Retirementology: Great Expectations
Man Walks into a Bank...
For millions of Baby Boomers preparing for retirement, we live in an era of what can best be described as Romantic Illogic. Consider the curious case of Timothy J. Bowers. In Columbus, Ohio, Mr. Bowers, age 62, couldn't find work, so he came up with a plan to make it through the next few years until he could collect Social Security. Mr. Bower's plan was out of the ordinary, to say the least. He robbed a bank and then handed the money over to a guard and waited for the police. Mr. Bowers passed a court-ordered psychological exam, and got his wish...he was sentenced to three years in prison, just enough time to take him to his Golden Years when he could collect his full Social Security check. The prosecutor was quoted as saying, "It's not the financial plan I would have chosen, but at least it was a plan."1
Before the Meltdown of 2008, very few Boomers had a retirement plan, but millions had retirement expectations. For example, 59% of the people in a survey said they expected to receive a pension check; however, only 41% knew of a pension to which they or their spouse were entitled.2 Of the people who actually had a pension coming, the median expected annual pension was $20,000, but the median actual pension payout was only $8,340.3 So did the bull market and strong economy create a quixotic-like disconnect between reality and fantasy? Why else would 50% of American workers say they expected to retire at 62, and 80% believed their standard of living would go up in retirement?4 Why else would 70% of Boomers expect to leave an inheritance, not knowing if there was really any money to be left to their heirs?5 After the Meltdown of 2008, you have to wonder: Who exhibited more irrational behavior...the bank-robbing Mr. Bowers who had a plan or the overconfident Boomer who had an expectation?