"The Number" Versus the Numbers...

You've seen those TV ads from ING, where all the characters are carrying around a large, orange number depicting the amount they will need to save in order to retire. Take a look at one of these ads, called "Nurture". I count thirteen legible "numbers" in the ad (for a few more the number can't be read). The lowest is $589,000; two others are under a million, the other ten are over a million. Looks to me like in ING's world at least, most people need upwards of a million dollars to retire.

Let's see how that compares with the real world... A Wall Street Journal article from February 19, 2011, titled "Retiring Boomers Find 401(k) Plans Fall Short" points to data indicating that boomers aged 60 to 62 have a median retirement savings of $149,900. "Median" means half have less and half have more; you can bet that the distribution is something of a bell curve, meaning that of those who have more than the median, most are fairly close to the median. All this suggests that a vast number of Boomers, the bulk of them, are unlikely to ever come close to realizing an ING type of number. Either that, or they will have to cut their current spending to the bone, save like crazy, and work well into their 70's.

Well, before we all go into despair over this condition so many of us find ourselves in, keep in mind that the messenger has a bias. ING, like all the financial houses that sell investments and insurance, would far prefer to see us build our nest eggs - which generates more and more fees for them over the long term - than to see us retire earlier with less and start spending that down. So here's an alternate thought: if we are going to have to pare our spending to the bone anyway, why not focus even more on this spending side of the equation. What if we can find a way to spend less without reducing our quality of life? What if we spent less yet actually improved our quality of life? While it takes some out-of-the-box thinking, it can be done. And, to the extent we learn to live, perhaps even better, on less today, then perhaps we don't need to save so much to live just as well tomorrow. Retirement from today's job can be closer than we might think if we master our spending.