By Nilus Mattive – Weiss Research

If you want to hear scary stories related to retirement, you don’t have to look very hard.

For example, a trade association for the financial services industry called LIMRA recently surveyed a couple thousand Americans on retirement matters. What they found is that about 49 percent of the respondents aren’t saving for retirement at all.

Yes, you read that right — HALF of the people are literally putting nothing away for their golden years!

Why not? Well, the majority suggested that they just couldn’t afford to contribute to an IRA account.

Now I realize that the current economic climate IS certainly making it much harder on a lot of Americans … but the idea that half of us have it so bad we can’t put anything into our retirement accounts just doesn’t ring true based on my own interactions and observations.

Instead, what I think a lot of our country’s retirement have-nots are really saying is that, when it comes down to limited amounts of income, they’d much rather have new outfits, expensive cars, or the hottest gadgets instead of having money put away for the future.

This isn’t all that surprising. After all, countless studies have demonstrated that many people struggle when it comes to delayed gratification. And they have also proven that those people who CAN plan for the future typically end up better off throughout life.

Take the infamous “Stanford marshmallow experiment.”

Back in the late 1960s and early 1970s researchers took a group of kids (ages 4-6) and offered them each a single marshmallow to eat. However, they also gave them another option — wait 15 minutes without eating the marshmallow and they could have a second one.

All told, 653 children participated. Some kids ate the marshmallows as soon as the researchers left the room. And even out of the group who tried to wait a little longer, only one third made it long enough to get the second marshmallow.

Even more interestingly, follow-up studies with the same group of children have showed high correlations between the ability to wait for the second marshmallow and overall success in life — based on everything from parental evaluations of general competence and well being to other measures into adulthood. Heck, the kids who were able to wait the full fifteen minutes scored an average of 215 points higher on their SATs than the children who couldn’t wait 30 seconds!

Of course, even if some people have a higher innate propensity for retirement saving — which is perhaps THE biggest real-world example of delayed gratification — I still believe reasonable adults can at least change their ways a bit, assuming they’re given reasons to do so.

So if you know someone who just wants to eat all the darn marshmallows right now, here are a couple things you can tell them …

Fact #1: Social Security is not going to bail you out.

A few weeks ago, I went into great detail on the current state of our nation’s Social Security program. Yet astoundingly enough, plenty of people I talk to still seem to think that they’ll be doing just fine by retiring on Uncle Sam’s dime.

What they fail to realize is that — even if Washington finally gets around to shoring up the Social Security program’s finances — those monthly checks won’t come close to covering even a modest lifestyle in retirement.

In fact, the average monthly benefit that’s going out to a retired worker right now is $1,231.73. That’s just $14,780 a year!

Fact #2: You’ll probably need an extra quarter of a million just to cover your medical expenses!

In the same article mentioned above, I also explained why Medicare is in even worse shape than Social Security right now.

But again, even if you assume that Medicare is okay for the long haul, the typical 65-year-old couple that retires this year will spend at least $240,000 in out-of-pocket medical expenses. That number comes from a Fidelity Investments study and doesn’t include long-term care costs, non-prescription drugs, or even most dental work. And it also assumes an average life expectancy of 82 for the husband and 85 for the wife.

Which brings me to …

Fact #3: If you like eating marshmallows that much now, you are REALLY going to hate the last 20, 30 or 40 years of your life!

Two last ironic twists of retirement fate to consider:

FIRST, the people who love living large right now will actually be the same people who want to spend the most money in retirement!

By learning to save a bit more in the present, they can simultaneously reduce their needs, desires and expectations in the future. And these changes can be pretty simple to implement. For example, just go take a nature walk instead of spending an hour trolling the mall!

SECOND, the longer they live the worse their lack of planning becomes!

This is both because of the basic math involved (i.e. more years = more money needed) and also because of the compounding nature of inflation, which will further erode what little buying power they have as time elapses.

Look, I can’t tell you how many people tell me they’re simply enjoying their lives now because there are no guarantees that they’ll live all that long, because they never had a chance when they were younger, or some other similar rationale.

And just to be clear — I am all for enjoying every day of your life, having some regular indulgences, even splurging from time to time.

However, “dying” is not an adequate retirement plan unless you are truly ready to pull the trigger when the money runs out.

That’s why I say a little balance goes a long way.

So go ahead and have a marshmallow or two from time to time. But also make sure you’re saving at least as many for later in life … because 20 or 30 years is a heck of a lot longer than 15 minutes.

Best wishes,