• Harry N. Stout

307- Have You Gotten a Retirement Readiness Check-up?


American retirement outcomes need improvement. Having $100,000 saved in a 401(k) is not going to cut it for your household. As we read daily, for the majority of households retirement savings and projected incomes are at levels that will not sustain basic lifestyles when full-time work ends. We are headed for a crisis for the many households who plan to primarily rely on Social Security benefits for the bulk of their non-working years’ incomes.


As this situation unfolds, it will put substantial pressure on government to increase benefits for these households. This will add yet another initiative to increase stress on the federal budget.


At the same time, the medical community suggests that individuals get routine screenings for many diseases at certain ages. The goal of these screenings is to identify medical problems early, avoid costly medical treatments and prevent unnecessary deaths. The same practice needs to be adopted for your retirement readiness. I propose that that you get regular retirement readiness checkups beginning at the latest age 45. In reality, I think as soon as individuals begin full-time work, planning for their later years should begin.


Here are some example areas that a retirement readiness checkup could cover:

  • Finding purpose. What will people look to do or what causes do they wish to embrace once “every day is a weekend”? Having people think about what retirement looks like for them as early as possible should help build awareness of the costs needed to fund the desired future lifestyle.

  • Lifestyle expenses. What level of spending should be planned, including needed support for dependents or special needs children or grandchildren?

  • Healthcare needs. With post age 65 medical costs estimated at roughly $300,000 for a twenty-year retirement for two people, how these costs will be funded using a combination of insurance, federal programs and personal savings needs to be planned.

  • Social Security. Determining what amount of benefits to expect when work ends.

  • Business needs. With more and more individuals developing entrepreneurial business initiatives how should these businesses be planned for as they age? What is the desired end game for the business?

  • Legal considerations. Are the necessary beneficiary designations, estate planning considerations and health related powers of attorney in place?

  • Savings strategy. How should the household use available tax advantaged savings and insurance programs including 401k, IRAs, annuities, cash value life insurance and health savings accounts. What level of personal savings is needed to produce desired retirement income?

  • Investment options. Which investment options should be used to put personal and retirement plan savings to work?

  • Long-term care needs. How will the household plan to obtain some form of long-term care coverage that will likely be needed? Today most households are ignoring this need incorrectly assuming that the government will pay these costs.

  • Debt management. How much debt will they take into retirement? Will they still be servicing mortgage and student loan debt as they age?

Summary

Retirement outcomes for Americans need to be improved. A future retirement crisis is building for a large percentage of Americans. One action that could be taken to prepare your household is to have a retirement readiness check-up. This should improve your awareness of projected amount of retirement income you will have, living expenses and other expected lifestyle needs in retirement.


Having periodic retirement readiness checkups beginning at age 45 should allow sufficient time for implementing corrective strategies to achieve desired retirement outcomes. You need to look after your future lifestyle as much as possible.

 

Ready to improve the quality of your financial life? Harry is the host of a new podcast from the FinancialVerse where he shares practical ways to relieve money stress and anxiety. Each 7 to 10-minute episode is designed to fit into your busy lifestyle.

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