The “Work Until You Die” Retirement Plan

In planning out my clients’ retirement plan, there’s one way to assure my clients that they will never outlive their income; Just continue to work until you die!  Of course, this advice is not something I actually say or provide to my clients.  However, there is a definite ‘truth’ to the statement as many Americans are not saving nearly enough for their Golden Years.

Many years ago, “retirement” was looked at as a three-legged stool that you could rest on after your working years.  The three legs of this “stool” were comprised of a pension, social security income, and savings.  And while most private industry jobs from the 1950’s through the 1980’s offered some sort a pension plan, this has become all but a memory of the good old days (note: Only 21% of private sector workers were offered traditional pensions in 2007 according to the U.S. Bureau of Labor and Statistics).

And if you have to ask about the condition of social security and how the benefits will be 20, 30, or 40-years from now, please do your own research and read about the inevitable downward adjustments that will have to be made to sustain the system on a lessened benefit basis.  The payouts that your parents or grandparents are receiving (or received) were supported by a much larger ratio of workers to retirees.  That, my friends, is a fact that we all have to live with.

So, since most of you reading this newsletter do not have pensions, and the future of your social security benefits are questionable at best, what can you do to help yourself?  Exactly that: “help yourself!”

The old adage “Pay yourself first” is one of the ‘absolutes’ that you CAN count on.  And in a retirement sense, it means exactly what it says.  I believe households should strive to save 10 – 15% of their income for future needs (i.e. family income of $140,000 should save between $14,000 and $21,000/yr.).  Where the money is saved isn’t as important as the act of “saving it.”  But saving it in an account that helps minimize income tax, and provides some exposure to potential market growth…now “that’s cooking with gas!”

As Tax-day (April 15th) will be here in less than two-weeks, make sure you have made appropriate contributions to your own qualified retirement plan (aka: paying yourself first).  As a concerned advisor, I will work with your tax preparer or CPA to come up with a plan to benefit you.  Together, we can make that one-and-a-half legged stool into a comfortable seat for retirement!