Alternate routes
I was getting confused.
Two new books, both recent arrivals here at the Business section, had very different things to say about a question that befuddles a lot of people. Will there be enough money when we retire?
The first book, by Alicia Munnell and Steven Sass from Center for Retirement Research at Boston College, arrived a few weeks ago. The title, "Working Longer," didn't have a feel-good vibe. It's academically oriented and published by the Brookings Institution. It's got charts.
But I'm really talking about the material and all its unpleasant questions. The basic plot: People are living longer, retiring early, and hardly saving. The defined-benefit pension system is disappearing. Something's got to give. One section asked "Will We Have to Work Forever?" (shoot me). Further on, a chapter was titled "Will Older People Be Healthy Enough to Work Longer?" (shoot me now).
I read more because Munnell and Sass are serious economists with substantial reputations. I could say they same thing about Larry Kotlikoff, who works the other end of Commonwealth Avenue as the chairman of the economics department at Boston University.
Kotlikoff and personal finance columnist Scott Burns (whose column appears in the Globe) have written their own new book that will be on the shelves next week. Perhaps you can guess where "Spend 'til the End" is headed. The title sounds a lot like "shop 'til you drop."
This is a very different message with different lingo. Among its many pronouncements: Maxing out retirement account contributions is generally undesirable, oversaving is a very risky practice, and too much insurance is a terrible thing. "Pimping Risk" is the title of a chapter about the exploits of a duplicitous financial industry trying to frighten money out of people.
It isn't really fair to directly compare the two books, but I wouldn't get too worked up about that. They still represent substantially different approaches to one of our biggest economic issues.
"Working Longer" is a book about public policy, demographics, and big pictures. The title is the answer to the problem, but the cure inside isn't really as dreadful as you might imagine. "Working longer does not mean working forever," Munnell and Sass suggest. The real answer, they say, is working another two to four years.
Kotlikoff and Burns set out to write a particular kind of personal finance book, one that tries to debunk conventional wisdom and challenge the savings requirement calculations of companies like Fidelity Investments and the Vanguard Group.
Kotlikoff has created financial-calculator software of his own. He argues that smoothing out spending and saving patterns over the long haul is the best thing to do, and that young people often struggle to put too much money away at a time when they should be spending. They buy too much insurance. Quality of life, he says, is important across all ages, not just the golden years. You can squander your youth just as you can your money.
Kotlikoff and Burns buck conventional wisdom about saving for retirement. But that isn't the same thing as what people actually do with their money.
A number of economists believe the savings patterns of Americans are much more sufficient than we think, but that's hard to swallow. Look around at people struggling with mortgages, college tuition, and any other big-ticket expenses. Many less affluent Americans have their hands full with just the basics. Whatever the right savings target may be, it's hard to believe most of us are hitting it.
And there is something to be said for saving money, for whatever purpose. Spending money badly, as Kotlikoff and Burns say, is always a dumb idea. But saved money is still available.
Everyone agrees on one constant in the retirement picture: Your financial future is too hard to truly see. Jobs, family, health, taxes, and a handful of things you could have never imagined at the start are all big factors. They can take your finances almost anywhere over a period of 20 years, or even fewer.
Savings rates come down to personalities, not calculators. Perhaps you'll have enough. But don't be surprised if you need to work longer, too.
The Red Herring
Shooting blanks: Liberty Lane Acquisition Corp., a blank check company highlighted in this space a week ago, never did get its initial public stock offering off the ground. The New Hampshire entity operated by former executives of Fisher Scientific International, was trying to raise $350 million in an IPO underwritten by Goldman, Sachs. After a couple of days, the offering was withdrawn citing "market conditions."
Steven Syre is a Globe columnist. He can be reached at syre@globe.com.
