Whether you are a Game of Thrones aficionado – or haven’t watched a
single episode – there are lessons to be learned nonetheless.
Last week I recounted
some fiduciary admonitions from the HBO series. Turns out there are
words of wisdom for individual retirement savers as well. Check these
out.
“When you play the game of thrones, you win or you die. There is no middle ground.”
All the way back in Season 1, Cersei Lannister explained what has
certainly been a theme for the series as a whole. That said, retirement
isn’t a game of thrones, nor is it precisely a “win or die” scenario. We
all die, eventually of course (no “wights” here), but there are those
who “win,” at least if you consider those who have sufficient resources
to fund retirement as “winning.”
The non-partisan Employee Benefit Research Institute (EBRI) has previously
found that
current levels of Social Security benefits, coupled with at least 30
years of 401(k) savings eligibility, could provide most workers –
between 83% and 86% of them, in fact – with an annual income of at least
60% of their preretirement pay on an inflation-adjusted basis. Even at
an 80% replacement rate, 67% of the lowest-income quartile would still
meet that threshold – and that’s making no assumptions about the
positive impact of plan design features like automatic enrollment and
annual contribution acceleration.
When
EBRI recently looked at
an individual basis, the average Retirement Savings Shortfall for those
ages 60–64 ranges from $12,640 per individual for widowers to $24,905
for single males and $62,127 for single females. Those looking for a big
boost in the odds of success could find it in eligibility for a defined
contribution plan. Consider that the average retirement deficit for
individuals ages 35-39 with no future years of eligibility in a defined
contribution plan is $78,046 per individual – more than five times the
average retirement deficit for those fortunate enough to have at least
20 years of future eligibility in a defined contribution plan (where the
average retirement deficit is $14,638).
Not that there isn’t plenty to worry about: reports of individuals
who claim to have no money set aside for financial emergencies; the
sheer number of workers entering their career saddled with huge amounts
of college debt – and the enormous percentage of working Americans who
(still) don’t have access to a retirement plan at work… and those
important years of eligibility.
“A Lannister always pays his debts.”
While the official motto of the Lannister house is “Hear me roar!”,
at several points throughout the series, the Lannisters are able to
trade on their reputation for, by hook or by crook, fulfilling their
debt obligations (though note, such “debts” are not always monetary in
nature).
Debt of any kind – and these days student debt seems to loom largest –
certainly weighs on thinking, if not saving, for retirement. While
younger workers’ balance sheets are clearly hurt by student debt,
researchers have noted
preliminary results that
indicate that they do not substantially reduce retirement saving to
compensate. Good news for their long-term prospects, anyway.
However, note that nearly two in three workers (63%) say debt is a
problem for them, and the Employee Benefit Research Institute’s (EBRI)
Retirement Confidence Survey has
consistently found
a relationship between debt levels and retirement confidence. In 2018,
just 2% of workers with a major debt problem say they are very confident
about having enough money to live comfortably in retirement, compared
with a third (32%) of workers who indicate debt is not a problem – while
37% of workers with a major debt problem are not at all confident about
having enough money for a financially secure retirement, compared with
6% of workers without a debt problem.
Now,
confidence is one thing;
reality is another. Paying off debt – or avoiding racking up serious
amounts of it in the first place – is the wisest course when it comes to
retirement preparations. But, as Tyrion Lannister observed in Season 3,
“I’m quite good at spending money, but a lifetime of outrageous wealth
hasn’t taught me much about managing it.”
”If you think this has a happy ending, you haven't been paying attention.”
Ramsay Bolton’s Season 3 admonition to Theon Greyjoy (soon to be
Reek, several seasons ahead of his eventual redemption) predicated what
was surely one of the more uncomfortable sequences (certainly for Theon)
– and proved to be prescient for viewers as well.
It is an observation that many retirement industry professionals
would surely direct at the individuals that any number of consumer
surveys suggest have set aside little or worse – nothing – not only for
retirement, but for the relatively commonplace financial emergencies
that seem to be part and parcel of life. Granted, some doubtless are
living “paycheck to paycheck” not by choice, but necessity.
And yet, there’s plenty of evidence to suggest that these behaviors
aren’t always constrained by economic reality, but by a very human
inclination to sacrifice the long-term view for the exigency of today’s
pleasure(s), if not an unhealthy confidence that the future will bring
opportunities to remediate today’s decisions.
“The Lannisters send their regards.”
Game of Thrones may not have invented the notion of surprisingly (if
not randomly) killing off key characters, but the series has arguably
taken it to a whole new level. For my money, even in a series well-known
for its plot twists, unanticipated shifts of loyalty and sheer mayhem,
there’s nothing quite like the episode titled “The Rains of Castamere,”
but more commonly known to fans as the “Red Wedding.”
We’ve all been to at least one wedding where the underlying tensions
between families threatened to undermine the happiness generally
associated with such proceedings, but I think it’s fair to say that the
wedding of Edmure Tully and Roslin Frey had a conclusion far more
dramatic than its participants (or viewers) anticipated (unless, of
course, you read the book). That said, it’s not as though the Starks
didn’t have a premonition about the trouble that would ultimately befall
them. It’s just that, ultimately, they relied upon a certain amount of
social decorum to prevail. Suffice it to say that the “decorum” that
accompanied Roose Bolton’s infamous quote above wasn’t what the Starks
had in mind.
The lesson for retirement savings is, of course, that it’s always
prudent to be prepared in case planned events take an unexpected turn.
That could come in many forms: an unexpectedly early retirement, a
sudden illness or disability, a need to provide parental support, or
even a sharp, sustained downturn in the markets.
It might be a good time to check out “
6 Things that Can Wreck a Retirement."
“Winter is coming.”
This is perhaps the most iconic phrase from GoT, and while those who
live in climates where the arrival of winter can mean significant change
– snarled commutes, cancelled flights, or perhaps trips to the ski
slopes – in the Game of Thrones it’s unequivocally a bad thing, though –
as in making retirement preparations – there are some who think that
arrival is further off than it actually turns out to be.
Retirement – or perhaps more precisely, the end of a full-time
working career – though it’s often depicted with scenes of warmth and
beaches – is “winter” of a sort, or might be if adequate preparations
aren’t made. While there are varying degrees of concern about that
impact, and the timing of that impact, it seems fair to note that
Americans know that retirement, like winter in GoT, is coming.
Those who haven’t are well advised to bear in mind Tyrion Lannister’s
caution, “The day will come when you think you are safe and happy, and
your joy will turn to ashes in your mouth.”
Better counsel comes from Petyr Baelish, who in Season 6 noted, “The
past is gone for good. You can sit here mourning its departure, or
prepare for the future.” Because, as that same Petyr Baelish explains in
Season 4, “a lot can happen between now and never.”
And here’s hoping it does – because it certainly can.
- Nevin E. Adams, JD
