I went to a Retirement Seminar last Tuesday. I had two main motivators to go: 1) I care about my own retirement, but more importantly 2) I wanted to see who else cares about retirement, what questions they asked and what sort of advice the presenter provided. So I went. Operation: What the heck are they teaching us? was in full effect.
This is what I saw.
First Observation: The young people are missing.
I was one of the youngest people in the room. I went with a coworker that is 1 year younger than me, otherwise, I would have had the youngest spot on lock down. There were maybe 2-3 other guys in their late 20s and 1-2 in the 30s. (Yes, all men.) The rest were a mix of men and women in their upper 40s, early 50s. How can we get young people, especially women, to harness the power of early investing if no one cares until later?
Second Observation: People expect shenanigans from financial people.
This seminar was put on by my employer for employees only. There was very little sales in this presentation. The only sale was that we can get discounted help if we’d like it. This was 95% information, 5% we can help. Even with that tone for the seminar, people still expected the presenter to be fishy.
I heard one attendee say as we were leaving “Telling us that our money needs to last 30 years is just a scare tactic.” Ummmm. No. Living into your 90s is getting easier and easier. The average life expectancy in the US is 81 for women and 76 for men. That’s average. In 2010, there were 1.9 million Americans over the age of 90. In 2012, there were 5 million Americans over 85. As modern medicine improves, these numbers will only increase. This is not a scare tactic. This is a fact of life.
I don’t know about you, but I’d rather have a little cash stashed away to feed myself should I live to be 90. I will only being eating cat food as a dare.
Third Observation: People are scared.
It broke my heart to see how many people in the room had the “deer in headlights” look. 80% of the audience was within 15 years of retirement. That’s not a lot of time to make up for lost ground. After the presentation, half the crowd bolted to the front to grab the presenter’s card. I’m glad these people want to do something now, but you can do so much more if you start earlier! See First Observation.
Fourth Observation: His numbers were wrong.
The powerpoint presentation listed the 401k match and catch up numbers for 2013. This didn’t bother me initially. I justified “Oh, the limits were the same in 2013 and 2014. He probably just didn’t update his deck. Sloppy, but he’ll say something.” BUT HE DIDN’T! Not only did he not mention that his deck was old, but he said out loud that the limit was still $17,500. I should have corrected him, but I didn’t. Perhaps I didn’t want to reveal myself as a hopeful super saver with so much fear in the room.
Fifth Observation: The framework numbers weren’t all bad.
Retirement planning takes a lot of guesses. I get that. Most of his numbers were fine. (even though I was looking for holes!) He used 4% for inflation. That seemed a little high, but high on the good side. 3% seems to be the average inflation number used. For return, he used 7%. That’s normal. Nothing too crazy here.
I was pleased to hear that he recommended that we plan for a 3.8-4% withdrawal rate. However, this number confused the bejeezus out of the crowd. Questions came up like: How much/what percent do I have to save to do that? What rate of return is that based on? I’m not an expert on withdrawal rates, but with so many people so close to retirement, I expected them to have a better grasp on this. ((The same guy that said living for 30 years in retirement was a scare tactic said he was planning on a 15-20% withdrawal rate. *facepalm* ))
Sixth Observation: We aren’t being asked to save enough.
The presenter was straight up asked how much we should be saving for retirement.
His answer: 10%.
Perhaps he gave a lower estimate because most of the people in the room have a pretty decent pension waiting for them. Maybe he gave a low estimate because he didn’t want to scare people. Either way, industry standard is 15%, and that’s if you start early. It seemed irresponsible to tell people to save less than they were expecting to hear.
Have you ever attended a retirement seminar? Did it surprise you?