RETIREMENT WAKE-UP CALL
As originally appeared in The Jerusalem Post on September 6, 2017.
I have never been one to get all worked up and depressed over my birthday.
But on my recent vacation, two things happened that reminded me that I am not 20 years old anymore. In synagogue after morning services I noticed a few people going up to a certain man and shaking his hand and speaking to him. It was not the welcome usually given to a stranger, but rather a guest who was friendly with many in the community. I asked someone who it was and it turned out to be someone who lived in the community more than 35 years ago! I went up to him and introduced myself and said that it’s been close to 37 years since we last saw each other. Then as I was driving home with my son I was listening to the Seattle Mariners weekly magazine. They had a segment where they interviewed old players to speak about the good old days. They interviewed a former outfielder named Joe Simpson. He played in Seattle in the late 1970’s-
As I was driving home with my son I was listening to the Seattle Mariners weekly magazine. They had a segment where they interviewed old players to speak about the good old days. They interviewed a former outfielder named Joe Simpson. He played in Seattle in the late 1970’s- early 80’s. He was telling stories and I remembered them like it was yesterday. Problem was that yesterday was really nearly 40 years ago. My conclusion: I’m not as young as I thought!
Time flies. Before you blink you are approaching retirement. I have mentioned before there is a lot of data on how little in retirement savings people in their 50’s have. On my aforementioned vacation, I was listening to an early morning radio show where callers were asking how they can quickly increase their retirement portfolios because they had very small amounts saved for the long-term. Then I happened to speak to a few friends who confided in me that they also have little in the way of long-term savings and they wanted to know how they will be able to retire.
Lack of retirement savings is a major problem facing baby boomers. Here are 3 steps that can get you where you need to be financially in order to retire.
Don’t get overly aggressive
Do not try and make up for lost time by trying to double your money in the stock market every few months. Investors who become overly aggressive to make up for years of no savings are making a huge mistake. If historical returns are in the 8-10% range, you are not going to be the one who averages 30% a year. I can’t tell you how often I hear of an investor who decided to make very aggressive investments to increase retirement savings, only to end up losing most of the little bit that had been saved in the first place.
Work
It’s time for a wake-up call. No sense in sugarcoating the truth. The most effective solution is to work. Delaying retirement by a few years can be a huge factor in being financially able to retire. By working not only do you push off tapping into your retirement funds, but you can keep saving for a couple of more years. According to the Oblivious Investor, “Whether it’s sticking it out for an extra couple years at your current job or picking up part-time work in a more enjoyable field after leaving your job, retiring later is often the highest-impact thing you can do for your retirement finances. Each additional year of work is one more year to accumulate savings and one fewer year of spending from your savings.”
Save and then save more
Investing can only help so much. The real chore is to save as much as possible. As you get closer to retirement there is a good chance that your kids may be out of the house which means that you can save on tuition, food etc. You may have to sacrifice on your lifestyle, but you have no choice. You need to save everything possible. Take all of your newfound savings and get it invested.
Delay Social Security
While you can start taking Social Security benefits at age 62, for those still working and trying to build savings for retirement income, it pays to wait on taking your benefits until you reach the age of 70. According to Forbes, “You can start drawing early retirement benefits from Social Security at age 62, but it pays to wait, especially if you continue working past that age, and is crucial if you’ve begun saving late. Delaying the start of Social Security benefits until age 70 can boost the monthly payout by as much as 80%”
Don’t think that it’s too late to have a financially secure retirement. It may not be fun, but it’s very doable. Take the necessary steps and you can still be able to retire comfortably.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is the author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, FSI. For more information, call (02) 624-0995 visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.
