Why Does The Thought of Retirement Hurt So Much? It is the ugly monster we don’t want to deal with. It’s the question no one wants to ask.
How are we going to fund our retirement when we have so little in the “bank?”
Let’s start with an assumption: you will retire at some point in your life whether you want to or are forced to.
The only unknown is how long you will live. If I had the answer to that one, I would not be sitting here writing this blog.
So how does one account for the need to live fully now knowing tomorrow may be your last day on the planet, with the need to make sure you don’t run out of money because you were “blessed” with longevity in your gene pool?
That’s a tough one but it is doable.
Most planners would do the calculation based on an assumption of average life expectancy, age 81 for men and age 83 for women. Great, but if your family tree shows nonagenarians or centenarians, this ain’t gonna work. We use age 93 for most of our clients when we run projections. We are more prone to solve for living too long than living to normal life expectancy.
So that’s the first step. If the numbers don’t look too promising, then we look at other remedies.
One solution might be working longer. That doesn’t mean you are slaving at a job you hate but working at a job you enjoy which might mean less time and less money, but that’s better than no money. Any time you can defer the taking of your retirement income sources is more money you have to extend the life of that pot of gold.
Let’s say you decide to retire at 70 rather than 65. Those five extra years of producing income, contributing to your 401k plan, and deferring the Social Security benefits would have a huge impact. Not just incremental, but significant. In those five years, you might consider downsizing your home, moving to a smaller and more user friendly community where you can give up the snow blower, the shovels, and the lawn mower. You could investigate other sources of income and consider consulting work or developing a business online. The latter takes a few years to get off the ground, but it could be just the ticket for replacing some income at age 70. There are so many opportunities for creating income online it is a welcome and maybe necessary addition to retirement income.
Let’s say you decide you can’t take it anymore and want out at 65. Stretching the money and learning when to take Social Security benefits is an intentional way to design the retirement income stream. Maximize the income potential of your assets and see what a difference it makes!
Retiring should not be a simple calculation. You could go anywhere online and fill in the blanks to get the straight line results you want; using some originality and thought into how and when to utilize the assets you have is when the pain goes away.
Need some help with this? Contact us to see how we can be of any assistance.