Finding That Balance

One of our readers, Eileen, passed on this article from CBS News to us about a retirement survey by investment firm BlackRock showing that 74 percent of respondents said they had difficulty saving for retirement while staying on top of their bills.

We’ve written a bunch about the retirement crisis before, but what struck me about this particular survey was this:

Baby boomers, those 55 to 65, said they want to have $45,500 in annual retirement income, yet they’ve accumulated nest eggs that would generate only $9,150 annually, leaving a gap of $36,350.

“People are sitting on more cash than they’ve ever done before, even though they recognize that they need to invest in order to get that return,” said Kapito.

While Americans said they should have 33 percent of their net worth in cash investments, they acknowledge to holding 65 percent. Beyond that share in cash, the survey found the current asset allocation of U.S. portfolios is 18 percent in equities, 6 percent in bonds, 4 percent in property, 2 percent in alternatives and 5 percent listed as “other.”

More than a third of respondents said they were holding onto their cash as a kind of “security blanket” for unforeseen events, or because they saw investing as a risky endeavor.

Yes, there is a risk to investing, but that risk is usually associated with short-term investing. Investing for retirement is something we should be doing over the long-term; the risk is mitigated because we have time on our side to ride out the ups and downs of the market. As for holding on to cash as a “security blanket,” this is why we try to have emergency savings in addition to what we put away for retirement.

When we talk about the retirement crisis, we talk about how things like wage stagnation is leaving workers with little leftover to put away at the end of the month, or how more workers are taking on informal, sharing economy-type jobs where employer-sponsored retirement plans are nonexistent.

But there also seems to be a lot of us out there who are facing a problem of finding balance: You have a job that offers you a steady paycheck that you want to put towards your student loans and other debt, and to your regular household bills, and to emergency savings, and to retirement, and to a dinner out or a trip somewhere because you work hard for your money and don’t you deserve to have a break to recharge sometime? I don’t want to use the “having it all” phrase (because, ugh), but it often does feel like we’re scrambling to fill a lot of buckets. Is it a wonder that we have a creeping sense of anxiety all the time?

It really is about finding our own, right kind of balance. There are people — as you’ve seen on this very site — who feel so burdened by their debt, for example, that they limit their spending to the extreme and throw every dollar possible until they’re back in the black. And that may seem so foreign to our own lives, but they’re doing what feels right to them. I feel that way sometimes about my own student debt; I’ve been very good about avoiding consumer debt, and I seriously lay awake some nights and log into Navient and just stare at what I still owe at 1 a.m. (please tell me I’m not the only one).

But I know if I threw too many of my dollars at my loans, I would have fewer dollars to throw into my retirement accounts, or savings, or to my poor old folks at the other end of the country, or to a vacation because I work so extraordinarily hard for my money and don’t I deserve a break to recharge, too? So, I try to find that balance and automate my savings and bill payments as much as I can. And I fly to Italy in the summer for a week to get away from it all. And I think that maybe, one day, I will write an article titled, “I Paid Off My Student Loans in 20 Years, and It Was All Fine.” And it really will be all fine.

Photo: D Sharon Pruitt

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