“The Biggest Surprises in
Retirement” read an all-caps headline in today’s Wall Street Journal’s“Wealth Management” section. Photos of happily
retired people chasing their dreams filled the page above the fold along with
comments about life changes, self-worth, and the financial freedom to do what
you want to do.
I am one year, one month,
twenty-two days, and five and a quarter hours since the school turned off my
email, mid-sentence, and my retirement began. Note to self: don’t work on an
email system as your password is deleted. It raises hell with the home computer
operating system. So, what have I been surprised by during the past 12-months?
Well, not a lot to be honest. Part of the reason is that we carefully planned
and saved for this part of our life. Things have gone well for us, life has
been kind, and we remain prudent, a life-long habit.
Financial planning is key, of
course. When you no longer have money coming in from a paying job, the money you have
saved at the moment your job screen goes black, has to last this year, next
and, with God’s good grace, for the next forty-plus years. Those interviewed
for today’s WSJ article agree,
“Financial surprises, not
surprisingly, popped up in many of the responses (to the retirement question)
we received. Frequently, a sigh of relief was audible. Nest eggs are working as
planned. A number of readers noted that a healthy amount of self-discipline
before retiring has a bigger impact afterward than most people realize.”
I have two words of advice here.
First, start saving for retirement with the first paycheck of your first job.
We still have records of our first year of work ($7500 salary – good wages those
days) that records a new retirement account saved and put away. How much you
put away is not nearly as important as making a habit of it every single
paycheck and then letting your investments work for you. We have a cash base
for our retirement, but have always put a portion of the pot into stocks:
individual stocks at first (Microsoft was one of my early gambles) and later
in mutual funds that followed the popular and diverse stock indexes. If you
believe in the value and industry of the people in this country, stocks are a
good bet.
Second word of advice: interview,
select, and work with a local money manager you trust. Don’t get sucked into
get-rich-quick money managers who conduct their business behind 1-800 golden
curtains. And, please ignore the talking heads who shout each other down on the
financial channels. Trust is key. I remember talking with one well-known
retirement manager early on, who was recommended by family. He was visibly
insulted when the two of us wanted to know how and where he made his investments.
He thought his decisions were proprietary and that we were too young and naïve
to understand his methods. It was a short meeting.
Once you select people you trust, question them and watch your investments. On an annual basis, have them run scenarios for all sorts of life
circumstances and how decisions will affect your retirement. When you get close
to retirement (I’m talking five to ten years here), good advisors can point out
problems and deficiencies in your planning, like the revealing the mind-numbing
cost of pre-Medicare health insurance. But that’s another post.
Once you are assured of and
confident in a regular stream of income for however many retirement years you
plan to torment your nieces and nephews, the rest comes much easier. Retirement
isn’t for the faint of heart, but it is for those who plan their
finances wisely, live within their means, and have the wherewithal to push off
into new adventures.
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