Retire-What?!: My Take On Retirement + Planning For It

Most of the time people reference retirement, they mention that time to be like the Golden Years (even I have a blog post with the reference ). But over the last decade or so the path to retirement has been anything but golden for some retirees. Many have found themselves moving backward even in poverty. The talk around retirement lately is that golden number you should have to survive 30+ years of that glimmer. Whether it’s $1.3M or more, that number is seen as out of reach for many or they figure it’s unobtainable.?

I was scrolling and saw this meme that made me cackle -?

But as some memes can, this holds some truth for some folks.

Many feel that with the amount of retirement that they have saved, they can only survive but for so long. As of April 2024 , the average amount of money held in a retirement account in the US is $88,400, which is $1.37 million less than the average person's retirement goals. The math looks different from the headlines to your account balance. People are finding it hard to back–door the Roth when they barely have enough paycheck to handle their livelihood. Yes, inflation and the pandemic rocked some ideals of retirement savings, but one of the other slashings of retirement has been the cost of living paired with not making enough to live (now and later).?

In articles in the past, I’ve called out the 15% rule that savers should look towards when it comes to retirement planning. The rule is that you should strive to save 15% of your pre-tax salary within your Retirement Stack (401K, IRA, 403B, etc). On the other side of the coin, I’ve stated that 10%-15% of your income saved is good, but can be tough due to life costs adding up. Which is true. You’re finding even more retirees have to moonwalk their way back to work due to the money they did have saved running out, Social Security not covering it, etc. We have been seeing an influx of retirees finding themselves in poverty or even homeless. Even with the great push for Secure 2.0, there needs to be more talk about those who are currently retired along with how people young or mature should start to rethink how they can save for later. Let’s not forget having to pay people more; imagine how things would be if the federal minimum wage had stayed the pace.?

Scrolling think pieces I often find some of the bros talk about how retirees should’ve saved for their golden years – how sway? Then I thought about this even more when I was scrolling the clock app and saw this insightful lady talk about the realities of retirement and saving for it. I made a stitch to her commentary, but going to talk about it in this newsletter:?

• Think about retirement in not just bulk, but streams: One of the things that we love to talk about as a collective is income streams. You have this income stream to fund an area of your life and another stream to fund another area, correct? So why isn’t that a conversation when it comes to retirement? You have your core/current retirement fund to handle what specific cost. Not all, but a specific area (s). You can have it cover your living expenses,? while Social Security handles your mortgage or rent, etc.?

• Other types of streams: Look to see what other things you could be doing now or in retirement that will have a low impact on keeping funds coming in. This could be real estate or something that will give you the balance later on. Work smart, not hard.?

• Calculate your later expenses: The older we get, the more life gets. Knowing your potential costs in retirement allows you to prepare for it before you go towards it. How much would your healthcare cost, how much does Medicare cover and what doesn’t it - also the sections. The concept of budgeting doesn’t leave just because we retire.?

• What seems small, can compound: no matter if you open up a regular (traditional) or Roth IRA, start paying for [future] self - look at your budget to see what you have, even if it’s $20 per week/month. Start automating your savings.?

• Think about the funds that will fund you later: no matter if it’s your employer-based retirement account or your self-directed, the funds you pick and stick with are what’s going to fund your golden years. Research before you reach for your wallet. The funds your employer offers in your retirement fund help them but can help you if you do your research on how they have been performing. You pay a service fee, call, and ask them about the funds. For those on the DIY side, look for funds that look like your target date fund and structure your portfolio to build cash (liquidity) and carry (the funds that are going to grow your account). ETFs/Index are amazing for these types of accounts.?

• Don’t be afraid to check not only where you are: Look at your social security benefits , look at your current retirement fund, and go find old retirement funds to fund a rollover into an IRA. How can you know what path you’re on if you don’t know where you are? I know it can be scary, but look and leverage.?

The economy is making many Americans have to either use their 401K like an ATM ?or stop contributing to it overall. It’s an interesting time for sure. I remember meeting with a client and she told me that she only opted into her retirement plan at work and never checked the process of it all. At least 2x a year, check to see how your account is doing, whether the funds are growing/performing well, whether your match is being attached correctly, etc. You’re doing your future self a disservice by not looking at planning and how the pace of it is going.?

Don’t let the headlines make you think that you don’t have enough saved or don’t have enough time, look to see how you can reverse engineer not only how much you have, the time you have left to save and even what the right pivot to make when it comes to building streams for your golden years.

Let’s rethink the theory of a “nest egg” -? do you think you can have multiple eggs in your nest to ensure it’s heavy enough to handle the later stages of your life? I believe so! Even BlackRock is starting to try to bring a pension-like element to their retirement offering; why? Because of how the retirement landscape is looking.?

Let me know what your current thoughts are of not only retirement but where you feel you are with retirement.