The New Commonsense Guide to Your 401(k): Rebuilding Your Portfolio From The Bottom up

Chapter 64. Get Real

FINANCIAL PLANNERS say that clients often approach them at age fifty, fifty-five, or even sixty-five and ask if they can retire, even though they have just $10,000 or so in the bank and no pension or other retirement income. Of course, financial planners use all kinds of tools to project how much you'll need in retirement and how much your current nest egg can be expected to grow. Hint: $10,000 will not get you too far into your first year.

But we shouldn't be surprised that Americans have an unrealistic view of retirement. Haven't we been told that retirement is the pot of gold at the end of the rainbow? Shouldn't we expect to be rewarded after a lifetime of hard work? Americans simply want a piece of that good life they keep reading about. The financial crisis of 2008–09 has punctured some of those unrealistic ideas.

Still, I blame the personal finance magazines like Money for stoking that dream, especially in the 1990s when the stock market was blowing its tech bubble until it burst in 2000. I include myself as part of that problem. Investment advice was hot news. Doubling your money in stocks gave you bragging rights at the cocktail parties or bridge clubs or book clubs or jazz clubs or wherever you hung out.

Everybody wanted to talk about the market—all the better if the news could show you how to retire in your fifties and live the good life. The end of the last century was an extremely difficult time for financial advisors who refused to go with the flow ...