How to Actually Plan for Retirement

By |2017-11-21T00:39:57+00:00March 11th, 2014|Retirement Planning|

If you’re already retired, or close to it, look in the mirror. Check your birth date on your driver’s license. That’s right! You’re no spring chicken any longer! Surprise! I’m not either. That means that your time for accumulation of your retirement account is over, it’s  now time now for distribution.

The accumulation phase of your life was basically around from age 21 yrs. to 65 yrs. During those years, you were accumulating money to pay for a house, children’s education, pay off debts, and save for retirement.

At retirement, you’ve now entered the distribution phase of your life or de-accumulation of your retirement fund. Income for your retirement.

Now, the focus should be on KEEPING WHAT YOU HAVE. Think about it. Common sense should tell you that if it took you 30-40 years to get what you’ve got, then you probably don’t have that much time left to make your retirement guaranteed.  Now the focus is making sure you have enough INCOME to spend on things like groceries, gasoline, healthcare, hobbies,  leisure activity and the possibility that, if you live long enough, you can pay for assisted living or even nursing help. And all of that, and still maintain your standard of living in spite of Inflation.

After all, we know that prices and taxes will only be higher 10-20 yrs. from now.

If you’re spending at pre-retirement levels after you’ve stopped working, and your retirement monies take a “HIT” because of a market correction, common sense should tell you that your pile of money could be doubly reduced-maybe beyond repair. That “pile” will eventually be gone to the point where you may be forced into lifestyle adjustments.

What’s the answer? First, stop taking risk with your retirement accounts. Stop putting your retirement on the roll of the dice, the nose of a horse. What that horse has done in the past is absolutely no guarantee of what it will do in the future.  Think of General Electric, Bear Stearns, Lehmann Brothers, Genesco, and the list goes on and on. Think of 2001, 2008 . Make sure your retirement Safe, and Guaranteed.

Next, figure out how much your standard of living costs today. This is easy. Just go to your check register, and add up what you spend on everything. Groceries, gas, utilities, clothes, vacations, cable, insurance, taxes, restaurants-EVERYTHING.

Next, add up all of your safe, guaranteed income that will absolutely ALWAYS be there, no matter what the market does. Social Security, company pensions, military pensions.

The difference between the 2 figures is the income you need to have guaranteed to come in for today’s prices. You should also keep in mind inflation for tomorrow’s prices. If you have that figure guaranteed to come in over you and your spouse’s lifetime, then any monies over and above that are the monies you should “Play Dice” with in the Stock Market.

Anything else is playing with fire. You may be forced to ‘scramble’ if your “IFFY” plan goes off the rails. You may be forced to liquidate assets, sell a house, take a 2nd mortgage, get a reverse mortgage, and at the very least, lower your standard of living. Not an easy thing to do in your 70’s or 80’s.

“This is the age of knowing.”

About the Author:

Rick J. Hahn
Rick has helped thousands of people find the safest approach to a stable and satisfactory retirement. Rick is a Certified Retirement Financial Advisor (CRFA), has been advising retirees for over two decades in Safe Money and Lifetime Income strategies. Web Site: safeharborfinancial.retirevillage.com