How to Actually Plan for Retirement

Look in the mirror if you’re already retired or close to it.

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 around from age 21 years to 65 years. During those years, you accumulated 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 on ensuring you have enough income to spend on things like groceries, gasoline, healthcare, hobbies,  leisure activity, and the possibility that you can pay for assisted living or even nursing help if you live long enough. And all of that, and still maintain your living standard despite 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.

Suppose 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 correction.  Common sense should tell you that your pile of cash 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 must 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, and risk exposure. What that horse has done in the past is 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, 2022.  Make your retirement 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 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 two figures is the income you need to have guaranteed to come in for today’s prices. It would help if you also kept inflation for tomorrow’s prices in mind. If you have that figure guaranteed to come in over you and your spouse’s lifetime, then any monies over and above are the ones 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.