Monday, February 17, 2014

Oops! Saving Is NOT the Key to Your Comfortable Retirement

Oops! Saving Is NOT the Key to Your Comfortable Retirement

Of course, it is important to save money. No question about that. Even a caveman knows that!

So I can understand if that subject line has you scratching your head a little bit. Maybe you are even thinking I’m a little nuts. But it is an accurate statement – and one you need to take serious note of and, most importantly, incorporate into your retirement preparations if you want to ensure that your years of hard work and saving will not end up in disappointment.

To be fair, though, it is not entirely your responsibility. That belongs more to your financial advisor/retirement consultant. However, the sad truth is that the overwhelming majority of financial advisors – somewhere in the neighborhood of 9 out of 10 – completely ignore this critical piece in their practice, leaving you to face the undesirable consequences.

Here’s what I’m saying: Saving for retirement, though it may be a routine exercise, cannot be an end in itself. The other equally if not more important leg of that stool is how you are actually going to turn that pot of money into income for the rest of your life. If your retirement plan only involves saving money, you may be setting yourself up for a rather nasty surprise.

I must admit, income planning is not easy. It requires a lot of heavy lifting, so to speak. Today it involves answering many tough, probing questions; making certain assumptions about the future; understanding how tax laws will impact you; incorporating social security strategies; considering health care and pensions; and a host of other things that will impact your income from day one of retirement through your very last day – and even beyond, if you have a spouse and/or dependents.

In fact, I tend to believe that the amount of detail initially involved as, well as the need for regular fine-tuning along the way, has something to do with why only a handful of retirement advisors specialize in income planning. But the thing is, it’s your retirement that’s at stake here. And you have only one shot at it. So of all things, shouldn’t you get your retirement income right from the beginning?

Many of my colleagues are probably not going to like me saying this, but if your so-called financial advisor is not actually incorporating how you will turn your pot of money into retirement income, it’s time you looked elsewhere because that’s not true and holistic retirement planning. You are saving money for your retirement, so make sure that you will have that retirement!
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