essays

401 Freefall

A recent Wall Street Journal article examined the 401(k) generation just beginning to contemplate retirement and realizing that their savings fall short.

How short? The median household headed by someone ages 60 to 62 with a 401(k) account has a quarter of what they need to maintain their standard of living in retirement, according to data analyzed by the Center for Retirement Research at Boston College.

This is based on the assumption that we will need 85% of our working income to live on if we want to live to the same standard.

What are the 401(k) holders doing about it? Same thing as most other boomers. Delaying retirement, downsizing, moving to cheaper housing, cutting out restaurant meals, taking fewer or no vacations, being more aggressive with their investments, and basically doing the duck and cover.

So big companies were able to get out of the penison business and money management firms made a nice living off all these 401(k) programs. Everyone was happy until the bubble popped. Many 401(k) owners saw half their savings wiped out almost overnight. Worse still, some lost jobs and no longer can contribute to their 401(k) plan.

It must be a shock to come to the realization that after 30 years of saving, there’s not enough there to have a comfortable retirement. These people weren’t looking for the gold watch -- they just wanted to know that somewhere around age 65 they would be able to stop working and maybe do some of the things they had always dreamed of doing.

Boomers want a more active retirement and now we may get it. Only it shouldn’t really be called retirement, because we’re going to keep on working. How about we call it pre-retirement? The pre-retirees will be working as greeters down at WalMart and driving school buses.

With any luck we won’t have to resort to the starving actor’s trick of mixing ketchup packets with hot water to make soup.

Jay Harrison is a graphic designer and writer whose work can be seen at DesignConcept. He's written a mystery novel, which therefore makes him a pre-published author.