Retirement - How Long Will You Live?
The Dynamic Wealth Report
April 6, 2009
She Died In Her Sleep
Last week I received the phone call everyone dreads. It was my brother. Our Great-Aunt Laura had just passed away. She died in her sleep,
peacefully. The news hit me like a ton of bricks. I just sat and stared
at my computer screen for what seemed like hours.
I kept thinking about the last time I saw her.
Laura is my Grandfather’s sister. We’re a close family and I can’t
remember a family event without her. Our family events seem to grow
bigger every day. Everyone is always welcome, and it’s not uncommon to
have upwards of 40 people for Thanksgiving or Christmas.
Laura’s passing wasn’t exactly expected. She was in her late 80s, but in
seemingly good health.
The news gave me pause and made me look inward for a while. Certainly,
life is a precious thing. In my moment of reflection, I made a
realization. I have five other family members all in their 90s. I also had
a great-grandmother who lived to 104!
Call it luck. Call it good genes. Call it what you will. Clearly people
in my family have been blessed with long and happy lives.
For me it’s great news. I hope to live a good long while. But the
blessing is a double edged sword.
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Because I’m likely to live a longer life, I’m also more likely to run
out of money in retirement. My brothers and I all need to prepare for a
longer more costly retirement. And that means thinking about our
retirement planning a little differently.
Right now, the lifespan of a newborn baby is estimated by the US Census
Bureau to be 77 years.
If you plan on living to 87 it means you need to accumulate more
retirement savings. Enough to support your lifestyle for an extra
decade. Live to 100, and you might spend more years in retirement than
you will working!
That’s why when I think about my own retirement, I believe in four absolute
truths. You may or may not agree with me, but here’s how I think about
retirement.
First, I believe in taking full responsibility for my retirement
planning.
I’m not handing my money off to a shady broker or some fund manager I
don’t know. If I make a mistake with my retirement funds it’s one thing.
If somebody else wipes me out, it’s something entirely different. I’m
not about to hand my entire retirement account to someone like Bernard Madoff only to have him steal it. Or to a broker so he can lose it.
I will seek out advice. Getting advice and using various resources is
important. If you need help with your own retirement planning seek out a
good CFP (Certified Financial Planner). They can help you plan your
retirement.
Just don’t ever blindly hand your money to someone and expect them to
take care of it. At the end of the day, it’s your money and nobody cares
for it more than you do.
Second, I’m careful to know what I’m investing in.
If I don’t understand something completely, I don’t invest. That means I
must understand not only how I can make money… but also how I can lose
money. If you don’t know all the details, then don’t invest. It’s that
simple.
People who buy investments they don’t understand are just like people
who buy a car with a tarp over it. The slick-Willie car salesman makes
it sound like the buy of the century. But in reality you don’t know if
it runs, or even has a motor.
You wouldn’t buy a car sight unseen… why would you do it with your
retirement investments?
The third absolute truth I believe is you can’t over-save for
retirement.
Visit any retirement planning website out there. Inevitably, you’ll
stumble across a retirement calculator. They’ll ask you a bunch of
questions, like how much money you spend, how much you’ve saved, how
long you plan to live, and what investment returns you expect.
Then it spits out some crazy number you need to save for retirement.
Here’s the thing, visit three different websites and you’ll come up with
three different answers. Clearly, there’s some uncertainty around saving
for retirement. Because of that, I’m bound and determined to save all I
can. I max out my 401-K program. I invest in real estate. I even invest
extra money outside of my retirement accounts.
I want to live the good life in retirement, not worry about running out
of money.
The last absolute truth I believe in, is simply this… the government
won’t be there to help.
Think about it. Our government was in debt big time before the recession
hit. Now they’re piling on debt like there’s no tomorrow. Honestly,
we’re going to have a very difficult time paying it all back. I don’t
care if we are the largest economy in the world.
I can just see it, decades from now when our government’s struggling to
pay off our debts. They’ll start cutting expenditures. One of those big
areas is going to be Social Security. It won’t happen today or tomorrow.
Or in the next decade. But I truly believe when I get ready to retire,
Social Security won’t exist in its current state. That means I can’t
rely on the government or any company pension program to help with my
retirement.
If you work for the government now – at the state or federal level –
have a back up to your pension plan. I have no doubt payouts and
benefits will be cut.
Don’t tell me it’s not going to happen. Just look at General Motors
(GM). If you’d have told workers back in the 1950s and 1960s the pension
system would be underfunded and cutting benefits they’d have laughed.
Now look at all the retirees struggling to make ends meet.
So there you have it, four things to think about for your own
retirement. Use the time you have now to plan for the future. You’ll
thank me in 20 or 30 years.
• Paper Industry (Up 65%)
In the last month, the paper industry has rallied big time.
International Paper (IP) is up more than 50%, and leading the industry
higher. It doesn’t make much sense as all the news is about them closing
plants and laying off people.
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