I have a reminder set on my phone for the day I’m scheduled to retire…at least if I believe my finance guy. Today I’ll talk a bit about that, as that milestone lurks out there like an achievable but still quite distant carrot.
Do We Believe in Retirement Anymore?
Some folks seem destined to die on the job. I think it likely for me. A friend posted a 2019 article this week stating that as much as 64% of Americans have not saved for retirement. And while my country’s government is determined to outspend drunken sailors, there is still the possibility that Social Security might not “be there” when people my age and younger start to retire. What then? Well,…I hope you’re saving in other ways.
I have a friend who thinks planning is futile or foolhardy because so much of life is beyond our control: random car accidents, illness, tornadoes, hurricanes, COVID, a plague of locusts o’er the land, et cetera. And yet there are people who still manage to save something out of each paycheck in the hopes of having something available for their life as a senior citizen. And others actually do retire.
Even with all that said, o let’s assume a few things about retirement:
- You will live long enough to see it happen.
- The economy will still enable offer enough saving or investment options to allow you to retire.
- You are gainfully employed until you reach “legal” retirement age (for the U.S., that means able to start collecting Social Security benefits).
- You might or might not have help (a spouse/partner) in contributing to your available funds.
Can you still retire? Will you? Here are a few points to consider:
- “Official” retirement age in the U.S. is 65, though that is shifting closer to 70.
- People are living longer, on the whole, than they were when “safety nets” for senior citizens were first implemented (1930s), meaning you’re healthy enough to continue working. My parents all worked into their early or mid 70s.
- You have skill sets that are still in demand.
- You like to work.
- You will have the freedom to retire.
- You have other projects you’d like to do to leave a legacy or contribute to your community.
Some of the questions a financial advisor will ask you (and please note that I am NOT a financial advisor–just throwing out information for you to consider) include:
- How long do you expect to live after you hit your designated/preferred retirement age?
- How much do you expect to spend on an annual basis or what lifestyle do you expect to have in your post-retirement life?
- How much working will you do once you leave the full-time workforce?
- Where do you want to live?
- What will the inflation rate be?
These sorts of considerations will determine how much money you need to have on hand come retirement day. They can also help you determine how much you need to save to “make it happen.” (Quick hint: while it might be difficult to set a lot of money aside, it’s easier and better to start when you’re younger, even if it’s only a little bit. I started at 27, though I should have started earlier.)
There is a charge for developing a retirement plan. I paid around $400 for a plan developed through a financial organization affiliated with my church. That’s one data point. I don’t know what others charge, but it might be helpful to know your financial state and where you need it to be come your “golden years.” If you can’t afford that, you’ll need to do a lot of extrapolations on your own based on your past experiences with mutual funds, 401(k)s, IRAs, or other savings plans. Or you can check the market. Get advice, though. Informed advice is good, paid advice from professionals is better. And give some thought to your future. Yes, the future is unpredictable, but assuming you’re able to live long enough to see a lot of it, it’s good to have a plan.