by Dave Kutcher
Whether we are working with folks in that pre-retirement window of age 50+ who are trying to ready themselves for the retirement road ahead or folks that have already pulled the retirement trigger and are actively living the life of a retiree, both sets of folks have some very common fears right now. In fact, the “fear factor” is high among both groups.
The overriding common theme is a fear that there will not be enough assets to provide income that will last for an extended life in retirement.
Some of these fears are well founded; both groups lack the resources to weather major financial setbacks such as poor stock market performance, natural disasters, or significant personal health issues.
Avoiding some common mistakes can help.
1. Don’t underestimate the cost of longevity. You can’t just consider your retirement income plan for the first few years of retirement. It is quite likely you will need income for 20+ years or more and there will be factors along the way that will be working against you such as inflation. And for those of you considering the idea that you can continue to work during your retirement years, that is true up to a point. You will arrive at a point in your life where you will not have the opportunity to supplement income by working part-time.
2. The rising cost of health care is a huge factor to consider in retirement. People need to understand that health insurance covering an accident or sickness is not the same as the cost of care when someone needs custodial type care. Custodial care is not covered by Medicare. Long Term Care costs are rising faster than inflation is otherwise, and you have to have a plan to help mitigate this potential expense as it can devastate even the best of financial plans.
3. Take care of yourself. Health issues can severely impact your quality of life as well as have a big impact on finances. Stay healthy!
4. Social Security: Don’t claim your Social Security too early. You must consider your expected longevity when making this decision, but we find too often that people have taken their social security when it wasn’t necessary and now forgo a much higher benefit that would have helped them mitigate rising costs for an extended period of time had they waited to qualify for a higher monthly benefit.
5. Don’t be too optimistic in your expectations about retirement. We have found far more folks have had to retire earlier than they had planned due to employment situations or health related issues that were not expected. More than ½ of retirees pulled the timing trigger to retire before they had originally planned to do so. The reasons were unavoidable, not by choice. If you are in pre-retirement age bracket, you need to plan that everything might not go as you think and be prepared for having less time between now and retirement.
6. Don’t overlook the value in seeking help from a financial professional. People we meet with are often surprised at how much they didn’t know about planning for the years ahead. Most aren’t aware of some of the best tools and resources that are out there for helping mitigate risk during retirement. Trying to manage through those options and choices can feel like you are drinking from a firehose. Financial professionals that specialize in planning for the retirement phase of your life can be extremely helpful. There are ways to multitask your assets and income to cover most of the potential pitfalls that lay on the retirement road ahead.
So, fear not. Seek out help and consider viable options that will help you. Retirement planning is not cookie cutter work. Everyone is different, everyone has different goals and objectives, and everyone has situations that are unique to them and may require unique planning strategies … strategies that will provide the security and peace of mind that only you can discern based upon your own personal circumstances.
My name is David A. Kutcher, a retired Marine Corp Captain. My business partner in the lower 48 is Richard C. Scott, CLU, LUTCF. For nearly 40 years we have been helping folks with their personal retirement and estate planning decisions. We encourage you to make an appointment and get ahead of your concerns as early as is possible. You can catch us on the radio every Saturday morning, “Retirement in the Last Frontier”, 8:30-9:30 on AM 650, Keni Radio. Frontier Retirement, 10928 Eagle River Road; Eagle River, AK 99577, (907) 795-7452.
