over a decade have been essentially yielding nothing.

It is time to disregard the conventional notions of retirement.  The old way of doing things is obsolete, and quite frankly has been for awhile.  If your financial planner is not addressing the new realities of retirement planning, and sticking with the same old savings models and “retire by” dates; you are limiting your family’s opportunities and we suggest you make a change.  The fact that people are living longer and healthier lives should be cause for celebration, not stress.  Having a realistic financial plan based upon the terrain of today will allow you to not only enjoy your later years to the fullest, but the entire journey itself.

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