If you are contemplating what you will be doing and how you will fund retirement but have no idea how to make it come together, then you are not alone. There are over 73 million baby boomers who are pondering these same questions.
Times have changed since I first started my career as a financial advisor in 1987. That was over 30 years ago, and back then, I was helping our parents retire. The consensus was if you kept paying off your mortgage, you could be debt-free by retirement – usually by 60 or 65 – and be able to golf, travel the world, and spend more time with your family.
All you had to do was to make sure your company was deducting the traditional 10% from your paycheck, and you were paying down your mortgage and staying out of debt.
Most were able to retire with a comfortable nest egg and income by simply understanding this analogy:
Retirement was like a 3-legged stool made up of pension, Social Security, and your savings, and if one of those legs was broken, your stool would fall over, meaning your retirement wasn’t stable. Today, all those legs are wobbly or even missing!
The biggest issue is that over the years more and more companies have been eliminating their defined benefit pension plans. This was a very popular retirement plan where companies would reward loyal employees with 25-30 years of service by paying them an ongoing income stream for life after they retired.
In fact, the percentage of workers with defined benefit pensions peaked at 60% in the 1980s. Today, the number of employees with these traditional pension plans is at just 4%, leaving Americans the responsibility of not only funding their own retirements, but having to know how to invest as well. The risk is now totally on the employee with retirement plans like 401(k)s.
Think about it. How many Americans lost 50% of their retirement portfolios in the Great Recession of 2008? The question is not if it will happen again, but when?
How did you feel when the market dropped in March of 2020? In just four trading days, the Dow Jones Industrial Average fell 6,400 points or about 26%. Did you see or hold tight?
What if this happened right when you were transitioning to retirement? What would you do?
I am sharing all this with you because, in future articles I will be showing you what I believe is the secret to thriving in this new economy during your “retirement” years. You see if you are planning to retire comfortably, you will need a plan to replace your income, and that is becoming more and more difficult in today’s environment.
I believe this new retirement reality needs a New Retirement Solution™. For many, retirement will indeed no longer mean the end of working, but more of a career and lifestyle transition, with many options: continuing to work part time, learning new things, taking courses, encore careers, starting a business, getting and staying fit, writing a book, volunteering, and traveling. It will be a combination of working, learning, and exploring new things.
What is your dream for an ideal retirement?
- How will you spend your time?
- Will you continue to work?
- Would you like to create an encore career or business?
- Where will you live?
- Will you downsize?
- Have you thought of traveling or even living overseas?
- How will you stay fit and healthy?
- Who will make decisions for you if you cannot care for yourself?
- When will be the best time to take Social Security for you?
- How much income will you need and how much will you have?
- Are you prepared for the next stock market correction?
Creating a plan that will help you fulfill your purpose, with vibrant health, lifetime income and happiness is the key. This is not a time for do-it-yourself, or trial-and-error solutions. It’s time to get smart, to get support and to create your personal retirement reinvention plan, so let’s get started creating this next chapter of your life together!
I invite you to pick up my free guide: 3 Simple Strategies to Maximize Your Retirement Income. Let’s explore your Retirement Reinvention together! Just visit me at www.katanaabbott.com.