As I began writing this editorial I started to recall a very interesting story that occurred in my office just a few weeks ago. One of my associates told me of an introductory conversation he had with a new client where they began to discuss some preliminary retirement planning. As he went into some of the specifics of a well designed roadmap for retirement, he noticed that after a steady dialogue, the client fell noticeably silent on the other end of the phone. In an attempt to elicit feedback from the client, he gently asked: “How do you feel about retirement?” That’s when he noticed that she was literally weeping. That’s when she said to him in a very shaky voice, “you know Kevin (not his actual name), I just don’t think its going to happen” and she abruptly ended their conversation after producing a flimsy excuse. True story.
I realized that this disconcerting event is telling of the overall sentiment towards retirement. The more people you talk to, the more you notice that there is a huge disparity between when people “want” to retire and when people “can” retire. Why, so often, is this the case? No one wants to work forever, but why have people started to embrace the possibility that they may have to. Why don’t more of us plan for retirement?
Perhaps the biggest and most common roadblock to retirement planning is the tendency of many working people to use their full after-tax income to support their current standard of living. Now as hard as it may be nowadays, clients must follow a budget that allows them to live within their current means and that also provides for retirement savings. Carefully analyzing your monthly cash inflows and outflows can sometimes yield a monthly surplus that will allow you to stash a few pennies away for your long term goals such as retirement.
Procrastination can also be a huge challenge that we face. While its never too early or late to plan for retirement, it requires a completely different approach to plan for a client’s retirement when it is too late to influence the client’s ability to retire with financial security. We should realize that saving is possible only for a limited time during ones life, but consumption occurs throughout ones entire life and can increase at any time due to a number of factors including inflation or illness. This imbalance makes it essential for us to save sufficient assets during our working years to ensure attainment of retirement goals.
So if you haven’t imagined your ideal retirement yet, take a few minutes out of your busy day to do so. I have found that every individual has their own unique definition of retirement. However, the one common denominator among all future retirees is their desire to retire with a sense of financial security. So have that conversation with your family, loved ones, and your financial professional. Get that gorilla out of the room.
Nemec Financial Group
New York, NY