I'd Like to Retire Yesterday
When I ask new clients when they want to retire, the most common answer is, “yesterday.” Then I ask, “When do you think you could retire and maintain your current standard of living?”
The most common answer is… silence.
Whether you are two or twenty years from retirement, considering expenses you will incur and how to meet them is critical. And the sooner you do so the better. Wherever you start, things will happen along the way that might throw you off track – all the more reason to plan for them.
1. Stock Market Drop Several years ago the catch phrase, “My 401(k) is now a 201(k)” took hold. Retirement portfolios were crippled. Many pre-retires realized their risk exposure only after the fact, and the time necessary on the job lengthened by years – if they were able to avoid massive layoffs. Learn this: If you are within 10 years of retirement, your retirement accounts may need to be reallocated to take some risk off the table.
2. Boomerang Kids As of 2009, over 50 million homes were “multi-generational.” Meaning the younger generation was living at home. But young adults, unlike kids, come with higher expenses such as transportation, insurance, college debt, etc. The burden of additional living expenses eat away at the finances of the parents and often extend how long it will take to retire.
3. Divorce There is an adage among financial professionals: “The fastest way to go broke is to divorce.” The lifestyle change is obvious, whereas the devastating financial impact is not so. Enormous income allocation shifts are required. Assets are divided. A partner may be required to go back to work after decades of being out of the work force. Costs for the split can be in the tens or hundreds of thousands. In short, the financial picture is halved and procedural costs reduce that further.
4. Lifestyle Changes Back in the day planners advised pre-retirees to expect needing 70% of the income required during your working life. New studies reveal that most often, people will need 95%-120% of income during retirement. Why? Because people want to pursue hobbies, travel, and often have medical costs substantially greater than when they were working. And then there is inflation.
5. Poor Planning The majority of pre-retirees do little or no planning. So it’s no surprise this is the most common reason for delaying retirement. Churchill said it best: “A failure to plan, is a plan for failure.”
A Word to the Wiser: Don't be intimidated by your finances. The earlier you start planning the easier and less disruptive saving for your retirement will be. If you haven’t started, do. Contact us and we will show you how easy this can be. Or take a look at this 2 minute video:
http://goals.wiserfinancial.tv/ I welcome your questions and comments.
becker@wiserfinancial.com
Golf Tip of the Week Know Your Yardages As a youngster, Deane Beman, now the former PGA Tour and Senior Tour commissioner, was one of the best amateur golfers in the world, not least because of his competitive smarts. I learned a lot from Deane over the years, but his best lesson came at the U.S. Amateur at Pebble Beach in 1961.
Although striking the ball beautifully, I was having trouble in practice judging distances of approach shots, particularly when the wind got up. Eventually, Deane said to me, "Why don't you do what I do--pace off the yardages and write them down?" I believe Gene Andrews, the fine California amateur, was the first to figure and record exact distances, but savvy little Deane was close behind him.
I paced off Pebble Beach and won that Amateur with some of the most accurate golf I've ever played. From that day on, I've rarely hit a shot in competition without knowing its exact distance. Once I began to have some success on the Tour, other pros began stepping off and charting yardages. Today, it is standard operating procedure in top golf worldwide.
Do you know exactly how far you need to hit your approach shots, even on your own course? If the answer is no, you might be surprised how much finding out improves both your club selection and your confidence over the ball.
Simply step off and note down yardages to the front and rear of each green from a permanent landmark like a tree or rock in the area where your drives usually finish. With that information, plus an estimate of how deeply the cup is cut into the green, it's easy to work out how far you need to hit the ball.
Source: http://www.nicklaus.com/nicklaus_golftips/
Trivia Time This week's question: We had crazy weather this week in North Carolina, from snow on Monday to thunderstorms and near 80 by Friday. But North Carolina does not have the most extreme temperature changes in the US. What state holds the record for the most rapid temperature change, the greatest 12-hour temperature change, and the greatest 24 hour temperature drop in the US?
Do you know? E-mail your answer wendy@wiserfinancial.com and if you are correct, receive a free "Way to Go!", "You Rock!", or other congratulatory phrase. Then brag to all your friends about how smart you are.
The answers will be in next week's newsletter!
Last week's question: What is the total amount expected to be spent for Valentine's Day in the US this year?
Answer: The total spent on Valentine's Day in the US for 2011 was expected to be $17.6 billion.
Source: National Retail Federation
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