I was sitting poolside at a hotel on the Cape Cod, Mass., seashore on Sunday afternoon, recovering from a Saturday night wingding, celebrating the marriage -- the third for both -- of some long-time friends. We wish them well: May the third time be the charm.
We were sitting with four couples we'd just met, talking about life in retirement. The group was an elite -- and hard-working -- one.
All four were dual-income baby boomer -- and slightly older -- couples in their mid- to late-60s, with at least one still employed. One man just turned 75 and, after several years of full retirement, had been wooed back to work by his former employer. All four of the couples were entitled to at least two defined benefit, old-fashioned pensions from current and former jobs, and all eight people were either anticipating or already claiming Social Security checks, based on their own work records.
"Are any of you worried that you'll run out of money in retirement?" I asked, taking another sip of Chardonnay. They all looked at me like I had lost my mind. "Well, we may have to give up something," one of the women said.
A path to this kind of retirement planning confidence is what the American Academy of Actuaries hoped to achieve when it organized a lifetime income risk joint task force. Their findings assume that most retirees going forward won't have the kinds or amounts of lifetime income the group I met enjoys. To help the rest of us achieve retirement security without defined benefit pensions, the actuaries urge these changes in federal law.
- Make it easier for 401(k) providers and employers to offer lifetime income-allocation choices such as annuities during the years when workers are accumulating savings.
- Make it easy for all plans to offer annuitization -- partial or full -- when the plans are distributed.
- Address Social Security's long-term funding issues now, so the plan remains stable, and people can continue to count on it.
- Allow workers to delay receiving Social Security past age 70 and receive delayed credits for those years.
- Delay the age when people must take required minimum distributions, or RMDs, to later than 70 ½ years to reflect the fact that people are living longer.
- Change the rules so that buying a longevity annuity, to be claimed at age 75 or beyond, satisfies RMD rules.
- Provide tax incentives for buying guaranteed income annuities.
None of these ideas replaces the need to start saving young and continue saving diligently. It also doesn't erase the value of continuing to work through age 65 and beyond.