There IS a Retirement Crisis, and Here’s Why

“You’ve changed, man!”

“You’ve spent the last year giving people hope, convincing them there is NO retirement crisis and now you’re telling us there is!?!?!? Never should have trusted you!” I can hear some folks saying as they saw the title to this email.

But hang tight! Let me tell you WHY the “retirement crisis” exists first of all. And then I’ll explain how it affects you,specifically.

Go to this article from Friday’s LA Times. Trust me, go there, and read it. You’ll be VERY glad you did. This email will be back ready for you after you read that. Or you can go to the video I did on that same article here.

Ok, you’re back…

Anything about that article jump out at you?

Notice the author is from the Manhattan Institute. Actually, it’s funny because in the comment section people are blasting the author as a right wing advocate. Thus they discount anything he says even if what he says contains valuable information.

While the Manhattan Institute certainly has a pro-free market opinion it’s never been on my radar as a right wing think tank, not along the lines of the Heritage Foundation, or even a Libertarian group like the Cato Institute. It’s been pretty middle of the road.

Be it as it may though, the interesting thing is THIS piece from MOTHER JONES of all places in response to the LA Times article just referenced. Hard to get much more to the left than Mother Jones without being an out right Menshevik.

And what does Kevin Drum of Mother Jones say?

“The “crisis,” as near as I can tell, is mostly an invention of Wall Street firms, which churn out an endless supply of “studies” with scary headlines but not much in the way of facts on the inside.”

Whoa. So, the supposed right-wing Manhattan Institute and the definite left-wing Mother Jones Magazine actually agree, there is NO retirement crisis! This is revolutionary. Yet, we keep being told that there is one.

Because crisis creates wealth…for the advocates of the crisis. Kevin Drum points out the crisis is a manufactured Wall St. lie. I don’t disagree with that at all. But Wall St. is working in conjunction with Big Education to promulgate a crisis that doesn’t exist in order to raise funds to “fight” the crisis.

Eisenhower warned us about this exact thing in his farewell address. One of the most underrated political speeches in American history. So, so prescient about the coming Education Industrial Complex. (Everyone focuses on his Military Industrial Complex line but his speech had the same scorn for big government and big ed too.)

Think about it like this. You’re a fundraiser for the SPLC. The SPLC played an integral part in the desegregation of the South in the 1960s. It raised A LOT of money for its mission. But then, as is always the case, mission creep crept in. As its initial enemy was defeated it had to find ever more dragons to slay. The Family Research Center became a target of the SPLC. The Alliance Defending Freedom too. And many other groups who are pretty mainstream. The SPLC’s mission creep was so vast it lost a significant lawsuit and had to pay millions for falsely accusing a person of anti-Muslim racism. And now even the Washington Post published an opinion piece calling the SPLC irrelevant.

And this is exactly what happens with groups that get some initial success in their battle against a crisis, the crisis is NEVER solved! In fact, the crisis just grows and grows. It’s HOW THEY MAKE MONEY!!!

The strategy is so easy to follow. Identify a crisis. Scare the bejeebus out of people about said crisis. Offer solutions to mitigate the crisis. Those solutions could be in the form of product sales (Wall St.) or research papers (Big Ed.). Either way, you, the purveyors of the crisis, get paid. And will continue to get paid so long as the crisis exists. In fact, make the crisis ever larger and you get paid…MORE! What a great line of work!

I won’t state the obvious on how many other “crisis” there are at this very minute. Think of all the things that are knocking on your door RIGHT NOW just waiting to devour you. There is always someone selling a product to deal with that boogeyman under your bed. Sadly, it’s great marketing.

Well, actually, maybe I will make mention of a couple areas of “crisis”. Health care costs in retirement.

Every year Fidelity publishes its “study” about the cost of health care for an average retired couple. Jonathan Clements, formerly of the Wall St. Journal, happened to tweet out the most recent study about how the cost is now $285k…and this doesn’t include Long Term Care!!! OH NO.

In the comments of that tweet were people saying things like “Well this just proves I need to save more. ” “I guess I’ll have to work a few more years.” Exactly the point! This kind of “study” works like a charm…for the financial services industry. Scare people into saving more and working longer. PERFECT!

Not to be outdone, Genworth offers the same type of annual “study” on the costs of long term care in each state. Genworth, “for over 145 years, we have been focused on helping our customers navigate caregiving options, protect and grow their retirement income, and prepare for the financial challenges that come as we age. We’re here to be a trusted ally for everybody who needs care as they age and anybody who loves them.”

Basically they sell products to help families face the “financial issues of aging.” Hmmm….

Will we ever read a headline “Crisis Averted!”? Of course not. Not while crisis pays. And that my friends is why there IS a retirement crisis.

So what does this have to do with YOU? Literally nothing. Pay no mind to this noise. Are you in a crisis? No. Could you be in a crisis? Sure. But let’s think that through. What is the likelihood of X happening? Let’s say running out of money in retirement. What’s the likelihood of that happening…to YOU??? When it comes to YOU, do not use averages, do not use medians, do not use what happened to your neighbor, be more specific than that. If you are going to live your life in worry about a crisis, we need specifics as to why that’s a concern of yours. Not just “well, I heard…” Not good enough. Specifics!

“That’s fine Josh but how about the unknowns, like a stroke or an emergency medical expense or Alzheimers?” All good things to contend with and plan for.

A long term stay in a nursing home is a costly endeavor indeed. You know what? Hopefully, you’ll have this thing called a paid-off house in which to fund that stay. And while we’re at it because we can’t know the specifics to YOU suffering a stroke that would put you into a nursing home we do need to look at the data about how many Americans are actually spending huge amounts of money in homes.

The data does NOT support a crisis whatsoever. Do some people spend HUGE amounts of money in long term care facilities? Yup. But like I always say, some folks fall off ladders too. Sometimes bad luck just happens. And there literally is little you can do to prevent it. Working a few more years and saving an extra $50k isn’t going to make a hill of beans difference if you are one of the few spending $200k annually in a nursing home.

Thankfully though, you probably won’t be one of the few people in that predicament, simply because so few people are. Yes, again SOME are going to blow through their life savings with health costs. Some WILL run out of money in retirement. But those people are few and far between. Not enough for you to think it’s a crisis. Not by any stretch.

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