Here are several “big picture” retirement themes I expect to hear more of in the coming year. I’ll come back later in the month with a post on personal retirement tactics.

From “devastation” to the future

With positive financial market returns for 2010, I anticipate a shift away from the chatter about the “devastation” in retirement accounts wrought by the financial crisis, and a shift to a more upbeat theme—building for the future.

As I have noted previously, much of the talk about “devastation” has been overblown, particularly for those still working. (The true devastation, as I’ve already noted, is with the long-term unemployed and their retirement finances.) According to Vanguard research, most retirement accounts now exceed their peak value as of October 2007 (as a result of ongoing contributions and partial market recovery). So I say good riddance to every 2010 article, blog posting, or commentary that misleadingly began with “Americans, having seen their retirement savings devastated…”

What I anticipate will arise in the place of “devastation” is a new theme—about the sensible steps that households need to take to recover, rebuild, and refocus on the future.

Glimmerings of a savings culture

With personal savings rates once again in solid single-digit territory, there is at least preliminary evidence that Americans are kicking the debt habit. Now, if the personal savings rate were to rise from 6% to 12% gradually in the coming years, the evidence would be conclusive. But we are by no means there today.

Like a lot of people I know, I tend to use debt in a limited way, and so often wonder how debt usage can be so endemic. But the issue was brought home to me in the checkout line at a “big box” retailer during the Christmas shopping season. The person in front of me was trying one card after another in the swipe machine, looking for one “that isn’t maxed out.” (That she didn’t know which one was maxed out is just the tip of the iceberg.)

If you believe at all in behavioral economics and the idea of self-control devices, you’d have to conclude that making credit harder to get is part of the approach for creating a savings culture. It’s not good for short-term economic growth. But it’s a great long-term policy.

Retirement reforms

2010 was remarkable in teeing up two important retirement reform themes. One is the long-standing issue we’ve all known about for several decades—the impact of the baby boom on the government’s financial position. This impact comes through rising costs for Medicare, Social Security, and the part of Medicaid used for long-term care. The government’s fiscal outlook and these programs are inextricably intertwined with the aging of the population and are compounded by accelerating health care costs, as I’ve noted in a previous post.

The second issue is the large hole that exists in state and local pension systems. (Correction: The hole exists in some state and local systems. There are well-managed programs out there, and those governments should be commended for doing a good job.) Some systems have overcommitted in terms of benefit promises and undercommitted in terms of funding levels (i.e., tax revenues and/or employee contributions). The stage is set, as I’ve previously noted, for a debate over what the British call “pension apartheid”—to what extent should private-sector workers with 401(k) plans pay taxes to finance generous guaranteed pensions for public-sector workers?

Again, from a behavioral finance perspective, these retirement financing problems, along with the personal savings behavior of Americans, all seem intertwined. They suggest an excessive bias to present-day consumption and spending, and a systematic inability to plan for the long term. The common theme is to overweight the present at the expense of the future.

We are living in a world in which the largest economy has a systemic present-day bias, and the second largest, China, has exactly the opposite (in the form of low present-day consumption and ultra-high savings rates for future consumption). Having the two meet somewhere in the middle in 2011 would be desirable. For the Chinese people, it means spending more on life’s pleasures. For the American people, it means spending less on (or paying more for) publicly financed retirement benefits of all kinds—while kicking the debt habit and personally saving more to bridge the gap. It is not entirely a pleasant theme for 2011 and beyond, but it’s a realistic one.

The new retirement

Finally, a positive development in 2010 that will certainly continue through 2011 is a rethinking of what it means to retire. Economists in the United States and around the world agree on one thing: working longer will help plug the financing gap. One recent study* also suggested that working longer improves cognitive skills during old age. So not only are your finances better off, but so is your mental well-being when you retire later.

I have two case studies on this point, admittedly purely anecdotal. A friend just announced her retirement—at age 67. And even though she and her husband saved quite a lot in recent years, she still plans to work part-time to generate some additional earnings. Her husband will continue to work full-time for a couple of years. A neighbor has also announced that he is tentatively thinking about retiring at age 66 (his spouse stopped working in her early 60s). But his plan is to work in a “downshifted” mode for at least the next 2 years.

It turns out that, from what I glean indirectly from our conversations, both of these couples appear to be “retirement ready.” It is not a coincidence, in my mind, that their definition of retirement is not “early out at 55.” It’s a lesson for us all.

* Susan Rohwedder and Robert J. Willis, “Mental Retirement,” Journal of Economic Perspectives, Winter 2010.