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The Most Important Question About Your Retirement

| March 07, 2016
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Retirement Planning

Are you confident you have enough money for retirement?

Rate your confidence – and remember…progress only starts when you tell yourself the truth. On a 1 to 10 scale with 10 being “without a doubt confident,” how confident are you that you will have enough money to retire comfortably and stay comfortably retired?

If your score was low or even nil, don’t feel alone. Believe it or not, 24% of workers have NO confidence that they will have enough money to retire comfortably!64% say they feel they are behind schedule when it comes to planning and saving for retirement.1. The bad news is that just because you aren’t alone doesn’t change the circumstances for the better.

Barbara Smaller has posted some great cartoons. One of my favorites says, “If we take a late retirement and an early death, we’ll just squeak by.” Funny, but the truth is that for most of us it won’t quite work out that way. There is a 50% chance that one spouse will reach 93 if you are married and 65 today.2. And most people would like to retire by 65 or at least have the option. That would be almost 30 years of retirement if you lived to 93. Then there are those who never plan to retire. They love what they do. That’s great and would be very helpful financially, but what if you can’t continue to work? What if health fails you or your spouse, and you have to take care of him/her?

So the next question you need to ask is “How can I score a 10?” We could lie and say it’s simple to raise your confidence. And it might sound simple, but it isn’t simple. It’s hard work. It takes dedication and discipline. But is it worth it? That is for you to answer. We can only tell you what it takes to get there.

#1…Create a budget…Yogi Berra said, “If you don’t know where you are going, you’ll end up someplace else.” How can you know where you are going if you don’t even know where you are and what it will take to get you there? We could tell you story after story of people who have came to us with this scenario:

“Our income is $250,000 a year. We are maxed out on our savings. We put back $25,000 a year and can’t put back anymore. But after we retire, we don’t plan to spend much. We will only need $10,000 or so a month to live on.”

The one thing we know for a near certainty is that there are very few - if any - people who spend less in retirement. Think about your weekends. Do you spend more or less than during the week? More, if you are like the vast majority of us. In retirement, every day is the weekend. You have to have a budget, not an estimate.

#2…Prepare for the worst… Lieutenant General C.V. Christianson stated, “Your biggest enemy is the unknown and assumptions.” All the time, we hear people say “that will never happen to me” or “she knows to pull out the shotgun if I get like that.” Let’s talk about long-term care. Did you know that over 70% of Americans over the age of 65 will need long-term care services at some point in their lives?3. Denial is dangerous! Here in Texas you can expect to pay a minimum of $3,000 a month for care in an assisted living center and more than $6,000 a month for care in a nursing home. 4. The goods news is that if you don’t have a plan for this “what if” the government has one for you: Medicaid. But don’t take that at as an added benefit - your family has to be destitute before you can use it. That means you will have to spend down almost every penny you have worked so hard to save. Is it worth ½ of 1% of your assets to protect your family’s financial well-being? I would think so. The funny thing is we don’t look at it this way. Well, if you have $1 million in assets and your long-term care premium is $5,000 a year, this is exactly what it is. You have to prepare for the worst in retirement—whatever that is and protect your family from death, disability and long-term care needs.

#3…Have a plan… Dwight Eisenhower stated, “In preparing for battle I have always found that plans are useless, but planning is indispensable.” Our lives are constantly changing and our plans for retirement will change too, even in retirement, not unlike in battle. President Eisenhower is right. Planning is indispensable, especially for the unexpected or unforeseen. Without it we have no goals, no guidelines, and no direction. We can end up totally lost and consequently, our retirement could be totally lost.

#4…Take action…Gordon Hinkley said it best, “You can't plow a field simply by turning it over in your mind.” If you want to accomplish something in life, you have to take action.

#5…Stay disciplined… Working toward any long-term goal is boring and frustrating. It is like the story of the Chinese Bamboo. You plant your seed and a small sprout comes up in the first year. You water your tree, care for it, fertilize it, nurture it and after the second year, nothing happens. You continue to give your little tree the upmost attention and after the third year, nothing happens. After the fourth year, nothing happens. But sometime in the fifth year, your precious bamboo will grow three feet per day until it is 90 feet tall.

It is easy to lose our focus when reaping the benefits of our disciplines is realized so far in the future. Stay disciplined and you will have your 90 feet tall bamboo.5.

It’s not easy. It takes hard work and discipline, but it is possible. Warren Buffet, who knows better than anyone, said it, “Someone’s sitting in the shade today because someone planted a tree a long time ago.” Have you planted a confident retirement so you can sit in the shade?

  1. EBRI.org 2015 Retirement Confidence Survey
  2. 2015 LIMRA Retirement Income Reference Book
  3. Longtermcare.org
  4. TDI.Texas.gov
  5. There is no guarantee of gains or that your goals and objectives will be met
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