How to Actually Plan for Retirement

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 is over. It’s time to distribute!

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

At retirement, you’ve now entered the distribution phase of your life.

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 a SURE THING. 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 increase over the next 10-20 yrs. A great way of making my point is to think about the price of a gallon of milk, just 20 years ago it was about, $1.10. How much does a gallon cost today?  $4 or more?   Prices will increase, and the cost of living will follow.

If you’re spending at pre-retirement levels after you’ve stopped working and your retirement monies can take a “hit” because of a market crash or market correction.  Common sense should tell you that your pile of money will be doubly reduced-maybe beyond repair due to the two dangers of an uncertain market and how inflation (the increasing cost of goods) can affect fixed income. That “pile” could eventually be gone to the point where you have to make severe lifestyle adjustments.

What’s the answer? First, stop gambling with your retirement. Stop putting your retirement on the roll of the dice, the nose of a horse, exposure to risk. What that horse has done in the past is absolutely no guarantee of what it will do in this race! Think of General Electric, Bear Stearns, Lehmann Brothers, Genesco, and the list goes on and on. Remember of 1929, 1953, 1979, 2001, 2008.  Make your retirement is safe, secure and stable.

Calculate your living costs today by making a simple budget. Include small things as well as large expenditures. Groceries, gas, utilities, clothes, vacations, cable, insurance, taxes, restaurants — everything.

Next, add up all of your safe, secure guaranteed income -income that will always be there, no matter what the market does. These include Social Security and 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” or put at risk.

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 second mortgage, get a reverse mortgage, and at the very least, lower your standard of living. Not an easy thing to do when you’re in your 70s or 80s.