The Path to Retirement

Of the 79 million Baby Boomers nearing retirement, more fear running out of money in retirement than they fear death. Clearly there’s no better time than the present to gain control of your financial future.


When should you start planning? Right now.

Company provided pensions are now becoming extinct and the responsibility for funding your retirement has shifted to you. Fewer Americans are covered by traditional pension plans and the age to receive full Social Security benefits has increased.

Only 4 in 10 Boomers, with less than $250,000 saved for retirement and have no private pension, believe they will be able to pay for their basic needs and medical expenses in retirement and have some money left over for travel and leisure activities.

There are risks involved that could derail your plan.

  • Stock Market Volatility: What happens 5 years prior to your retirement and 5 years after are the most critical. You can’t predict what the market will do, but you can prepare for it.
  • Longevity: While average life expectancy is 77 for males and 82 for females, a male in good health at age 65 has a 50% chance of reaching age 87, a female age 89. For a couple age 65, there is a 50% chance one will make it to age 93 and 25% chance one will make it to age 97.1
  • Health Care: A 65-year-old couple retiring this year will need an average of $220,000 (in today’s dollars) to cover medical expenses throughout retirement.
  • Interest Rate: Recent research indicates that 65% of retirement-age consumers are concerned that continued low interest rates will hurt their finances during retirement.1
  • Inflation: Many retirees have a fixed income during retirement. If that income is not able to adjust for the rising cost of goods and services, over time, their income will not support their purchases during retirement. Essentially, inflation erodes the retiree’s buying power.


A big surprise for many new retirees is how much more money they spend in their retirement than they did while still actively working.

Think about it… every time you leave the house is an opportunity to spend. New goodies for the grandkids, dinner with friends, perhaps a new RV or even a trip to that exotic locale you always said you’d visit once you retired.

These expenses are often not accounted for during pre-retirement planning.

Income Planning

While you deserve to live the retirement you want, it’s vitally important to account for every expense that could potentially deplete your retirement savings. By creating a comprehensive income plan, you are creating confidence in the retirement and financial freedom you’ve worked so hard to achieve.

To estimate what your retirement expenses will be, start by calculating your current monthly expenses. This should include all household, daily living, entertainment, transportation, health, debts and charity expenses. After your retirement expenses are calculated, the next step to planning your retirement is to organize your retirement assets and develop the income you need to cover your expenses.

Why? Because strategically liquidating assets according to tax status can ensure you are putting the most money directly into your pocket. For example, liquidating or restructuring assets with reportable and taxable interest, such as CDs or certain brokerage accounts, can reduce the taxes you will pay on your Social Security benefits.

BCJ_HealthCareStatWe see a transition to retirement as a time of shifting priorities. As the era of accumulating assets winds down, individuals’ expectations for their investment portfolios begin to change. Generating a monthly income to cover living expenses becomes the dominant concern. Instead of “How much can I make?” the questions becomes “How can I make it last?” Retirement brings a change of mindset.

Retirement planning doesn’t end once you retire. Like and financial plan, it requires periodic adjusting from your advisor.

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1-Source: Boomer Expectations for Retirement 2015 Study

BCJ FG 15-12


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