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3 Harsh Realities Retirement Advice Almost Always Ignores

Saving for retirement is an important financial goal, but it's been a difficult one for most Americans to achieve comfortably. Finding more money to save is always a challenge, and even those who do a good job of accumulating assets and investing well during their careers can find that their nest eggs are still vulnerable to unexpected expenses during the retired years.

Those trying to solve their retirement planning challenges often see the same kind of advice repeated over and over. Saving more, investing better, and being aware of the financial risks you face both before and during retirement are all smart things to do if you can manage it. But the reason so many people are still in financial straits in their golden years despite the seemingly simple ways to avoid problems is that it's a lot easier to tell someone what they need to do than it is for someone actually to do it. Three things in particular are especially tough to do in retirement planning, and they've held many people back from realizing their dreams.

Gray-haired person making a clay pot in a shop with many materials.
Gray-haired person making a clay pot in a shop with many materials.

Image source: Getty Images.

1. We're rewarded socially for spending, not saving

If you want to accumulate wealth, then you have two possible options: spend less or earn more. You'll find financial advice tailored to both sides of that equation, with some helping on budgeting techniques and cost-saving measures while others look at career-building options, second jobs, or ways to invest to grow your savings more effectively.

Yet underlying all of that advice is the idea that eventually, you want a retirement in which you'll no longer have to exercise so much self-discipline. The key tenet to most advice appears to be that financial planning early in life requires privation and hardship as necessary evils toward eventually being able to be profligate and spendthrift in your later years.

In that light, it's easy to see why most people don't voluntarily go through the suffering of financial planning. A consumer society that repeatedly emphasizes the perceived value of spending now to build up your lifestyle only heightens the cognitive dissonance inherent in most financial advice.

Put another way, if society as a whole valued saving more than spending, then it'd be far easier for people to prepare for retirement. Instead, when you're told that you need to have everything you want as soon as possible, it makes it extremely difficult to defer any gratification in pursuit of a more secure future. To overcome this obstacle, you have to be prepared to buck popular trends and live a life that's different from most of your peers -- and that's not something everyone is willing to do.

2. Overcoming the fear of losing everything isn't easy

Investing advice always talks about how important it is not to let your emotions get the better of you. Too often, people make the mistake of investing when financial markets are performing well, only to panic and sell out during inevitable crashes. They then only get back into the stock market once things look good again. That creates a huge disparity between the long-term returns of the market and the actual returns that individuals see in their own portfolios.

It's easy to say that you should simply stick to your investing strategy through thick and thin. But it takes a lot of work to ignore all the short-term noise that you'll see, and the tone of the advice you'll get often heightens the positive feelings during bull markets and the negative ones during pullbacks. You'll see a lot more headlines about how bad the next bear market will be once stocks begin to drop than you will when they're at all-time highs. And when your life savings are on the line under times of stress, it's natural to react to all the hype that accompanies market movements.

The best financial advice hasn't changed much over the years, and so taking yourself out of the 24/7/365 media frenzy surrounding the stock market won't cause you to miss out on much. Come up with a plan and stick by it, and then take away as many potential sources of distraction as you can. That way, your emotions will be less likely to get the better of you.

3. You can't protect against every financial risk

A lot of financial advice is geared toward identifying potential risks that you might otherwise overlook. Yet even once you know about those risks, it doesn't mean there's a lot you can do to eliminate them.

One common theme in retirement is the uncertainty that healthcare expenses create in a financial plan. Prudent use of Medicare coverage, supplemental policies designed to go with Medicare, and other resources like long-term care insurance can help to manage some of the risks that a catastrophic health event will wipe out your savings. Yet these insurance products aren't perfect, and flaws -- like the ones that led to a huge upheaval in the long-term care insurance market several years ago -- often emerge only when it's too late for retirees or near-retirees to do anything about them.

The idea of eliminating risk in retirement sounds attractive, but in an imperfect world, it's not possible to get rid of every risk. Coming up with an acceptable level of risk can be hard to do, but it's essential to do so in order to make decisions that will best balance best-case and worst-case scenarios.

Face your fear and retire anyway

None of these harsh realities should stop you from pursuing your retirement dreams. But if you find it hard to move forward on what seems like simple financial advice, you're not alone, and these tough truths are part of the reason why it's difficult. Hopefully, seeing them more clearly will help give you the confidence you need to achieve your financial goals for retirement.

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