How to HAVE Money Concerns in Retirement by Bill Storie
Last week I wrote about how to avoid money concerns in retirement, which attracted the biggest viewership ever for one of my articles. Maybe the title was the attraction and maybe folks thought I had the answer to their worries. Maybe they even thought I knew how to get lots more money in retirement. In any event, you read the avoidance argument.
This week I’ll turn a full 180 and tell you how to actually have worries about money in retirement.
Firstly let’s be clear about the THREE types of worries regarding money when you are retired.
You can (a) have problems with not having enough money to sustain a basic life ; or you can (b) have problems with not having enough money to live the lifestyle you want ; or lastly you can (c) have problems with not having enough money to last the rest of your life.
If you are in the (a) bracket, you are in trouble. If you are in the (b) bracket you may need to curtail your aspirations. If you are in the (c) bracket then you are probably denying yourself everyday expenditures to make it last.
Which one are you in?
Frankly there’s no real solution to any of this.
Obviously if you are in (a) then you have issues which you probably can’t resolve unless you get assistance from the State or your family. If you need that assistance but don’t want to be a bother to your family then you simply have to get on with life the best you can. Not nice I agree, but there are few other choices.
If you are in (b) and therefore should be re-arranging your life’s priorities but have decided that you don’t want to do that, then so be it. If you run out and end up in (c) a few years from now then you chose to go there and should have no complaints down the road. On the other hand if you are wise about it, you will make some adjustments to your everyday life and realize that as you get older, your activities will probably slow down or even diminish, and as such, circumstances may help the financial adjustment.
If you are generally comfortable, and are not in (a) and not too worried about (b) but you are concerned about (c) then you have some deep thinking to do. Clearly the unknown factor is how long you will live. Not how long you expect to live, or how long you’d like to live, but just how long will you actually live. In simple terms, the longer you live, the more money you’ll need, or the less expenses you must have.
But here’s the rub. If you feel you must leave (or simply decide that you want to leave) some inheritance to the kids or grandkids, then your forecasting will be severely tested. Leaving say $10,000 to your grandkids in today’s money may seem fine, but by the time you expire, that $10,000 will be worth much less. So while $10,000 may seem a healthy amount today, you do have to think about its value down the line.
So in that scenario not only do you not know how long you will live and hence can’t realistically work out how much you need in income and/or assets, and can’t therefore work out how much to spend each year, but you are also giving yourself the impossible task of working out how much to set aside for the kids. Good luck with that one.
As you know, here in Olderhood, we make it clear that while money is critical to your retirement happiness, it is not the only factor to consider. Hopefully you will be more in (b) than (a) and not too worried about (c), in which case you can fairly easily lay the money worries to the side for most of the time (just never forget them all together) and get on with your life. Yes there are other things to think about in life, maybe even worry about, but they are not all dictated by money.
So get on with your life and if you really do want to actually have money worries then try that world cruise, or buy that big boat, or get that cottage in the hills. Just don’t come running back to me moaning about having been a B and now you’re an A-Lister … or words to that effect !!!
Chat next week.
By Bill Storie