If you are losing sleep wondering if you have enough retirement savings you are not alone. A recent study by Bankers Life Center for a Secure Retirement (Study) finds many middle income boomers have retirement savings worries. While one-third feel very or extremely confident about their retirement savings, two-thirds express some doubts, with a quarter being not too confident or not at all confident. It is difficult to be confident if you have not received in education on the topic.
Retirement savings is not about the “the number”
Some media and financial institutions have made retirement savings an uncomfortable, sometimes scary conversation. You may have heard things like planners say you should be saving 10-15%. Some companies have tried to focus on a specific account balance for retirement, for example $1,212,000. While those numbers may be true for some, it may not be true for you. These characterizations appear to be in part the reason that 62 percent in the Study expressed some doubts that they will have enough money to live comfortably throughout retirement.
Retirement planning was not in your high school or college curriculum. If you are a boomer, like me, when you started working you likely had an expectation that your company would provide a pension (defined benefit pension). In a defined benefit pension, someone else does all the work of calculating savings, inflation, mortality, needed rates of return and other factors involved in retirement planning. Best of all, someone defines the benefit as receiving a defined annual income amount for life.
If you are like the respondents, you have not received any specialized training or education on topics related to retirement financial security (83%) nor do you receive professional financial guidance of any kind (59%).
Get a retirement saving planner and get some sleep
Rather than guidance, I recommend hiring a planner to help you create your retirement paycheck. Get advice from a planner who takes an oath and better yet is paid to work in your best interest. Rather than finding someone that embeds their advice in the form of selling investments or insurance, find someone that acts like a personal actuary (does retirement planning calculations based on many factors).
I recommend finding a planner with proven retirement planning skill such as a CERTIFIED FINANCIAL PLANNER™ or CHARTERED RETIREMENT PLANNING COUNSELOR™. A CERTIFIED FINANCIAL PLANNER™ professional’s status can be verified at letsmakeaplan.org. I have found at least one adviser who said they were a CFP pro but showed uncertified in the planner search. Find a “retirement savings planner” that charges an hourly or flat fee for helping you develop a retirement savings plan. The retirement savings planning will customize a retirement savings plan based on your desires and resources. When you want to arrive may or may not have to be adjusted based how much you can save, how much you have saved, where it is saved, how long you can/want to work, Social Security, etc. While Social Security has a “Full Retirement Age” definition, it speaks only to a certain income benefit. That income benefit may not be sufficient for you. You may find it better to hold off on turning on benefits based on your expected longevity, tax situation, etc.
Contact us to let us know how we can help.
Bankers Life Center for a Secure Retirement, New Expectations, New Rewards: Work in Retirement for Middle-Income Boomers, May 2015.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.