Did you know that a retiree’s greatest fear is running out of money?
It’s a legitimate concern… We saved less and were living longer. The markets are more volatile and uncertain than they’ve ever been. Some of us are faced with providing for ourselves and for aging parents, and Social Security certainly isn’t replacing the paycheck we enjoyed while we were working.
That’s one of the greatest joys in my work… Seeing initial anxiety melt away after creating a realistic game plan that will help them go the distance.
I recently met for the first time with a potential client I’ll call Mike. Mike has diligently saved in his company retirement plan for decades. He and his wife, Susan, have amassed over $700,000 in their company retirement plans.
They never thought of working with an advisor during the accumulation years, since they didn’t think they could do much more than save as much as they could. As they get close to their actual retirement date, they have begun to get nervous about whether they actually have enough, and what would happen to their retirement if the stock market tanks or if one of them needed funds for long-term care.
When we stress tested his retirement plan there was a 0% chance that he would still have money left if retirement spanned 25 years.
Fortunately, there are many tools in the tool belt to work with, and we were able to do the following:
- Improve the risk and return characteristics of the investments
- Get Susan $30,000 more from Social Security during her first two years of retirement
- Reduce their taxable income by showing them a better way to give to charity
- Convert a portion of their assets to become “income producing” so that it didn’t matter what happened in the markets
- Convert their term insurance to permanent so that each of them were protected in the event they lost one of their Social Security checks
- Show them how to eliminate the payment on their mortgage in about 7 years instead of 30 years without taking a single dollar out of their investment accounts
- Let them know exactly how much per month they should shoot to spend in retirement
As a result, we moved from 0% to a 98% likelihood of success with a few small tweaks and only a slight reduction in spending.
I can’t describe the huge burden of anxiety that was lifted at the end of that meeting.
Unfortunately most retirees continue to live with some level of uncertainty about whether they have enough.
How about you? A scale of 1 to 10 (10 being that your extremely nervous), how much anxiety do you experience about running of money in retirement?
Contact me and let me know.