For most people retirement is now an illusion, and many Americans will find themselves working far longer, for far less real compensation, then they ever imagined. The quicker we realize this, and plan accordingly, the better off we will be…READ MORE.
My Take: Is retirement an illusion? While the linked article makes a number of points, many of which I find to be valid, I don’t think anyone must hold a defeatist attitude that retirement is an illusion. Retirement is a goal like any other goal one may have in his or her life. If it’s something you truly desire you will achieve the goal.
What people must focus on in terms of retirement as a goal is the fact that the quest for retirement will most likely involve some form of delayed gratification. Retirement is not a free lunch. Retirement does not simply occur when you get to X age. To achieve this period of retirement you must work towards it as any other goal in your life.
If only a fraction of what is being claimed about the impending doom of various pension programs becomes a reality the young workers today will have a shift in thought and beliefs. The belief that they will receive what is stated by any form of collective retirement system will be significantly weakened. I sense that this perception amongst young workers already present and would be set in stone by pension breakdowns.
From an investor’s perspective, if you believe some pensions will go broke or have to significantly alter the promises they’ve made to their contributors, then I think you have to keep your eyes on the horizon. In the long-term, such actions would force all workers, especially younger workers, to take a very hard look at what that they are personally doing to ensure retirement can be a reality for them.
At this point I am not certain how all of this potential drama will play out. If things turn out as bad as some expect, do we end up with a large pool of society that develops a heightened sense of awareness and dedication to their finances? Or do we end up with a disillusioned population that loses a significant amount of trust in various government and private institutions?
Does this potential disillusioned state drive them away from investing in the market? It’s very possible. Many were driven away in late ’08 and early ’09 when the market crashed and have yet to return. Such events can be very traumatizing and leave major psychological scars.
This is going to be a very interesting decade.