Many of Don’s first-time clients come in scared, wondering how in the world they’re going to afford retirement.  That’s not a reason to put off planning! 

The sooner you talk to an expert the better, advises Don.  A financial planner can walk you through your sources of income, now and into the future, and help you plan for additional income or lifestyle changes, if necessary. 

Don hears this a lot: “I do not want to reduce my standard of living in retirement, and I want you to make my money last.”  A financial planner can’t help you do that unless you make that first appointment – the earlier the better.

And, maybe you can convince someone else that it’s a good idea to start early, too!  Don’s granddaughter was just 12 when he told her about the power of saving just ten percent of everything she makes.  She opened a special account just for that.  She’s 14 now and still saving away.

Don’s motto: “The earlier the better, but it’s never too late.”

Be Wary of “Life Expectancy”

Don’t use popular “average life expectancy” statistics to gauge how long you’ll live.  According to Don, many people hear over and over again the magic number  78, the oft-cited current life expectancy from the CDC’s National Center for Health Statistics [link to http://www.cdc.gov/nchs/fastats/lifexpec.htm ], and they plan for that.  However, if you live to age 65, your life expectancy is not 78 but 87, says Don – nine more years to plan for.  And, if you’re in good health and have a family history of longevity, you could easily live much longer than that.  A wonderful prospect – but you want to be able to afford it!

Which is why Haas uses a “termination point” of 100 for most of his clients.

Similarly, think twice before assuming a retirement age of 50 or 55.  “The message is finally starting to get to baby boomers” that they probably won’t retire at 55, says Don.  And that makes sense, since many of them are living past 85. 

Don cites a 1998 AARP study and a 2003 Merrill Lynch study that both conclude 80 percent of baby boomers plan to work at least part-time in their retirement – 25 percent because they have to, and 35 percent because they want to.

Three Things You Can Do to Secure Your Future

First, get out of debt.

“Debt is the millstone that destroys you,” says Don.  Ideally, your total consumer debt should not exceed 25 percent of your gross annual income, excluding your mortgage.  That includes credit card debt, car loans, and any other kind of loan.  The repayment of that debt should not exceed 10 percent of your gross annual income.

These guidelines are stringent for some, but will go a long way toward financial security.

Second, save as much as you can.  Sounds simple, and it is, but it’s not always easy.

Third, properly allocate your savings.  You need to invest in the right kind of investments at the right time.  That’s where a good financial planner comes in.  Just as you rely on yourself and your doctor to maintain physical health, you need to rely on yourself and a good financial planner for financial health.

Embrace Change!  

If your financial planner says you’ve got a lot of work to do, then don’t be afraid to it.  Saving more can mean changing your lifestyle today, but you can feel good about a more secure financial outlook.