January 30, 2014

When Will You Know Your Retirement Plan is INADEQUATE?

By Richard J. Schillig, CLU, ChFC, LUTCF
Independent Insurance and Financial Advisor

In my years of business, I’ve had conversations with many people, and I continue to talk with people daily. Everyone has a retirement plan or retirement plans – at least in their heads they know they have a retirement plan. You know you have a retirement plan because you receive quarterly statements from your 401K, 403b, 457, IRA or other plans.

Statements tell us the accumulated value of our retirement plan(s), AND sometimes that accumulation value is a nice sum of money. BUT, you know what? Too often, we look at the accumulation of money and just “think” that this accumulation of money is adequate for our retirement. But the reality is that retirement statements DO NOT SHOW the real value of our retirement plans by telling us how long this accumulation of money will last. How long will this accumulation provide income? If your plan for retirement (your plan for retirement income that you believe to be true) turned out NOT to be true, when would you want to know?

You see folks – if you are now retired or if you are soon to be retired, you have a lump sum of money in one or more retirement plans. You receive those quarterly retirement statements that reflect a considerable accumulation of money. BUT too often in looking at this considerable accumulation of money, we as individuals, and too often planners (financial planners), do not convert that sum of money into monthly income payments to determine if that accumulation of money is adequate for lifetime, for longevity. That’s a real risk we face in retirement.

Life expectancy today is greater than ever before. Statistics from the Social Security Administration tell us today one in four people turning 65 can expect to live past their 90th birthday. One in ten people turning 65 today will live past 95. There is a 58 percent chance for a married couple that one of them will live to 90. Is your retirement plan (at least the retirement plan you have in your head) adequate to provide income for these years? If it is not adequate, when would you want to know that?

Our Retirement Analyzer service provides answers to that essential question. We introduced our Retirement Analyzer
service in 2013, and we will continue providing this valued service in 2014. Information provided for our clients is not only essential it is critical for planning. The greatest fear retirees have today is the fear of outliving income. That is why I pose the question – If the retirement plans you have today – at least the retirement plan you have in your head turned out NOT to be adequate, when would you want to know that? Is not the answer to that question – “yesterday” – or some version of “as soon as possible.”

Years ago in training for my career in retirement planning we used the 3 legged stool concept for most retirees. The assumption then was everyone’s retirement plans has 3 legs; #1 leg Social Security, #2 leg is pension plan, and #3 leg is other retirement savings plans like 401K or IRAs or other savings plans.

Over the years…..what has happened in this retirement planning concept is one of those legs – pensions – have given way…….so that second leg…..is no longer there. This is especially true for the latter half of the Baby boomer generation soon moving into retirement and more true for Generation Xers ( born between 1965 to 1979) and even more certain for millennial Generation y – (born between 1980 – 2000) & certainly for generation Z (born in 2001 to now). Some Boomers, most Generation Xers and clearly all you Millennials, you only have 2 legs remaining. This Retirement Analyzer service is of special value for you. Early Baby boomers and persons currently retired encourage you too to take advantage of the Retirement Analyzer service. You will find it very helpful in planning. Remember retirees planning cannot stop at retirement. Planning must continue during retirement.

We recently visited with a couple in their mid-50s considering retirement. After reviewing the results of our Retirement Analyzer service discovered it best to postpone retirement at least another 2 years. They both agreed retirement would be much more comfortable by delaying that decision. Once the retirement begins it may be too late to postpone that decision. Too often retirees need to return to the workplace – at least part time – out of necessity. They need to return to at least part-time employment for income needs. Let’s determine if the retirement plan you have today is adequate for today’s life expectancy. Call us or email us to take advantage of Retirement Analyzer service. See our ad below.

Filed Under: Finance, Retirement