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Saving Yourself from You

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I bump into surveys and white papers and research about how this group or that plans or saves or simply doesn’t have a clue how to plan or save. This must leave the surveyors somewhat aghast. How, after what most of us have experienced in the last decade, do some people think that the retirement is a short-term phenomenon that will turn out okay if you simply ignore it?

As I have seen these surveys time and again, the lackluster amount of money currently in many of these plans balances remains worrisome. Folks who are sixty-five years old with accounts worth $50,000 is the norm rather than the exception. From these folks, these surveys seem to always elicit this sort of answer when asked what sort of retirement plan do you have: I’ll simply have to work longer. That’s not a plan or a solution. What it is, instead, is a compromise. Or if you prefer, the Joe Paterno plan.

Most of us know who Joe Paterno is. He has been the head coach of the Penn State Nittany Lions for as long as I have been watching college football. The man is legend in the sport and, in some circles apparently, a legend in retirement planning as well. His approach to taking a leave from his career is to not take a leave from his career. Not that he couldn’t afford to, he can. But he suffers from a fear of retirement, especially in light of what happened to a fellow longtime coaching friend, who retired after decades as a head coach as well only to die a couple of weeks later.

I think about Joe every time I hear someone say they plan on working longer. This open-ended excuse removes any target you might have for when you plan on retiring and simply suggests that you are taking the JoePa approach to retirement planning. What happens if you can’t work longer? Worse, what happens if you live longer? In Joe’s case, it might mean a month, or six, or another decade.

Women have been told that they have the distinct chance of outliving their spouse. Yet when women are asked how much they have saved for this longevity, they choose to answer the question in vague terms. They believe—and this is according to surveys done by esteemed groups like the Employee Benefits Research Institute—that they can withdraw 10 percent of their accumulated retirement portfolio and not expect to run out of money.

This would be the Woody Allen approach to retirement planning, who once wrote that “Another good thing about being poor is that when you are seventy your children will not have declared you legally insane in order to gain control of your estate.” The funny here is that with that sort of plan, there will be no estate. Which of course, means there is no plan.

For some reason, we think of retirement planning as something new. Even Cato the Elder, the Roman statesman who lived when they still counted time with a B.C. understood that expenses don’t end when you retire. This may come as a surprise to you. But did you know the biggest employers of the plus sixty-five-plus crowd are Walmart, McDonald’s, and Burger King? Evidently, this answers the old Zen quote, “If you do not get it from yourself, where will you go for it?”

You have only yourself to tap for any sort of security. Not your husband or your wife. Not your kids. And probably not your parents either. If that is the case and you think that a million bucks in the bank is the answer, do you have a realistic idea of what it will take to get to that point?

If you are fifty-five with about $50,000 saved so far and still planning on the mythical target of sixty-five as the age to retire, you will need to save an additional $4900 per month. You might be better off than that with $100,000 nest egg. If that is the case, you will need to add $4300 per month to get to a million. $200,000 in your retirement portfolio and you need to put away $3040 every month.

If you are forty-five, the numbers look a bit brighter. If you have $50,000 saved for retirement, you’ll need to save almost $1300 a month so that by the time you are sixty-five, you’ll be with any luck and the market doesn’t tank, closing in the seven figure goal. The more you currently have, the lesser the demand on your resources to get to whatever goal you have set.

Now the idea behind this little missive isn’t to scare you into thinking that you will never be able to do this. The idea is to get you thinking about it. Not worrying but giving it some consideration. For the most part, having a goal is a good idea until it becomes so daunting as to be self-destructive.

The idea is to figure out what you need now, consider what you could do without and find out how much that costs. If you live in the city, will you need a car to get around? If you live in the burbs, do you need a big house to be comfortable? Once you begin thinking about what you don’t need, you have begun to make inroads into the planning process.

And that is the best start anyone can hope for. Because whomever they are talking to in those surveys, their problems don’t have to be yours.

By Paul Petillo, managing editor of and




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