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Winning the Retirement Income Sweepstakes

September 19, 2018

 The 28th annual Retirement Confidence Survey for 2018 sponsored by multiple banks, brokers and AARP of 2,000+ retirees and workers shows some interesting results.  Notably, retirees are less confident about their money holding out.  They did not expect the rise in health costs or the need for long term care. They elected Social Security too early.  Their new longevity is a happy but worrisome surprise.

 Unlike retirees, workers with defined contribution (employee funded) retirement plans are more confident they will have enough money to retire.  Considering the market has done well the last five-plus years, that may not be a surprise.  However, they failed to show concern that the next market pull-back may be imminent. The Survey did not ask workers how they measured or perceived their expenses in retirement or their expected retirement lifestyle.

 Our experience is that pre-retirees expect and want to maintain their current lifestyle.  They are also just becoming aware of the dramatic growth of medical bills and co-pays as well as the possible need for Long Term Care or other assistance.  Invariably, they forget their silent partner’s share of their pension plans:  income taxes.

 Whether you will be able to weather the pitfalls and challenges of retirement depends on what you do now, anticipating an uncertain future rife with inflation and surprise, both good and less than good.

 Looking forward, the wise way to prepare for a secure Retirement is to ask and answer the following four questions:

   1.>   What rate of return do you have to earn on your savings and investment dollars to be able to retire at your current standard of living and have your money last through your life expectancy?

   2.>    How much do you need to save on a monthly or annual basis to be able to retire at your current standard of living and have your money last through life expectancy?

   3.>   Doing what you are currently doing, how long will you have to work to be able to retire and enjoy your current lifestyle till life expectancy?

   4.>   If you don’t do anything different than you are doing today, how much will you have to reduce your standard of living at retirement for your money to last for your life expectancy?

Given accurate numbers, we can show you the calculations in ten minutes.  How soon do you want to know? 

 Winning the retirement planning game does not have to be a lottery.