By Terry Savage
Retirement is a word that traditionally has been used to define the period after a life of full-time work ends – and before death.
Historically, it was a short period of three to five years in which a “worn-out” retiree could play golf, or fish, or sit on a beach. That quaint concept has been overtaken by today’s reality of longer life spans, more volatile career paths and a changing economy.
Retirement is about more than money. A recent survey by Bankrate.com lists the best and worst places for retirement. Among the criteria, financial aspects were important, including state income taxes and estate taxes – all part of a category called “affordability.” Although financial matters were the largest category at 40% of the rating, other issues played a significant role: wellness (20%), culture (15%), weather (15%) and crime (10%).
Tops on the “best states for retirement list” were Georgia, Florida, Tennessee, Missouri and Massachusetts. Read the specifics of the Bankrate survey at Bankrate.com to find out where your state of residence ranks at https://www.bankrate.com/retirement/best-and-worst-states-for-retirement.
But all of these criteria presume you have a choice about retirement – not only where to live but whether you can “afford” to retire – or should plan on working as long as you possibly can to bring in some income to supplement Social Security benefits.
Remember, for about half of seniors, Social Security provides at least 50% of their income, and for about 1 in 4 seniors, it provides at least 90% of income. That doesn’t leave much flexibility, although it may be important to choose a low-cost retirement destination to stretch a limited budget.
The real question for many people is how to bring in some income in their later years to cover food and shelter and uncovered medical expenses. And this is especially important for seniors who are alone, without a spouse or family to rely upon.
Fifteen years ago when I wrote “The Savage Number: How Much Do you Really Need to Retire?” the focus was on reaching some sort of “magic number” – along with a withdrawal strategy – that would give you peace of mind that your money would last your lifetime.
But that was before the financial crisis of 2008-2009. Homes were foreclosed, jobs were lost and confidence was shaken. True, the stock market has reached record highs since then, despite the impact of the pandemic. But our society has been divided into those (relatively few) who are prospering – and the many who lost employment and savings just as they were nearing retirement. For them, the retirement choices are limited.
If you are able to make choices about your future, it’s important to seek out expert retirement planning advice, starting around your 50th birthday. Those key decisions about how long to work, how to invest, how much to withdraw and how to plan for the other ongoing costs of living in retirement are part of an overall plan.
The most difficult aspect of financial planning is finding someone you can trust – as opposed to someone who is just trying to sell you something and get a commission.
I have long recommended that you find a Certified Financial Planner who is also a fiduciary (signing a pledge to put your interests first) – who is also a fee-only planner (and does not get commissions for products recommended).
The one matching service for planners that meet all these criteria is Wealthramp.com, where you can list your important issues and be matched with a carefully vetted, fee-only fiduciary financial planner. Wealthramp founder Pam Krueger cares as much about the integrity of financial planners as I do.
Yes, you’ll pay a fee for this advice. The amount depends on the planner and the services you need. But don’t be scared off by a one-time or annual fee (the first meeting is free). Failure to plan, or falling into the hands of an unscrupulous salesperson, could and will cost you far more in the long run. And that’s The Savage Truth.
Terry Savage is a registered investment adviser and the author of four bestselling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.