Underestimating Retirement

The financial planning industry has overplayed the marketing line ‘what’s your number.” I am referring to how financial literature and commercials primarily focus on having a particular asset value (i.e. one million dollars) and once you reach that mythical dollar amount you can have a successful retirement.

Some of the most successful retirees we work with are the ones who managed their expenses prior to retirement. When they retired, they had minimal expenses. Now apply this to your own situation. If you have little to no debt and are able to live within your means, you do not need a huge retirement nest egg to have a great retirement.

Unfortunately, most people underestimate and fail to plan properly in their pre-retirement years. According to the AICPA* CPA Personal Financial Planning Trends Survey for the third quarter of 2015, more than half of their retirement planning clients underestimated:

Underestimating Retirement Funds Forced Individuals to Change Retirement Plans

  • Their retirement expenses (57%)
  • Their and their spouse’s combined life expectancies (57%)
  • Their individual life expectancies (52%)
  • The amount of money they need to be able to retire (54%)

The time to plan for the above-mentioned concerns is in your pre-retirement years. Pay off debt in the 5-10 years leading up to retirement. Have regular meetings with your adviser or utilize the Retirement Consultants offered through your employer’s retirement plan. The Pension Consultants’ RetireAdvisers® team meets at least annually with clients to complete an Income Needs Analysis Report. This report considers retirement expenses, life expectancies, rates of return, retirement assets and withdrawal strategies to forecast if individuals are on track to meet their retirement income goals.

Proper planning before you retire is the key to a successful retirement. For help planning and estimating your retirement income needs, contact one of our Certified Financial Planner™ professionals at Pension Consultants at 800-234-9584.

*AICPA – American Institute of CPAs
Pension Consultants, Inc. is registered with U.S. Securities and Exchange Commission as an investment adviser.
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