Check your finances before leaping into retirement
November 20, 2019
By: Mark Harvey
Email: mark.harvey@dshs.wa.gov
I’m hoping to get your attention:
I get a lot of emails from a lot of people who have figured out that they’re aging; well, OK, maybe they’re just admitting that they’re aging, but I suspect that we all know a little bit about how that goes.
The exchanges/conversations wander and vary through any number of what are, sometimes, some pretty esoteric topics as folks mull a reality of retirement – Or not.
And while I enjoy and respect these conversations – They’re IMPORTANT! – I, sometimes, (like today) feel the need to point out that there might be something else to consider here; specifically, that this is 2019 and this is America: Money counts.
That seems apparent, right? It isn’t. I don’t know how many folks I’ve watched vault into retirement – DESPERATE to get out of their particular “rat race!” – Only to trip (and, usually, rather rapidly and unceremoniously) over a big “OOPS!” called “money;” or, more specifically, not enough of it.
If you’re wealthy to the point that this is an inconceivable concern, never mind; besides, you probably aren’t putting your Wall Street investment broker on “hold” to read this little column, anyway – For the rest of us, think about it.
Statistically and actuarially, we are likely to outlive our parents and grandparents – That’s probably good, but it also means that we are more likely to outlive our money, which is not so good. Now, if your profession, employment potential/status quo, temperament, endurance and goals are such that you have no intention of retiring, never mind – But if you’re thinking that retirement (whatever that means to you) might be an attractive prospect, you need to think about money.
Have you been saving anything for retirement, e.g. 401-K or whatever? Can you start? Can you increase? Do you have investments of whatever nature? How are they doing? How are they likely to do? Could you live on them?
If your income, assets and “situation” are such that you need to do some serious “financial planning,” then go find a serious Financial Planner, preferably a certified serious Financial Planner, and here’s why you would want to do that, as opposed to just listening to me, who is a Social Worker: (1) I know very few wealthy social workers, and (2) I have yet to see one in any of the myriad mirrors that assault me on a daily basis – Go forth and plan! Now.
What about Social Security? Now, wait a minute, because I’m going to openly sidestep any political concerns, fears, opinions or prognostications regarding Social Security because I don’t know what is or isn’t going to happen – And neither do you. All of any of us non-wealthy folks can do is try to be as responsible as possible in the game that currently exists, so for most of us, Social Security is a factor – For many of us, Social Security is a MAJOR factor!
Have you been getting estimates of your Social Security benefits along the way? I’m guessing that you have, but if not, start now, because they will not only get you into your Social Security “ballpark,” but they also allow you to verify that Social Security has your correct earnings info – AND, the “window” for correcting incorrect info is limited, so I repeat: Start!
But let’s say that you’ve been tracking this and now you want to begin to look at some scenarios for how you might live if you want to actually live: you can go to https://www.socialsecurity.gov/estimator/ and begin to “play.” You can do this IF you have enough credits to qualify for Social Security benefits and you are NOT (a) currently receiving Social Security benefits on your own record; (b) 62 or better and receiving benefits on another person’s record (think “divorce”), or (c) eligible for a pension based on work that is NOT covered by Social Security. If you have no idea what any of that means, or what “credits” are, go rummage around on socialsecity.gov and TAKE YOUR TIME.
“OK” to all of the above? Good! Go do it! It’s a pretty slick tool! By the way, there’s a link there for helping you to think about what is the “best” age to start receiving Social Security (which is a SERIOUS consideration for a lot of folks for a lot of reasons) and even one for estimating your life expectancy, if that’s the kind of day you’re having.
Most professionals who are good at “planning for retirement” talk a lot about “income,” which is why they are good at planning for retirement. The often ignored other-side-of-the-coin is “debt” – Oops. Look: If you’re retirement income is $10,000 per month, but you’re liabilities (debt) total $9,500 per month, you are NOT in good shape. If you’re in debt, do everything you can to either get out or reduce it as dramatically as possible. If you have no idea how to do that, find someone who can help to guide you, and they’re out there.
Balancing “debt reduction” with “income generation” (in other words, paying “it” off vs. saving for retirement) can be delicate. Use the same simplistic example from above: If you don’t owe anybody anything, but you’re only bringing in $500 per month, you are NOT in good shape, so think it through, and if you need a “pro” to help you, get one.
If you’re employment prospects are great, you have no intention of retiring, you like paying interest and have never encountered the phrase, “delayed gratification,” never mind.
Yes, I’m hoping I’m hitting some of you right between the metaphorical eyes, because the point of this today is simply to (Hopefully!) get you to think, not to get you to go “this way” or “that way.” What we want to do is avoid ugly surprises that often come 6-12 months into what was supposed to be a reasonably happy retirement.
If you like surprises, feel free to do absolutely nothing, as you celebrate your bold and fearless spirit!
…with a can of tuna.
Mark Harvey is the director of Information and Assistance for Olympic Area Agency on Aging. He can be reached at harvemb@dshs.wa.gov or 532-0520 in Aberdeen, (360) 942-2177 in Raymond or (360) 642-3634. FACEBOOK: Olympic Area Agency on Aging-Information & Assistance.