How Can You Plan for a Secure Retirement With These Issues Threatening Your Future?

By on October 1, 2012 in News, Retirement
  • Sequestration
  • Fiscal Cliff
  • Unprecedented National Debt
  • Unemployment

While these issues are alarming, they create cycles that we have no choice but to get through. Think back to the Oil Crisis of 1973, Tech Bubble in 1999, Credit Crisis of 2008, bursting of US Housing Bubble in 2008, and now an unprecedented National debt. Looking at our current crisis, there is disarray among all of us Americans that we can’t we come up with a solution and fix our country before we go broke! I do not believe the end of the world is coming or that the next financial crisis will doom us all. I also believe that for every negative, there is a positive.

The thing that you can do is to make sure you are prepared for the worst outcome and hope for the best. The other alternative is not to plan, but to just hope for the best while keeping your fingers crossed. Doing nothing can be dangerous and harmful, but preparedness can help you survive and thrive.

What does this mean to you? You must be prepared and make sure that you have your financial house in order. Many of you can survive on your pension, and Social Security benefits to meet your fixed expenses, at least for the earlier years in retirement. But how are you going to afford the lifestyle that you have planned for in this phase of your life within the current “low” or “no” interest rate environment, without exposing your retirement assets to risk. Inflation destroys purchasing power. It is sneaky because you don’t realize it is causing damage until it’s too late. Having a retirement income strategy that takes into account the impact of inflation is necessary and should be a priority.

The average equity Americans’ have in their homes has fallen since 2006, from $200,000 to $78,000. The average Americans’ net worth has declined since 2006, from $126,000 to $76,000. (www.aoa.gov) Imagine what would happen if they lose the remaining $76,000. Is it possible to recover? What would you recover with? Your personal planning should include a strategy to keep money safe, as well as being able to take advantage of future opportunities.

Personal planning is key. Start by estimating your cash flow and expected expenses in retirement, which is sometimes the most difficult task of this process. Next, look at your income sources such as your pension and Social Security. Most of us will have a gap, which we will need to supplement from our personal savings (TSP, 401k, IRA, etc). Even if initially there is not a need to take withdrawals from your savings, don’t assume that everything is peachy! You will want to make sure you are including inflation as part of that income need. And, If your pension and Social Security COLA’s are not keeping up with inflation you will need to take larger withdrawals from your savings. Now include a realistic rate of return to this scenario to determine if your savings are sustainable to meet your income needs. This is how you can arrive at your savings goal specific to your personal income strategy. If you are falling short, what should your savings goal be? Finally, does your current savings and investment plan allow you to reach this goal? If not, are you willing to increase your savings before retirement, have a more prudent investment strategy, work longer than originally planned, reduce your income goals, or a combination of the above. The underlying reality is that this is not your employer’s responsibility or the government’s, but your own. And it’s up to you to create the retirement you so richly deserve.

For information on FedSavvy Educational Solutions: Financial and Retirement Literacy Programs for Federal Employees, please contact contactus@franklinplanning.com or http://www.franklinplanning.com/federal-employees.html

For a copy of our recent whitepaper: Surviving the “Fiscal Cliff”, Estate Planning for Tax Changes in 2013, email natalie@franklinplanning.com or go to http://www.franklinplanning.com/contact-us.html

© 2016 Carol Schmidlin. All rights reserved. This article may not be reproduced without express written consent from Carol Schmidlin.

About the Author

Carol Schmidlin is the President of Franklin Planning and has been advising clients on how to grow and preserve their wealth for 20 years. In addition to her financial planning practice, she is the founder of FedSavvy® Educational Solutions, which provides Financial and Retirement Literacy Programs for Federal Employees. Follow FedSavvy® Educational Solutions on Facebook for the most up to date information. Contact Carol at (856) 401-1101 or visit FranklinPlanning.com.

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  1. holybatman says:

    Why can’t we get whoever makes decisions to give us life long social security contributors, our money back so that we can invest w/o having all those grubby hands take it from us?

  2. Softwarengineer says:

    I Find It Humorous

    We used to lambast Social Security for its investment loss; now with conservative TSP G funds in the 2% area and cash money markets in the 0.2% area; hardly no one can save [even with 5% matching] enough to even get retirement interest close to a $2-3K/mo Social Security draw….I think the Rich not on Social Security, but depending on their clown joke 401Ks are jealous of us on FERS that could get Social Security’s monthly retirement checks; so they’re trying to butcher ax it all away.

    • little taxpayer says:

      Not exactly sure what you are trying to say, but analysts not too long ago were saying that SS gives recipients the equivalent of 2% return on investment.  Pick any 30-40 year period in the stock market and it’s easy to beat that rate of return, and virtually impossible to do worse.

      • Softwarengineer says:

        Dollars and Sense My Friend

        I’m talking interest you can get now from a pile of money, not 30 years ago…..hades, no one saved cash outside of retirement then anyway, we put it all in devalued real estate.

      • OldRet says:

        I read somewhere recently that the upcoming generation collecting SS will have paid more into the fund than they get out of it.

      • Patrick says:

        That may have been true in the past,  but the stock market has turned into a  casino.  Too risky. Even  some investors, I have read, have pulled their money out of stocks.

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