OK. At some level that makes sense. Based on the hard economic realities imposed by the markets and real estate values the past three years, many of us may not be able to afford all the things we’d hoped for in retirement. In fact, the USA Today recently ran an article on the front page of the Money Section talking about just how much less the Baby Boomer retiree has saved for retirement.

http://www.ecidevelopment.com/blog/baby-boomers/baby-boomers-fear-outliving-retirement-savings/

Both the article and brokerage commercial ask the tough question, “Will my retirement savings be enough?” This of course is a very valid concern. But the tag line to the TV commercial “Get real,” just seems so glib. As if trashing 50 years of hopes and dreams is simply like tossing out yesterday’s newspaper. How very sad indeed if millions of Boomers headed into retirement are thinking this way.

But there is good news for folks open-minded to see and hear it. There are simply some strong, wonderful alternatives to throwing away your lifelong dreams.

Think Outside-the-Box.

My daughter and I were talking one morning recently and the subject of pushing a rope came up. I told her that something I was working on felt like “pushing a rope” and that you just cant do that. I explained that ropes have to be pulled along, just like some problems, or in many cases managing people. Without missing a beat, however, she looks up at me and says that she can push a rope. I must admit, I raised a skeptical eyebrow but went on to say, “OK. Show me.”

Not having a rope handy, she reaches up and unclasps her necklace. She proceeds to lay her necklace on the table in a straight line. She then puts her finger in the middle of it and pushes it towards me. “See Daddy. I pushed a rope.”

I just sat there for a second and realized how short sighted I had been. Here was an outside-the-box solution. She clearly saw an innovative way to “push a rope” and rolled with it. In fact, there are almost always multiple solutions that we don’t easily see when it relates to our lives. This is especially true in highly emotionally charged issues like when we are faced with less income and savings than we had planned for in retirement.

When faced with seemingly impossible situations, for instance, not having enough saved for retirement, we can imagine the worst and become paralyzed with fear. We may feel like our backs are against the wall and that there’s no hope. We may despair our choices, or lack of choices, because we don’t have enough saved. In the brokerage commercial we get to hear the man talking to himself about being responsible and having enough money for retirement. He expressed the concerns that I guess most of us have, “Do I really have enough for retirement?” “How can I make it last? “ “What are my sensible choices?”

These are in fact great questions to be asking. Taking responsibility is the hallmark of excellent character. And if we keep our thoughts “inside the box” our choices are in fact very limited. Ernst and Young made a study back in 2008 and it showed that retirees will have to cut back on average by about 25% to avoid outliving their assets.

http://www.ecidevelopment.com/blog/baby-boomers/ernst-young-state-of-retirees/ This is a hard economic reality. But does it have to equate to suffering?

But just like you really can push a rope (and yes wetting it and freezing it is another way) there are multiple ways to face the reality of your financial situation and still enjoy many of your hopes and dreams being fulfilled in spectacular ways. Certainly one of my suggestions is to look overseas for a retirement location.

Living internationally is an outside-the-box solution that more and more folks are considering. The paradox is startling. You can live overseas for a third to a half less and have a higher quality of life. That’s quite something isn’t it?

The reason many folks don’t initially think of leaving North America is that it simply lies too far outside their radar screen and comfort zone. How you feel, fortunately, is something you can change.

For many people now the option of moving overseas is very real and taking on greater importance every day. If you are reading this then you probably already know that you know it is possible to have an ocean front, beach condo for less than $200,000, a home on a golf course for less than $150,000, and yes, even a vineyard estate for about 10% of what you’d pay in Napa Valley.

On the flip side, however, people do sometimes send me a critical note saying that prices of real estate in Latin America are now the same, or in some cases even more than in the US. This is especially true in the hardest hit areas like South Florida, Phoenix, and Las Vegas. While this is true and the acquisition cost may be the same, or in some cases lower, if you look at the ownership costs over 20 years, a different story emerges.

Just HOA/COA fees, insurance, and taxes can be hundreds of thousands of dollars more costly in the US over a 10-year period. Most of imagine living for 20 years or more after retirement I’d guess. The difference then becomes staggering. That is saying nothing about the quality of life. Imagine having a maid and domestic help for just a couple hundred dollars a month. Imagine… no more chores. What a nice thought, and certainly a luxury at first, but maybe more of a necessity in the future. As we age, having help around the house we can afford will save us tens of thousands of additional dollars we might spend in assisted living as well.

The bottom line is that there are no perfect answers. Life always consists of trade offs. Are you really going to be able to have the best of both worlds, everything from North America just a 2 hour flight south in Latin America? No of course not. Trade offs are a reality of life, just as having a smaller nest egg is an unfortunate reality for most of us today.

The real bottom line is that if we are open to new ideas like living south of the border, we don’t have to just write off and toss aside 50 years of dreams and hopes with a glib “Get real.” These dreams are part of who we are and trashing them is tantamount to killing part of ourselves. We can still have these dreams if they are important to us. They may just come packaged with a short culture shock.

So, I’m sorry Mr. Stockbroker. I don’t buy it. If I want a vineyard, there are still ways to have it within the fiscal constraints of my new reality. The mind of a child is a wonderful thing. Seeing a simple outside-the-box solution to “You can’t push a rope” was as natural to my daughter as many folks now seeing an outside-the-box solution to, “How do I still realize my hopes, dreams, and ambitions on the limited resources I have for retirement?” A fantastic outside-the-box solution is here, right now, and waiting to be discovered and created in your mind. Free yourself from the limits of thinking in only North American terms and see just how big the worlds of opportunities are for you.

Ernst & Young state of retirees

Summary:  The report notes that 60% of retirees face the prospect of outliving their assets if they don’t cut back on spending by about 25%.   This is a very serious situation and the E&Y report implies that people will have to suffer. But it doesn’t have to go down this way.  

The wonderful paradox is that you can have a higher quality of life in Latin America for 20-30% less than a similar lifestyle in North America. According to AARP, 500,000 US retirees already live outside the US. There are some very good reasons why. Visit www.ecidevelopment.com for the good news.  

Baby Boomers face so much uncertainty that nearly half of them fear that their retirement will result in poverty, according to a new study by California-based investment advisers Financial Engines.

The growing concerns are causing indecision and inertia at a time when Boomers need to be more involved in their retirement future, financial planners say. As pensions disappear, many of them must rely on 401(k) plans.

“They woke up one day to find themselves responsible for saving and investing and generating retirement income,” says David Ramirez, portfolio manager at Financial Engines, which interviewed more than 300 near-retirees and retirees.

Because of the stock market crash, real estate downturn and recession, many Boomers are now terrified that they will outlive their retirement savings. One woman, age 60, who was interviewed by Financial Engines said that she “might be forced to become a bag lady.”

Those interviewed by Financial Engines bring up several other common worries:

• More than half of those interviewed expressed uncertainty about their retirement future.
• Nearly half said they were distrustful of financial services and insurance firms.
• More than one-third said they did not feel confident about making financial decisions.

How Recession hit older workers

 Even those who have saved more than $500,000 are uncertain about how long their nest eggs will last. But many others have more serious concerns.

Among Boomers, 45% are at risk of running short in retirement, according to the 2010 Retirement Readiness Ratings by the Employee Benefit Research Institute. And one in four older workers have exhausted all savings during the recession, according to a new survey by AARP Public Policy Institute.

A growing number of older Americans are piling on debt and filing for bankruptcy. Many have lost their jobs and can’t get new ones, says Marvin Wolf, a northern New Jersery bankruptcy lawyer. Much of their savings are trapped in their homes, which have lost value.

It’s understandable why Boomers feel so insecure. “When you’re in retirement, the stakes are high,” Ramirez says. “When you spend money, it’s gone.”

While working longer may be the best way to boost savings, health issues and job loss can interfere.

Or possibly even Belize, Costa Rica or even Nicaragua.

A recent report from the Employees Benefit Research Institute reveals that 47 percent of retiring Baby Boomers are in serious danger of running out of money. That report comes on the heels of a 2008 Ernst & Young study finding that three out of five current retirees could soon outlive their assets if they fail to cut back substantially on their spending.

Some would say that the solution is for the government to bail them out. But, unfortunately, the United States government is already asset-poor. It has raided Medicare and capped the COLA on Social Security. And it is now planning to ration health care. So, if Baby Boomers intend to get in line for government handouts, they’re going to find it a very long line, longer than they may have time for.

Fortunately, while the popular media generally ignore it, there is another option, one that, amazingly enough, would allow Baby Boomers to not only survive – but actually to prosper – on the potentially doubled value of their retirement incomes. And many retirees are already taking a serious look at seizing that opportunity and living out their remaining years in the relative lap of luxury.

How so? By moving south. Way south. To Central and South America, where the cost of living is a fraction of what it is in the United States. And where a retirement income that would force most Baby Boomers to live in destitution in the U.S. could put them in a spacious home on a sandy beach with swaying palms at up to half the cost. Already several hundred thousand folks are doing so. Right now. Today.

Allow me to use myself and my family as an example, because we have been living what I call “the good life at a great price” for more than seven years in Central America. My wife, Carol, no longer cleans house – because that’s the maid’s job at $140 a month. I don’t mow the lawn or trim trees – because that’s the gardener’s job, at less than $100 a month. We dine out regularly, with steak dinners for two and a bottle of wine costing $25, and enjoy weekends away in the cloud forest for less than a day in an amusement park in the U.S.

And our total bills – including utilities, food, entertainment, and private school for our girls – come to about $2,000 a month. Remember, that is for a family of four. To live our lifestyle in the U.S. could cost at least five times that much. Or even more.

This window of opportunity coincides with a historic time, a time when our nation’s Wall Street-driven economic landscape has forever been altered. As a result, over the next two decades, 84 million Baby Boomers are entering retirement and their 401(k)’s and home equity are still languishing in value.

Perhaps that helps explain why a Zogby poll of 103,000 Americans, a rather large statistical sample, revealed that 18 percent of Americans have a desire to move or own property outside of the United States – representing 26 million people dissatisfied with their quality of living. The survey further disclosed that 17 percent of the sample – some 4.5 million Americans – listed Latin America as their first choice.

This trend is not limited to U.S. citizens. In a survey of Canadian boomers, TD Waterhouse found that 45 percent of respondents, representing 9.3 million people, plan to spend at least one month or more outside Canada in retirement.

Already, nearly 500,000 American retirees receive their Social Security while living outside of the United States. The host nations have developed proactive policies to attract these retirees, and hence their capital, to establish a residence there.

And that makes sense. The average retired couple in the U.S. now receives $1,700 a month in Social Security benefits. Take out housing, utilities, medical expenses, car payments, insurance, and grocery bills, and there’s very little left at the end of the month. As the EBRI puts it: “nearly one-half of Early Baby Boomers are simulated to be ‘at risk’ of not having sufficient retirement resources to pay for ‘basic’ retirement expenditures ….” Pretty stark, isn’t it?

Yet, in the many parts of the Caribbean and Latin America, the same $1,700 would provide that couple a beachfront home or condominium with every modern amenity; a maid; plenty of food to feed themselves (and all of their visiting relatives); first-rate medical care; and sufficient money left over to travel and entertain to their hearts’ contents.

So, the bad news is that, quite simply, retiring Baby Boomers very likely will not be able to afford to live in the United States. The good news is that they no longer have to. And, perhaps, the best news is that when they make the move south, they may well have millions of their fellow retirees as prosperous new neighbors.