He or She who fails to plan…
According to goodreads.com, it was Benjamin Franklin who first stated, “If you fail to plan, you are planning to fail.”1 An online article by the State of Indiana, attributes Winston Churchill with the words “He who fails to plan is planning to fail.”2 Whoever actually coined the phrase, the necessity to plan for one’s retirement should be a given. When do I want to retire? Where will I want to live when I retire? What are the predictable expenses I will face? What level of income can I ABSOLUTELY count upon when my paycheck ceases? How much additional savings must I accumulate to make up the difference? These are only a few of the questions that must be addressed.
How much can you ABSOLUTELY count upon receiving?
Decades ago, many members of the Greatest Generation warned Baby Boomers against relying upon the promises of Social Security. Some sternly warned that too many promises had been made and added that would eventually sink the program. To be sure, there were many who said those were scare mongers, overstating the concerns. The Social Security Administration now declares benefits are not guaranteed and will be reduced to 79% in 2034 if changes are not enacted. The Christian Churches Pension Plan offers a fixed monthly income for life. Sound insurance companies can also be trusted to provide a reliable monthly income for life through annuity contracts. While we should have planned for income from at least two of these options, it is likely that we will need still more for a comfortable retirement!
Build upon the foundation of the reliable monthly income
You may build upon these income streams with IRAs, Roth IRAs, 403(b) accounts, savings accounts, certificates of deposit, mutual fund investments, Christian Credit Union deposits, and more. It is always wise to include savings plans that do not include market risk, but it is not generally wise to avoid stock and bond investments simply because they are subject to value fluctuation. Each individual must take into account their own emotional make up and risk tolerance, but as Jim Cramer has said, “Stocks aren’t just the best game in town, they are really the only game in town if your goal is to grow your wealth.”3 Put some funds aside with a long term view that allow you weather market downturns, and history says you will be rewarded with asset growth for retirement. Over the past sixteen 65 year periods (1936-2016), the S&P 500 has returned a minimum of 10.70% annually with dividends reinvested.4
Avoid the Paralysis of Analysis
Planning requires thought. Making a plan real requires action! The danger we all face in planning is to get lost in the weeds, to become so afraid of making a mistake that we decide to take no risk. Remember, our motto “Read Widely, Act Wisely” is based on ACTING. Retirement is Ahead…here’s hoping yours will be peaceful!
1 http://www.goodreads.com/quotes/460142-if-you-fail-to-plan-you-are-planning-to-fail
2 http://www.in.gov/dnr/water/files/wa-IEAP.pdf
3 http://www.cnbc.com/2016/12/02/cramer-highlights-the-magic-of-compounding–how-to-double-your-money-in-7-years.html
4 S&P 500 Return Calculator. Specific information for each 65 year period is available by request from ccpension(at)icloud.com