It probably goes without saying that 2008 was not kind to the so-called retirement calculator--what I refer to as the Formula of Despair (FOD)--that has overshadowed the working life of anyone who has entered the workforce sometime in the last 30-some odd years. During that time, we've been repeatedly admonished that Social Security--if it survives the crush of Boomer retirees at all--would provide insufficient benefits upon which to depend and would therefore require us to significantly supplement our retirement with our own savings and investing genius.
Unfortunately, the companies I worked for in the 80's and early 90's did not offer 401k plans or any type of pension benefits, so I did not get started building my 401k until my first opportunity in 1994 at the age of 35. Unbeknownst to me at the time, I had already lost the key decade--my 20s--in which most long-term retirement plans are made or broken (think 40 years of compounding). Even so, when our little company introduced the 401k program that year, I was very excited and remember enthusiastically reviewing each and every piece of paper in the Welcome Kit. Of course, the excitement abated substantially when we all found the part of the kit--the FOD--that showed we would need a minimum of a million dollars by the time we retired if we were to have any hope of outrunning inflation for the subsequent 20 to 30 so-called golden years. I can remember thinking, I would be happy if I could just earn a million dollars in that time let alone save and grow it.
Yet, for the next 14 years, I did exactly what I was supposed to--contributing the maximum amount allowed in the account every year without exception. Along the way I learned about diversification, compounding, dividends, pretax contributions, matching, vesting, compliance, noncompliance, top-heaviness, discrimination and safe harbors. My account balance grew and grew and everything seemed on schedule until one day in 2005 when I decided to run the numbers and assess my progress. I built a spreadsheet in Excel (something I do regularly in my job) to show where I was and what I needed to do to reach the "goal." To my stunned amazement, it was evident that I was nowhere near where I needed to be in spite of having contributed the maximum allowed by law and receiving a generous corporate match. Worse, without achieving twenty plus years of extraordinary market-beating returns from that point forward, I had no chance whatsoever of reaching a million dollars--nor even half of that. Now, if you think having a few hundred grand in your 401k is going to do the trick, you need to perform the calculation for yourself to discover what kind of income you will have after a few decades of hungry moth-like inflation eat away at the purchasing power of your account. I'm confident you will concur that something is horribly wrong with the basic assumptions of this whole "comfortable retirement" ideal we've been sold.
The Great Crash of 2008 has exposed the most readily visible part of the retirement charade that assumed you (and your employers and your government) could set aside enough money during your pre-retirement years, safely preserve the principal, consistently earn impressive returns, wisely adjust your diversification strategy at exactly the right times, miraculously avoid any major hardship withdrawals caused by illness or job loss, and nimbly skirt around any financial market collapses--thus sustaining your "standard of living" or something close to it for the extraordinarily long time period (twenty-plus years) between your retirement date and your actuarially-projected date of death. And no less improbable, that in accomplishing all of that perfectly executed money management, your company, industry and country could remain competitive in the global economy and lastly, that our government and major financial insitutions could manage not to turn our entire financial system into a giant Ponzi scheme.
But that's not even close to a complete reckoning of the cozy retirement farce. For that, we need to take it a step further and look to the very meaning of the word "retire" itself. Here's a list of synonyms I found on dictionary.com:
Synonyms: absent oneself, decamp, deny oneself, depart,
draw back, ebb, exit, fall back, get away, get off,
give ground, give up work, give way, go, go away,
go to bed, go to one’s room, go to sleep, hand over,
hit the sack, leave service, make vacant, part,
pull back, pull out, recede, regress, relinquish,
remove, repeal, rescind, resign, retreat, revoke,
run along, rusticate, secede, seclude oneself,
separate, sever connections, stop working,
surrender, take off, turn in, withdraw, yield
begin, enter, join
absent oneself, decamp, deny oneself, depart,
I don't know about you, but that list of synonyms doesn't describe anything that I'm interested in for more than a few days--words and phrases like depart, go away, regress, seclude oneself, and sever connections. It's no wonder we always add the word "comfortable" to the front of our description. It seems like the least we could ask for is a warm fire in all that cold hard-earned isolation.
Now don't get me wrong, I intend to keep saving and investing and stuffing as much as I can in my 401k for as long as I am able because that's probably still our best bet to build wealth over time. And further, after my work expiration date comes, I sure don't want to be foraging through garbage cans for breakfast or imposing my basic needs on my children. But for my remaining time on this planet, I intend to work on some other more meaningful long-term goals because this endeavor to sprint a frantic work marathon in order to fund some sort of mildly pleasant dreamlike withdrawal from the work community just doesn't interest me anymore. It's not real and it's not going to happen.