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5 Questions Toward Solving the Retirement ‘Mystery’

Accomplished singer, actor, dancer and choreographer Fred Astaire once said: “Old age is like everything else. To make a success of it, you’ve got to start young.” His insightful words ring as true today as they did in his heyday because, as Yogi Berra said, “The future ain’t what it used to be.”

Mystery Question #1: When Does “Old Age” Begin?

In a study by U.S. Trust, perceptions of the onset of old age vary widely among generations:

·         Millennials say you are old once you turn 59

·         Gen Xers say old age begins at 65

·         Baby Boomers and the silent generation say you are not really old until you hit age 73  

Old doesn’t seem old when you are or near that age. People’s view on age and retirement is unique to him or her because age is just a number. You might retire at 66; someone else might retire at 76. You might take another job or a side gig; someone else might not. You might have enough money to travel the world and someone else might not.

For example, Bill wanted to retire early. “When I was in my 30s, I wrote down several goals, and one was to retire at age 55. When I was about 54 and a half my employer said, ‘Hey, Bill, we’re ready for you to go, and we’ll give you a nice package to do that.’”

It was a bit of a shock to Bill and his wife, Rose, because it was on more on their terms than mine,” he said. “But, I still had options, and they paid me through my 55th birthday.” As he told Business Insider, “Hey, this is exactly what I wanted to do for 30 years.” Today, he and Rose divide their time between traveling the world and their home in New Mexico.

Mystery Question #2: Can I Do This Alone?

To make it work properly, you will need a plan – like what we set up for you with our MASTERPLAN® – so your money can potentially grow and last for years to come. A Hefren-Tillotson financial advisor gives you straight talk. No “pie-in-the-sky” ideas using industry jargon you won’t understand. So keep this quote in mind: “Be sure to look for a retirement specialist like you would look for a cardiologist if you had a heart problem.”

Chances are you are still among millions of other people who are contributing as much you can to your 401(k) plan. That’s your part of the bargain. But you and they should also be seeking advice from an advisor for guidance toward determining your future retirement goals, and setting the proper course to achieving them. It is not in your best interest to self-advise or listen to others who lack proper professional training and financial education.

Mystery Question #3: Will I Have Enough?

Americans love numbers and statistics to help them arrive at a more tangible place in their own minds. While someone else’s numbers can be useful measuring mechanisms for comparison with your own situation, view them carefully and for your edification only. 

For example, in 2019, Fidelity Investments found that the average retirement nest egg in corporate-sponsored 401(k) plans was $95,600. For Roth IRAs and rollover IRAs, it was $98,400. At least by age 50, having six times your salary in savings would help you to retire comfortably at age 67. Stymied by the word, “comfortably?” So were a lot of others. Using simple math, if you earned $50,000 annually, you would have $300,000.

Not long after the initial report, age 50 changed to age 55 – and so did having at least seven times your salary in savings. Using $50,000 annually again, you would have $350,000.

And then, new numbers came out. If you earned an annual salary of $75,000, you should have $525,000 or more in savings by age 50. Numbers don’t lie; they change.

Mystery Question #4: How Will I Cover Expenses?

Hefren-Tillotson advisors don’t search for a magic number, again, because numbers change. So how much money will you need to support yourself? Will you need 60% to 80% of your pre-retirement income? If you have less, you’ll work with less. You’ll manage. Once you add up your monthly expenses – housing, food, utilities, insurance, transportation and others – you will see a clear picture of your outgoing expenses and what you can trim.

Remember that if your monthly expenses exceed your expected income, you will need to trim. Is the house paid for? Can you downsize to a less expensive property with lower county and state taxes? How much insurance do you really need? Do you need a new car or truck? There is a lot to consider, and you want to keep as much as you can “in house.”

Mystery Question #5: How Will I Occupy My Time?

Stay productive doing and learning. The pressure is off. Consider making a little money with a side hustle or two that you will enjoy. This is the time to be happy and healthy. You worked for it. And you deserve it. There is no mystery to retirement; it is what you make it.

If your course isn’t clearly charted out for you, and your retirement future is in the dark, we can shed some light on it for you. Take control of your financial future and enjoy your free time worry-free. We can help. Contact us at Hefren-Tillotson today.

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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