Recent market turbulence has raised the anxiety level among many people either thinking about or approaching retirement. With the daily market gyrations, it is no wonder many folks have grown increasingly concerned they will not have enough money to retire.
On top of this, the constant media barrage, “shock news,” and advertising (“what’s your number?” commercials) have added to anxiety levels to the point where many people are chronically focused on “their number.” As financial planners we hear the concern over “my number” a lot these days. But we think the more appropriate question to ask is “What’s your plan?”
No question, the size of your assets the day you retire does have an important bearing on your ability to meet your retirement goals. However, the day you retire is but one day in the continuum of your life. The growth and proper management of your wealth, your personal finances, and your estate, will continue for years, perhaps decades, beyond the day you retire. So the anxiety over your “number” on the day you retire is somewhat misplaced.
An action plan can really help
No matter where you are on your life continuum, taking concrete action can help relieve your “number” anxiety and put you on a better track toward achieving your retirement goals. Here are a few things you may want to consider to get you moving in the right direction.
Change your way of thinking
The “number” on your retirement day shouldn’t be thought of as an “end game.” Proper management and growth of your assets well beyond your retirement day will be critical in achieving your retirement goals.
Be realistic
If your resources are low and you expect you will have problems meeting basic cash flow and spending needs in retirement, it is important to face that reality and take action to improve your ability to fund your retirement. A realistic assessment of your resources, debt, spending goals and lifestyle expectations can be a good first step in beginning to formulate a plan.
Harness the time value of money
Utilizing the magic of compound growth of assets either through interest or conservative dividend-paying investments can make a significant difference in your available assets even in as short a period as 5-10 years. The important thing is to get moving: every day you delay is a lost opportunity to improve your chances of success.
Tune out the media
The media loves to emphasize the negative and “shock news,” and why not? For their business, it keeps people watching, which sells more commercials. But the hype and negativity created by the financial media can lead to distorted thinking and unnecessary anxiety. The best thing is to limit your consumption of financial media.
Insurance
Certain types of insurance, such as liability coverage or annuities (in certain cases), can provide some options for risk coverage or providing a guaranteed income stream. These might be considered as part of an action plan.
Seek professional assistance
There is no magic bullet for people who are underfunded for retirement, and trying to “do it yourself” can be a difficult and risky prospect. Seeking the help of a professional financial planner can provide benefit in helping to assess your situation and frame options that you may not have considered. A professional planner can help in better understanding improved asset deployment, appropriate tax planning which may reduce your taxes, navigating the investment markets, optimal investment allocation, and analyzing a variety of options to help stretch your retirement assets.
Bob Toomey is Vice President, Research for S.R. Schill & Associates, an investment and financial planning firm located on Mercer Island.
