Retirement Savings

The time in our lives when we finally stop working and start to enjoy the fruits of those many years of hard work is known as “retirement”.

The actual phrase “the golden years” was coined in 1959 in an advertising campaign for America’s first large-scale retirement community. It was a roll of the dice to see whether folks “55 and better” would embrace “an active new way of life”, move away from their families, and buy one of the modest homes on a $2 million golf-resort development in the middle of the Arizona desert. The campaign was a success. On the first weekend, 100,000 people showed up to tour Sun City’s model homes and see for themselves if a lifestyle free from responsibility and the constraints of working life could actually be possible. For many seniors in the 1950s, retirement was a lonely time of decline. They had the financial support of Social Security, but once they left the workforce, they had little purpose in their lives. Retirees saw themselves as “too old to work, too young to die.” No wonder they grasped with both hands the idea of retirement as essentially a second childhood!

The 1981 family drama film “On Golden Pond” painted yet another dramatic interpretation of what “retirement” might entail. An aging couple continue their family tradition of spending each summer at their cottage on a lake. When they first arrive, the wife notices the loons calling on the lake "welcoming them home"; her husband, however, claims he does not hear anything. As they resettle into their summer home, the husband, who is about to turn 80, shows signs of dementia when he is unable to recognize several family photographs. He copes with his memory problems by frequently talking about death and growing old. The wife does her best to liven up the atmosphere, but this proves to be difficult at times.

Whether either of the above scenarios, or countless dozens of other possibilities, is what you may envision for your retirement years, it will take a lifetime of planning, saving, investing and patience to attain your retirement dream.

While saving enough money is a key ingredient in ensuring a fulfilling retirement, it’s only part of the recipe. The happiest retirees know in advance how they want to spend their golden years and they’ve taken the steps to make it possible. Happiness is more than just freedom from work, it’s having a purpose for that freedom. The happiest retirees have several core pursuits—hobbies on steroids—that engage their minds and keep them socially active long after they’ve stopped punching a time clock.

The key to savings enough money for retirement is to develop good retirement savings habits early and stick with them. Save early enough and often enough to build one’s retirement savings. Invest your retirement savings in assets that make regular cash payments in the form of interest, dividends and distributions. During the individual’s wealth-building (i.e., working) years, that income stream is continually reinvested in the retirement plan portfolio to contribute to its long-term capital growth. In retirement, those payments can be directed into the individual’s bank account as a “paycheck” to help meet monthly expenses.