Why is Planning for Retirement so Hard?

If you’ve watched the news or seen survey results about retirement savings and investing you KNOW how horrible the stats are. If you watch the news it always talks about how social security is suffering and will likely not be there by the time people retire (no matter how far you are from retirement incidentally). A recent survey of baby Boomers by Moneytips.com said that 32% of Boomers have no financial plan and only 40% are saving enough to meet their retirement goals.

In response to this litany of horrible news there are basically two responses….run and hide or learn and change. In an attempt to help folks respond in the more healthy way (hint that’s not running and hiding) Moneytips.com conducted a survey with the help of financial Bloggers to identify the traits of successful retirees. (I know a novel concept look at the people who do something well rather than looking at only the disastrous results….)

I’m not going to give you the full report of what these retiree’s looked like but if you want to see it all click here to get your copy.

The infographic below summarizes the information.

Source: Moneytips.com.

I would like to highlight a few results before talking some about the title of this post (ohhh the anticipation…if you want to skip down for the why….) These successful retirees mainly have post secondary degrees (71%). The majority have over $500,000 in net worth (56%). The majority (72%) have incomes over $50,000 a year. Despite the rumors of the number of retirees living with their kids over 91% live with their spouse (80% live with someone and only 20% live alone). Successful retirees spend enough to live comfortably (65%) and only 38% don’t live on some type of budget when working towards retirement (and presumably continue to live on a budget in retirement.) When they were working towards retirement 62% of them consulted a professional at least some of the time when planning for retirement.

All of this is just to say that the majority of successful retirees planned and used advice and built up savings over time and is now living comfortably in their retirement. However they still have regrets and worries. Their top regrets were making stock and real estate investment decisions that they later regretted. Their biggest worries are mainly about health-care issues or maintaining their current standard of living without running out of retirement savings.

This brings us to the actual topic of this post….

I would argue that the reasons that it is hard isn’t the math. Nope, it’s not usually about the money (obviously if you live below the poverty line income is an issue and you MUST make more, but even this isn’t really about the money). It’s about emotions and how those emotions color your choices.

Emotionally people often don’t save for retirement out of Pride, Shame, Fear, and even Love. These emotions aren’t all bad even but if they keep you from saving the way you should they are bad.

Many people feel a great deal of Pride and never want to appear as if they aren’t living well. They spend time and energy and LOTS of money to make sure that they look good. I’m Looking Good but Living Bad. (or in the Texas expression you are “all hat and no cattle.”) This is Pride. Pure and simple. If you are more worried about how you look today than how you are living today AND in the future then you spend everything you make and then some and end up not making progress on things like retirement because how do you save if you spend everything you make (or worse yet then some and go into debt.)

But here’s the why….Pride means that to fix this you have to really just begin to not care about the facade you have to care about reality. And this is REALLY hard. A few years ago I got a promotion and was asked within the first week by several folks…"so when are you buying a new car." Why? Cause at the time I drove a 1995 Ford Taurus….(this was in 2013 so that already gives you a hint..) It used to be baby blue but it was more of a sun washed out gray by this time. I drove that car for another six months before we bought a new car for my wife and I got her hand me down car. The 1999 Toyota Camry (a major step up in car). However, that Ford we bought for $1000 dollars cash with 70,000 actual miles, I drove it for 3 years and it had 140,000 miles when we sold it for $500 dollars.

Why did I drive such an old car when I was making really good money and I didn’t have any debt? Cause I could care less about what my car looks like. I just drive to get to work, it’s a commuter car only. Now don't doubt I do still have Pride areas where I have to fight. My Pride area is gadgets. I Love to have the latest and greatest electronics. And trust me I have some nice stuff now. But I do it only AFTER I fund our retirement not despite it. Pride can be defeated with planning and support and coaching from folks that realize that how you look is far less important than what you do.

Another emotion that can keep you from saving for retirement is Shame. So many people have a great deal of Shame around their money. It may be Shame that somehow if they go to someone and want to start investing they’ll ask them questions about their money. And then the Shame will be exposed. How badly they’ve been dealing with their money. How far behind they are and how much debt they have. How they haven’t been providing for their family as well as they should. All of this Shame tends to make folks have a certain inertia that keeps folks from actually getting started planning and executing on their retirement planning. Like Pride, Shame can keep you from getting started. But even worse Shame is self reinforcing. If you have Shame about not providing and not planning and not doing well with your money and then you don’t plan and execute well for retirement…that’s right…MORE SHAME. Which leads to more inertia to not get started. Shame is a bit harder to defeat but yet again finding support and coaching from folks that do realize that no matter what mistakes you’ve made in the past it is much more important what you do today. To paraphrase the saying about planting a tree, “The best time to start planning for your retirement is ten years ago but the second best time is today.”

Fear is another inertia building emotion that can keep you from planning for your retirement. After all, if you don’t know how to do something well then you automatically begin with some sense of Fear about getting started. This also usually starts from a sense that you need to know every step. If you make a mistake anywhere it can lead to big dollar mistakes. But remember what the successful retiree’s showed above? They made mistakes and had things that they felt had cost them, but they were still successful. Why? Because despite any Fear or worry they got started. Fear is usually best described as F.E.A.R. False Evidence Appearing Real. It isn’t real and simply getting started can usually reduce Fear while not getting started can cause Fear to build. The only real way to defeat Fear is to gather information and get started. Again you have to surround yourself with people that can support you thorough the Fear and help you move on.

Here is a big emotion Love. You’ll notice this is the only emotion in the list that is considered a positive emotion. And it is. Love is great and it is a wonderful building emotion. Normally it would seem like there is no way a positive emotion like Love could keep you from doing something positive like planning for retirement. But it can. Normally you would think that if I Love myself and my family of COURSE I would begin to plan for my future by planning for retirement. But not always. There are at least two ways Love can prevent you from working to provide for your future.

1. The Love that you feel can cause you to live in the day rather than planning for the future. The Love that you feel today can cause you to spend everything you have (and then some) to give your family everything they want today at the expense of the future.
2. The Love that you feel can cause you to put the future needs of kids before retirement. I’ve meet dozens’ of folks that sacrifice saving for their future to either pay for or save for their kids college funding. The problem is that the order is wrong here. College should come behind retirement savings.

Again I’m not saying that having things today is bad. I’m not saying Love is bad. I’m not even saying that if you want to help pay for your kids to go to college that this is bad. What I’m saying is you need to make sure you pay for your own future first. Yet again (hey are you catching the theme here?) the best defeat for this type of issue is information and support from coaches and others who are willing to help you plan in a way that helps your family in the most loving way possible; planning for the future while still providing for the now.