April 17, 2024
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Retirement Planning Diseases: Do You Have These Symptoms?

In 2006, Dr. Gregory Salsbury authored a book titled But What If I Live? The American Retirement Crisis, which identified seven key challenges to the retirement dreams of Americans. These challenges were a combination of fiscal events and social behaviors that Salsbury felt were coming together to create a “‘perfect storm’ for a generation of under-saved and over-spent Baby Boomers.”

In 2010, Salsbury came out with another book, Retirementology: Rethinking the American Dream in a New Economy. Coming in the wake of the Great Recession, the book proposes Americans need to revise their thought processes and planning strategies in order to survive and thrive in a new financial environment.

In an attempt to help readers better understand the interweaving of financial concepts and behavioral psychology at the heart of the book, Salsbury develops some amusing new terms. In the language of “Retirementology”…

 

Equimortis [ek-wi-mawr-tis]: The dangerous condition of relying on home equity to fund retirement.

Bingefy [binj-ih-fy]: Justifying a big-ticket purchase because you were previously frugal.

Kinphobia [kin-foh-bee-uh]: Fear of having to tap into retirement savings to support extended family.

Ohnosis [oh-noh-sis]: Realizing you really should have started planning for retirement years ago.

Finertia [fi-nur-shuh]: Paralysis brought on by trying to comprehend contradictory, overwhelming and confusing financial information.

In a press release that accompanied the book’s issue, Salsbury said, “People may not remember the precise psychological terminology behind these behaviors, but they will certainly remember ‘bingefy’ and hopefully take steps to avoid it.”

Fortunately, Salsbury’s wryly amusing descriptions of the financial afflictions affecting Baby Boomers may not be part of a behavioral epidemic in the United States. Witness the headline from a front-page Wall Street Journal article:

Watching Parents Fail Sparks New Rebellion: Saving Money

An excerpt from the opening of the article:

As older Americans lose jobs, lose homes and delay retirement, their children are watching and reacting. Growing numbers of young Americans are boosting savings, cutting spending and planning for retirement.

The article goes on to note the distinct differences in the financial habits of the Greatest Generation, i.e., those who grew up during the Great Depression, and the Baby Boomers born between 1946 and 1964. While the Depression-era generation was generally thrifty and debt-averse, Boomers have tended to spend and borrow. As a result of their spendthrift ways, many Boomers found themselves ill-prepared to weather the layoffs, declining housing values, and investment losses that accompanied the financial recession. Data from the Federal Reserve and the Center for Retirement Research show Boomers are approaching retirement age with, on average, “less than one-quarter of the amount they need to maintain their standards of living when their work life ends.”

Seeing the struggles of their parents, a number of Boomer children—sometimes referred to as “Generation X”—appear to be getting the message. Data shows a marked increase in employee participation in retirement plans by those under age 35, as well as a significant decrease in credit card debt. As one financial planner told the Journal, “You run into people who are 33 years old and are buying long-term care insurance. That is the result of personal experience.”

It is the hope of most parents that the lives of their children will be better than their own. Part of making that hope a reality is instilling good financial habits, as well as setting good examples. Don’t let “Ohnosis” and other financial afflictions have ripple effects to future generations.

Elozor Preil is Managing Director at Wealth Advisory Group and Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). He can be reached at epreil_wagroupllc.com. See www.wagroupllc.com/epreil for full disclosures and disclaimers.

Guardian, its subsidiaries, agents or employees do not give tax or legal advice. Consult your tax or legal advisor regarding your individual situation.

By Elozor M. Preil

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