The Bottom Line: Retirement Issues in the 21st Century

I returned to work today after four days of intense training at the National Press Foundation on "Retirement Issues in the 21st Century." What a whirlwind! As such, I've developed this photo essay to not only catch you up on my trip, but also overview changes to the retirement outlook that impact how we live the rest of our lives.

 

Retirement travel plans: I snapped this photo of the Department of the Treasury as my taxi whizzed down the street from the Reagan International Airport toward my downtown Washington D.C. hotel. The status of my retirement is heavily impacted by the value of my national currency. As the U.S. dollar looses its value against other currencies like the Euro, my international retirement travel plans become all the more expensive.

 

A new definition for retirement: I arrive at the DoubleTree Hotel in Washington D.C., where the National Press Foundation is putting up each of its 2007 "Retirement Issues for the 21st Century" training fellows (of which I am one). Here's the view from the enclosed DoubleTree courtyard, which is peppered with iron cafe tables and chairs, warmed by the lights of streetlamps, and accessible from the stone patio (where cocktails were served) and enclosed dining room (where our introduction dinner was held).

Our meet-and-greet cocktail event is just kicking off, with free cocktails around the outdoor patio bar. (I tried an artistic touch with this next photo, using the Edge Detection effect option on IrfanView, a free image editing program.)

Of interest is that several of the other fellows were either retirees or of retirement age, but are still pounding the work grindstone. Turns out there's a new definition for retirement these days. I'll call it "worktirement" for this generation of return-to-workers. As experts over the next few days of training attested, more and more Americans are working until they can't.

Interestingly, this was how life was before Social Security (the government retirement payment program) and pensions (the employer retirement payment program) made quitting your job and jumping into full-time retirement an option. With Social Security's continued coverage in question and pensions on their way out, people are once again continuing to work.

 

Annuitize this: The National Press Foundation training kicked off with Jac Herschler, senior vice president of marketing for Prudential Annuities (its parent company, Prudential Financial, was the title sponsor of the NPF event). Given his role, Mr. Herschler spoke highly of annuities -- a financial "investment" that has its strong detractors. But there have been some changes in the annuity structure that at least goes a step in the right direction for making annuities a better investment, at times even a recommended one.

Annuities are an insurance product that allows me to pay a chunk of money up front, in the hundreds of thousands, and receive monthly checks back of principal and interest on the money until I die. It's a really good deal if I live past the age the insurance company's actuarial team uses as the expected age I'll die. (Morbid, I know, but necessary to consider.) By then I'll have been paid back all of my original investment, plus gains on those professionally-managed investments, and still be getting more checks. You can imagine that it's not such a good deal if you happen to die before then.

The industry had a black mark for a while, and is still struggling with Security and Exchange Commission findings that some annuity sales/scare tactics aren't exactly above board. The good news for consumers is that a number of annuity insurers have said they're loosing money on the deal, likely due to statistics that show people in general are living longer and actuarial teams that didn't take into account when figuring out the complete payout date. And, to try to bring customers back, the firms are offering products like checks that increase each year with inflation and gains that remain stable even if the investments lose money. I'll usually have to "upgrade" to get these options, however, and that comes at an annual cost of half a percent up to 3 percent of my annuitized assets. I've concluded that, if I'm going buy into an annuity product, it should be done either when I'm 70 and still in good health, factoring each of the decisions above, or when I have the option to either cash out or annuitize my pension.

 

Change your behavior now to change your financial future: Steve Vernon, author of "Live Long and Prosper" (John Wiley & Sons, 2005), leads a session on "What Makes a Happy Retirement" for the 2007 National Press Foundation's "Retirement Issues in the 21st Century" journalism training event. One of the many here in "worktirement," he officially retired last year -- only to open his own communications firm and work up a DVD/booklet combo called "The Quest: For Long Life, Health and Prosperity" due out Nov. 1.

"Most Americans aren't even in the ballpark when it comes to planning for a traditional retirement. They're not even close," he says. "What I want to do is get them in the ballpark ... The challenges that we face in respect to retirement are behavioral."

Behavioral? Check out this quiz, designed by Vernon, to see how your behavior and retirement know-how stacks up: "Are you ready for a prosperous Rest-of-Life? Take the readiness quiz."

In the meantime, going back to something Mr. Herschler said, the five years before and after traditional retirement is supposedly a "Retirement Red Zone." "The mistakes (people) have made in investing over their lifespan become most pronounced during this Retirement Red Zone period," Herschler said. Then he put the load on people like those at this National Press Foundation fellowship: "Journalists must help them become better equipped."

 

What's your take on what you've seen so far?

 

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		Jennifer D. Meacham, Gather Money Correspondent
	Jennifer's column, "The Bottom Line," is published every week to the Gather Essentials: Money channel. Jennifer covers money matters for RedwoodAge.com and self-directed retirement account investing for RISMedia. She's co-author of the best-selling retirement investing guide "IRA Wealth: Revolutionary IRA Strategies for Real Estate Investment" (Square One Publishers, New York). Keep up on the latest news and analysis into how you can take control of your business and personal financial future by joining Jennifer's "Self-Directed Investing 101" network.

 

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