Stop blaming yourself for retirement savings shortfalls

Reading a few tweets from financial writer Helaine Olen was all it took for me to abandon a long-planned personal-finance column that was going to be about the smart practice of annually taking stock of household finances.

It might still be a good idea, but you will have to read about it somewhere else. It no longer looked possible to write that kind of personal-finance advice piece and not become part of a far bigger problem Olen identified.

Olen's work can be found on the Washington Post opinion page and elsewhere, and she grabbed my attention with her angry reaction to a short TV news item before Christmas. It was about an 80-year-old part-time greeter at an Oklahoma Walmart who still can't afford to retire.

As CBS described, he had been laid off from his job as a machinist by an aerospace firm years before, the job loss coming just before he became fully vested in the corporate pension plan. His household then fell into a financial hole, and it's never gotten out.

"I blame myself for it," he explained.

That was the scandal for Olen. He lost his job deep into middle age along with his promised full pension, the best-paying employer he could hope to have was gone, and yet someone had convinced him that this was all his fault?

Olen's explanation, in tweets that pointed back to a lot that she has written, is that a whole industry has sprung up to get people to see their setbacks as individual failings, from self-help books and seminars to personal-finance writing in the newspaper.

In the case of the Walmart greeter, there really is a better explanation than that he messed up. Can't we agree it's possible to be badly hurt by losing your job and having to start over in a new line of work at the age of 56? And the safety net hasn't been designed to catch people like him.

As a sometime writer of personal finance, it's not easy to see a lesson in his case worth pointing out. Make sure you train your whole working life for something else to do if the job goes? Save more than you ever thought you would need?

As a lifelong consumer of personal-finance writing, I've learned to easily spot the articles to avoid. Skip anything on how to invest in 2019 (careful, even the pros are speculating) or any piece on cryptocurrency with the word "invest" appearing in it, as it's only possible to speculate in something like Bitcoin, never invest.

Obviously skip anything promising to reveal the "secrets" of the most successful people, as of course you will never read that the secret of most successful people is that it paid off to get lucky.

But even the best-intentioned writing on personal finance seems to encourage folks to conclude that if they aren't financially secure already or at least on the path to getting there, the problem must be them.

Get talked into a high-cost variable annuity? That's on you. Finally work up the courage to roll 401(k) savings into stock funds in September? Way to go, you bought at the peak of a nearly 10-year bull market.

Still making payments on your kids' college loan? Should have let them sign up for their own loans. At least they are young enough to eventually pay them all back.

Meanwhile, people won't be able to find nearly as much to read about what to do after the setbacks that routinely happen to families and push financial security out of reach — a layoff, an illness or leaving the workforce to care for an aging parent — maybe because they don't sound much like things that make for fun columns.

Based on the thousands of hits a quick search on Google turned up, saving for retirement must be an enduringly popular topic for personal-finance writers. People are eager for help in what's purely a DIY project for most of them.

And it's not going that well. It's been a while since a generation got to retirement age worse off than their parents, but the boomers seem to be. The median retirement savings balance for households with one worker 55 to 64 years old and a retirement account was $111,000, as of the latest from the Center for Retirement Research at Boston College.

Of course, that's with upper-income households thrown in. For households in the middle, $61,000 to $90,999 in household income, the average balance is $100,000, enough to generate about $470 per month of guaranteed retirement income, based on a Charles Schwab annuity income calculator.

That's not possible, of course, for the 4 out of 10 households in that income bracket that lack a 401(k) or IRA account. And way more than half of households that earn less than $61,000 don't have a retirement savings account.

If approaching the age of 66 with not much more to look forward to other than Social Security payments happens to 1,500 households across the country, while everyone else manages to more or less maintain their lifestyle in retirement, well, those 1,500 families really did mismanage their money.

But this hasn't happened to just 1,500 households. It's happening to more like 15 million. If 15 million households get it wrong, then it's obviously not everyone's fault. And if more people only understood that, then we would probably come up with a better retirement finance system than the one that now seems broken beyond any hope of repair.

Just before Christmas, the popular podcast Freakonomics rebroadcast its show with the Nobel Prize winner Richard Thaler, an economist who thought about fixes to our retirement finance system as part of his work to figure out and describe how people make decisions. He had never really accepted that people are as rational as suggested in conventional thinking.

This Freakonomics show covers a lot of ground before listeners can hear a little of Thaler's thoughts on "nudges" to increase retirement savings, his most important policy ideas based on behavioral economics. Yet they can skip the podcast and just glance at the title of the episode to get the point Thaler makes that's really worth remembering: "People aren't dumb. The world is hard."