Help from a Retirement Income Certified Professional

With more than 10,000 baby boomers retiring everyday their number one concern is “Will I outlive my money?”

No matter how old you are, you’ve most likely made the statement, “I can hardly wait until I retire, then, I can do whatever I want.”  Unfortunately only a small percentage of retirees can actually retire financial secure to do whatever they want.  Over 90% of retirees have to find a way to supplement their retirement and live out their golden years.  We’ve all seen them at Wal-Mart, in fast food joints, grocery stores, etc. and we silently hope that we won’t end up doing that.

Seniors are living longer and longer due to advancements in healthcare, eating habits and exercise.

According to data compiled by the Social Security Administration:

• A man reaching age 65 today can expect to live, on average, until age 84.3.
• A woman turning age 65 today can expect to live, on average, until age 86.6.

And those are just averages. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95.

The current paradigm is that most people will retire around 65/66 years of age.  That means that 25% of todays 65 year olds will live 30 years past their retirement date.  Which begs the question, will you have enough money without an income to live another 30 years in good health?

Seniors are more active in their retirement years and aren’t satisfied with just sitting on the porch watching the grandkids play in the yard.  After all, 60 is the new 50.  They want to do things, and who can blame them, but these things cost money.

Lawmakers are telling you that social security will run out in 2033, that’s only 18 years from now; however, did you know that the average social security check is around $1,300 a month before taxes, and yes, you may have to pay taxes on your social security.  Can you live on $1,300 a month?  Do you know when your full social security benefits kick in and how much you’ll receive?

So how do we prepare financially for our retirement years?

IRAs, 401Ks and Stock Market accounts are great ways to accumulate and grow wealth: however, distribution of that wealth is a problem for most seniors.

When it comes to retirement planning, the 4% rule has stood as a tried-and true method of drawing retirement income from an investment portfolio without depleting the principal of the portfolio prematurely. This rule states that a retiree can usually withdraw about 4% of the value of his or her portfolio each year, provided that the portfolio is allocated at least 40% in equities. However, this traditional strategy has recently come under fire from retirement experts who claim that this rate of withdrawal is no longer realistic in the current economic environment.

The discouraging news is that a panel of retirement planning experts with Morningstar, a company that provides independent research on both individual securities and the financial markets, recently released a paper that indicates that it is impossible for retirees to be able to withdraw 4% of their portfolios each year and expect them to last for 30 years.

Another challenge for leaving your money in an investment portfolio is the fluctuation of the stock market.  People tend to have short memories when the market has been booming for the last 7 years and have forgotten the financial losses people endured in the stock market correction of 2008.  You most likely know someone, maybe it’s yourself, that had a lot of money in their IRA and lost upwards of 40%.  I speak to customers every day that tell me that their account is still not back to where it was before the correction.  This period was devastating to those customers who had retired, counting on this money for income, only to lose a large enough portion where they had to go back to work.

Retirement INCOME Planning is a new niche of Certified Planners and is designated as a Retirement Income Certified Professional (RICP).  These professional planners have a fiduciary responsibility to you, not the companies they represent, and specialize in helping you plan for an INCOME during retirement that you won’t outlive without the worry of the fluctuation of the stock market.

It’s never too early to start planning and the sooner you start the easier it will be to meet your goals of retiring and being able to do anything you want; however, if you’re over age 55 with an old 401K that you’re not contributing to or an IRA, we need to talk today!