Small Business Boomers

The Big Worry for Boomers: Will I Outlive My Retirement Savings

by Jean on July 8th, 2008

Last week, I posted some questions and answers from my interview with Bill Losey about National Retirement Planning Month.  This week, a couple more questions: 

Q:  You mentioned that the #1 biggest concern baby boomers have is that they will outlive their incomes.  I can certainly relate to that one!  What’s the best strategy to alleviate this concern?

A:  It used to be that people who retired had pensions; now I’m seeing that 70% or more don’t have pensions.  They have Social Security, and some 401k/IRA money, and they have a lot of misinformation.  People are overwhelmed; they don’t know who to trust.  So they look for guarantees, and some certainty that if they do “X” they will be guaranteed never to outlive their money.  

My retirement success principle is this:  I can’t guarantee squat!  And neither can anyone else. A while back, a bunch of financial advisors, and finance professors came together in New York City and based on research and past data to come up with a projection what it would take to not outlive your money. These financial gurus came up with a figure of 4% as a nice starting point to use for withdrawals from your portfolio.  Let’s say you retire at 60 and want your money to last 30 years (assuming you might live to 90).  You can take out $4,000 each year for every $100,000 in your portfolio.  With inflation, this puts you in a position of being able to have the possibility (notice I didn’t say “guarantee”) that you might not outlive your money.  This projection still makes assumptions about inflation, returns, the U.S. and world economy, and taxes.

 If you want guarantees, I would suggest you read the book 101 Stock Market Guarantees by Ivana Retyre and her husband, Dr. Ken I. Retyre.  (Say their names slowly.)  The book contains nothing but blank pages!  If you want to get it for a  friend as a joke, go to 101guarantees.com    It makes a great gag gift, and you get the point quickly.

Next, can you/should you do your own retirement planning?

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POSTED IN: Boomers nearing retirement, national retirement planning month