Walter Russell Mead tells us about the bad news and the really bad news. The good news? He then makes some excellent points:
The best and perhaps only real choices that most of us have involve two changes. First, save more and make realistic assumptions about your future rate of return. There is no way around it; if you want to be financially secure or even sort of secure in the future, you must sock more money away now. Nobody cares as much about your retirement as you do; if you don’t save for yourself you can’t count on the government or a benevolent employer to do it for you. Save, save, save. This is true whether you are twenty or whether you are seventy; Americans have let themselves get out of the habit of saving, and we need to get back to it. Whether your income is large or small, you need to look for ways to cut expenses. That will help you save now; it will also mean you will know how to retire more cheaply. We need less Martha Stuart and more Ben Franklin in our national character these days. Thrift, friends. It’s a virtue.
Second, and perhaps even more important, adopt reasonable goals. Stop thinking that the goal of your working life is to get rich enough to quit at 65 and have fifteen years of active leisure. The goal of a working life is to find ways of contributing to the common welfare that sustain you and your family, that fulfill you and help you to grow. As you go on in life, you should be looking to keep contributing. The goal isn’t to play golf at Palm Beach or veg out in front of the tube. Retirement is a time to change careers: work part time, or work at something you love that pays less — but that still contributes something to your income.
The time to spend wisely (aka “less than you earn”) is now. In difficult financial times, those who have are able to help those who have not. Do you want to be a giver or a receiver? I know where I wish to find myself–and I’ll only get there in the future if I practice restraint in the present.
Retirement while still young and in good health is a modern phenomenon. While we all tire as we age, the idea of pushing ourselves for 45 years so we can coast for 15 is growing increasingly unattractive. Not only are there financial incentives for keeping an oar in the water for as long as we can row, there are cultural/communal/familial benefits to continuing our labors.
The best time to change our worldview with reference to matters financial was 30 years ago. The next best time is today.