I have two kids and they just started summer vacation. Ahhh, the sweet freedom of youth. Months of swimming, fishing, bike riding, and downloading ridiculous apps.
My 12-year-old son noticed that I was still doing my usual evening prep to get everything ready for work the next morning and said, “No summer vacation for you, Dad.” I nodded. “Don’t worry,” he continued, “You’ll be laughing at me when you’re retired.”
Wow. Pension humor at age 12. He’s a chip off the old block, my son.
I only hope he’s right. But I’m sure not laughing yet. I’m 46 and, although I’m saving for retirement, I also plan to live a lot longer, which means I’ve got to work longer to save up for it. In addition, although I’ve had good health so far (and I try to hit the gym four or five times a week), there’s no guarantee that it will last.
People are living longer. On average, a 65-year-old can expect to live another 19 years, but it’s becoming more and more common to cross the century mark. People are also dying longer. Instead of dying quickly from heart attacks, we’re facing long battles with cancer or Alzheimer’s, and along the way we’re having hip replacements and knee replacements. With healthcare costs already straining company budgets, I have to believe that some of my nest egg will be paying for my medical needs. (Check out the Milliman Medical Index for some sobering data on how the average family of four spends more on medical premiums than they do on groceries.)
In the meantime, my kids will need college educations and the tuition trend is looking a lot like the healthcare trend.
It’s a good thing I love my job (Thank you Mr. Milliman!) because I’ll probably be at it for a while. And that’s really the bright side. It’s a challenging time to be in the benefits industry. The global financial crisis has really put the squeeze on a lot of pension plans and our clients need creative solutions for managing costs while staying compliant. Furthermore, I think the pendulum may be about to swing back in favor of defined benefit (DB) plans because people now realize that 401(k) plans alone can’t provide a stable, secure retirement. But the defined benefit plans of tomorrow will need less volatility and may have later retirement ages.
So, someday in the distant future, I’m sure I’ll be able to laugh at my son when I’m retired and he’s a member of the workforce, but I can wait a while and find other things to laugh about along the way.