I read this article on yahoo which really bothered me. The writer asks if great grandpa didn’t retire why should I? He talks about how more elderly are retiring in the red and 20% of bankruptcies are made by retirees. Then mentions rising health care costs, stagnant markets, and low savings levels may mean retirement is a thing of the past for most. His solution- He plans to work the rest of his life, literally dying before retiring. I thought of a lot of horrible disasters his “plan” could run into but let’s just consider one: What happens if you are no longer able to work due to poor health?
However, what really bothered me about this article is that the writer worked as a financial adviser, and instead of suggesting solutions, he has decided that saving for retirement is too hard so he is going to give up and work forever. That is the worst advice I’ve ever seen on retirement. Can we even call it advice?! Why not suggest a plan that might actually work? With just a bit of thought I came up with the following:
· Lower your expenses to save more now and need less in retirement. I’ve done this and I’m saving over 30% of my income for retirement. Even now most of my expenses are really wants, not needs. If I had to I could cut back further, but I want to balance my current quality of life with my future quality of life.
· Cut Investment Costs- you can’t control what the market does, but you can pick funds with lower fees to decrease how much of your investments go to the fund managers.
· Invest in your health by eating better and exercising more; since health care is expensive do your best to be healthy.
· Use insurance to prevent misfortune from running your plans. Specifically disability and term life insurance to replace income.
· Work a bit longer, retiring closer to 70 than 62 to get the largest social security payment possible.
I’m sure my plan isn’t perfect but at least it IS a plan, even if it didn’t give you an ideal retirement I promise it is a lot better than working until you drop dead.