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Karen Telleen-Lawton: Searching for Reasons Not to Save for Retirement

As a financial advisor, I obsess over statistics about retirement planning. I recently ran across a few that gave me a start:

» Almost half of millennials are not saving for retirement.

» Around one-third of Americans have no retirement savings

» More than one-fifth of investors have tapped into their 401(k) accounts.

» Almost two-third of older earners say they might have to delay their retirement.

These made me wonder whether there good reasons not to save for retirement? I came up with these:

» You find good habits easy to pick up and hard to break.

One reason to save early (besides the fact that money saved in your 20s has a long time to grow) is to establish the habit before you have lots of required expenses like mortgage, kids, and tuition.

But if you have perfect self-control, why worry?

» You believe you will eventually win the lottery.

They say the odds are really low, but maybe you buy your ticket during some news-full time when everyone’s attention is lured from the lottery and they forget about playing. Maybe your odds quintuple over California Super Lotto’s 1 in 18 million.

Even if you play every week at one in a million, it would take over 10,000 years of playing for your odds to be good.

» You believe you will marry someone rich.

Hope they are generous as well.

» You believe your spouse will eventually win the lottery and then die tragically young, with a generous will.

» You believe your parents will win the lottery and then die before their time, naming you the beneficiary.

You can double the above odds, since we’re talking about two people each playing once per week. So your odds are good if your parents live 5,000 years or so. But they’ll probably need long term care by then.

If you’re not comfortable counting on these, then you should avoid being one of the statistics above.

Millennials, start saving now, while compound interest will do part of the work for you.

Yes, interest rates are low these days, but the silver lining is that you can earn a virtually risk-free 6- to 8-percent return on every dollar by repaying student loans.

Parents, you may find yourselves trapped between rising tuition costs and the need to save for retirement.

You’re allowed to tap into a 401(k) for education, but it’s not a good idea. You and your kids likely would agree that choosing a less-expensive school, working more, and/or taking on some loans are preferable to you depending on them in old age.

But limit student debt to the amount the student can expect to earn the first year out of school.

Middle age earners may be thinking that Social Security will provide their sole retirement income. It’s true that for very low earners the benefit may be 90 percent of their pre-retirement income.

But for the average retiree, Social Security covers about 40 percent of their expenses. You need a hefty portfolio if you want to maintain anything like your pre-retirement lifestyle.

If you’re faced with a shortfall, the only options are to make more, spend less, or retire later; sometimes all three.

What if, after taking all of these tips, you end up winning the lottery? Then you’re free to support all your favorite charities and travel the world.

Or die young and deprive your kids of the pleasure of saving for retirement.  

— Karen Telleen-Lawton’s column is a mélange of observations spanning sustainability from the environment to finance, economics and justice issues. She is a fee-only financial advisor (www.DecisivePath.com) and a freelance writer (www.CanyonVoices.com). Click here to read previous columns. The opinions expressed are her own.

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