Rolling the Dice on Your Retirement

Gamble: "To stake or risk money or anything of value on the outcome of something involving chance."

Gambling is a bad thing, unless done responsibly, as in done for entertainment purposes with money that you don’t mind losing.

There’s not one situation that would make sense where a person would be ok with losing their retirement savings. The rolling of the dice (or gambling) with one’s retirement refers to the idea that you’ll somehow be able to make things work when you reach retirement age if you’re not saving for retirement.

A government analysis recently found that average Americans between the ages of 55 and 64 have saved only about $100,000 for retirement. This is far below what one should have in savings on your retirement day.

The 2016 Retirement Confidence Survey from the Employee Benefit Research Institute takes a look at the confidence people feel about where they’re headed in terms of retirement and compares that to their actual financial state.

Despite a fairly high confidence level in the study, that confidence doesn’t reflect reality. Roughly 4 in 10 workers — 42% — said they and their spouses have less than $10,000 in savings and investments, and 27% of those age 55+ (in fairness, however, another 26% have saved $100,000 or more).

What can we glean from this information? There’s a large portion of Americans that believe they’ll be fine in retirement but haven’t saved a dime yet. Unfortunately for those people, they almost assuredly won’t be fine in retirement.

Many Americans are simply gambling that some kind of financial miracle will occur to make retirement easy for them, whether they think about it that way or not.

Unfortunately, the only way to create that miracle for yourself is to plan and invest over time, growing your retirement savings to the point that when your retirement finally does arrive, you’ll have stashed away enough money to live comfortably with your financial obligations covered.

While retirement is not defined solely by finances, however, it cannot be denied that money is a big influence on your happiness during this time. For one thing, it dictates your level of comfort and the number of options you have. More than that, though, there is the mental impact of living with the consequences of decisions you made throughout your career.

The Sensible Middle Ground

When faced with too-good-to-be-true odds and returns, it may be easy to go “all-in” on an investment. But the truth of the matter is that the old adage, “If it looks like it’s too good to be true, then it is,” really applies here. How many times have we seen the catastrophic results of a reckless gambling mentality in investments?

A sensible, middle ground approach may be far more attractive in terms of long-term returns. Slow and steady wins the race, as they say.

Gamblers are risk-takers by nature. They seek out the high risk/high reward situation. Investors should be diametrically opposed to this philosophy, making educated decisions and saving for long-term goals such as retirement.

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC