The Bully Proof Retirement Plan

Posted: December 1, 2015 at 7:34 pm by Skip Kelley

Let’s face it, retirement for most people is a big financial unknown. Will we run out of money, will we have big health emergencies and expenses, will market losses reduce my income and lifestyle, will my income rise with inflation, will taxes eat up my income, are just some of the issues that retirees face day to day. That’s a lot to deal with and, in many ways, these are very much like the bully we met when we were kids, threatening us all the time until, of course, we stood up to him (or her) and then the bully left us alone.

So how do you stand up to a retirement future that’s bullying you around? The answer is to create a solid plan, a plan that gives you the confidence that you can handle all the different situations that may arise, disarming the bully, and thereby leading you to the good life.

After years of working with folks in retirement or planning to retire, I could count on my fingers and toes the number that had a retirement plan when we first met. As a planner I am amazed at how many people don’t plan. When I ask if they do, I get some interesting answers, “I’ll deal with that stuff (the bully) when I have to”, “I’ll cross that bridge when I come to it”, “I’m an optimist and everything will be okay”, “I can’t find anyone I really trust”, “I’ll do it myself” (they never do and they never do it right if they do).

Planning is easier than you think and probably more important that you may realize. With the bully lurking behind the door, take these steps to keep him there and, if you haven’t already, give me a call so you can permanently take the bully out of your retirement equation.

Here are the core ingredients for creating a bully proof retirement plan:

1. Get Organized: Few people like to create a real budget; but the ones that do are ahead of the game. Creating a budget will show you exactly where your money is and where it’s going. Wouldn’t you like to know? This is the initial stepping stone to reaching your goal.

2. Start Saving: Easy to say, but sometimes hard to do. Make sure you are making savings a part of your budget. Even small amounts add up. The key is to start the habit of saving and then you’ll see the results at retirement time when you have to put your money to work for you.

3. Fearless: Ask for help! For some people, asking for help can make them feel vulnerable and scared. A trusted financial adviser is not your bully, they are the ones who will stand by your side and stick up for you when faced with some of the most important decisions in your life.

4. Know How Much You are Willing to Lose: Figure out the amount of risk that you are able and willing to take with your money and how much of that risk, if the market declines, will cost you in dollars and cents. The Rule of 100 is a general formula to use (take 100 and subtract your age, the remainder is the percentage of your portfolio that should be in the market; the rest should be in principal guaranteed, no loss, products such as annuities or CDs) but it can still give you direction with the amount of money you should have at risk and the amount in guaranteed safety. Everyone’s individual situation is different so asking questions is key.

5. Be Holistic: A bully proof retirement plan is like an automobile with all working parts. For instance, if you had a car with tires from Volkswagen, an engine from Infinity, transmission from Acura and a body from Ford, it might run, but not very well. Holistic means that all parts of your retirement plan are working together and supporting each other.

These five tips are, unfortunately, just the tip of the iceberg of a true bully proof retirement plan. Other considerations like having a trust in place, getting your estate in order, maximizing your Social Security benefits, protecting yourself against the high costs of long-term nursing care, etc. will go a long way to scare any bully off the monkey bars.

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