Retirement – How Long Will You Live?
Last week I received the phone call everyone dreads. It was my brother. Our Great-Aunt Laura had just passed away. She died in her sleep, peacefully. The news hit me like a ton of bricks. I just sat and stared at my computer screen for what seemed like hours.
I kept thinking about the last time I saw her.
Laura is my Grandfather’s sister. We’re a close family and I can’t remember a family event without her. Our family events seem to grow bigger every day. Everyone is always welcome, and it’s not uncommon to have upwards of 40 people for Thanksgiving or Christmas.
Laura’s passing wasn’t exactly expected. She was in her late 80s, but in seemingly good health.
The news gave me pause and made me look inward for a while. Certainly, life is a precious thing. In my moment of reflection, I made a realization. I have five other family members all in their 90s. I also had a great-grandmother who lived to 104!
Call it luck. Call it good genes. Call it what you will. Clearly people in my family have been blessed with long and happy lives.
For me it’s great news. I hope to live a good long while. But the blessing is a double edged sword.
Because I’m likely to live a longer life, I’m also more likely to run out of money in retirement. My brothers and I all need to prepare for a longer more costly retirement. And that means thinking about our retirement planning a little differently.
Right now, the lifespan of a newborn baby is estimated by the US Census Bureau to be 77 years.
If you plan on living to 87 it means you need to accumulate more retirement savings. Enough to support your lifestyle for an extra decade. Live to 100, and you might spend more years in retirement than you will working!
That’s why when I think about my own retirement, I believe in four absolute truths. You may or may not agree with me, but here’s how I think about retirement.
First, I believe in taking full responsibility for my retirement planning.
I’m not handing my money off to a shady broker or some fund manager I don’t know. If I make a mistake with my retirement funds it’s one thing. If somebody else wipes me out, it’s something entirely different. I’m not about to hand my entire retirement account to someone like Bernard Madoff only to have him steal it. Or to a broker so he can lose it.
I will seek out advice. Getting advice and using various resources is important. If you need help with your own retirement planning seek out a good CFP (Certified Financial Planner). They can help you plan your retirement.
Just don’t ever blindly hand your money to someone and expect them to take care of it. At the end of the day, it’s your money and nobody cares for it more than you do.
Second, I’m careful to know what I’m investing in.
If I don’t understand something completely, I don’t invest. That means I must understand not only how I can make money… but also how I can lose money. If you don’t know all the details, then don’t invest. It’s that simple.
People who buy investments they don’t understand are just like people who buy a car with a tarp over it. The slick-Willie car salesman makes it sound like the buy of the century. But in reality you don’t know if it runs, or even has a motor.
You wouldn’t buy a car sight unseen… why would you do it with your retirement investments?
The third absolute truth I believe is you can’t over-save for retirement.
Visit any retirement planning website out there. Inevitably, you’ll stumble across a retirement calculator. They’ll ask you a bunch of questions, like how much money you spend, how much you’ve saved, how long you plan to live, and what investment returns you expect.
Then it spits out some crazy number you need to save for retirement.
Here’s the thing, visit three different websites and you’ll come up with three different answers. Clearly, there’s some uncertainty around saving for retirement. Because of that, I’m bound and determined to save all I can. I max out my 401-K program. I invest in real estate. I even invest extra money outside of my retirement accounts.
I want to live the good life in retirement, not worry about running out of money.
The last absolute truth I believe in, is simply this… the government won’t be there to help.
Think about it. Our government was in debt big time before the recession hit. Now they’re piling on debt like there’s no tomorrow. Honestly, we’re going to have a very difficult time paying it all back. I don’t care if we are the largest economy in the world.
I can just see it, decades from now when our government’s struggling to pay off our debts. They’ll start cutting expenditures. One of those big areas is going to be Social Security. It won’t happen today or tomorrow. Or in the next decade. But I truly believe when I get ready to retire, Social Security won’t exist in its current state. That means I can’t rely on the government or any company pension program to help with my retirement.
If you work for the government now – at the state or federal level – have a back up to your pension plan. I have no doubt payouts and benefits will be cut.
Don’t tell me it’s not going to happen. Just look at General Motors (GM). If you’d have told workers back in the 1950s and 1960s the pension system would be underfunded and cutting benefits they’d have laughed. Now look at all the retirees struggling to make ends meet.
So there you have it, four things to think about for your own retirement. Use the time you have now to plan for the future. You’ll thank me in 20 or 30 years.
Category: Stocks
