Thinking about retiring? If your one of the millions of baby-boomers nearing retirement
you’re probably wondering if you’ve saved enough to live comfortably to last your
lifetime. If you’re still in your early work years you probably have visions of retiring at a
young age so you can travel and play golf but have little idea of how much money you’ll
need. Whatever your situation, you need to give retirement some serious thought.
Time goes fast and the earlier you plan the better.
Often when clients come to us, they really don’t have a clear picture of what retirement
will be like. They view it as time when they sit back and do whatever they want. For the
most part however, they’ve spent most of their time focusing on saving as much money
as they can and give little other thought to the matter.
Often we hear of people who postpone retiring because they fear they will be bored.
Others seem to get ill shortly after retiring, in some cases even passing on shortly after
ceasing work. We believe it’s important for you to give serious thought to what you want
to do in your retirement years. If you have no hobbies, how will you spend your time?
Will you have enough money to do what you want?
It may be useful to think about retirement in a totally different way. In the book, The New
Retirementality, by Mitch Anthony, Dearborn Trade, Anthony says that we need to
rethink the meaning of retirement. Too often, he says, we work ourselves to death to
accumulate a large sum of money so that we can retire and enjoy ourselves at some
magical age (now often age 55 or younger).
In many cases, he says, we work at a job we don’t enjoy for the majority of our life.
Today, he notes, many people continue working well into the traditional retirement-age
years. The key is finding work you enjoy doing even if it doesn’t pay a huge salary. If
you enjoy what you do, you can continue doing it well into your 60’s and 70’s (perhaps
on a part-time basis). Doing so reduces the need to accumulate a large retirement nest
egg and provides meaningful activity in the retirement years.
In another book titled Die Broke by Stephen M. Polan and Mark Levine, the authors offer
a similar view about retirement but with a different twist. They too say that we should not
retire, at least in the traditional sense. They say it puts undue stress on us to feel like
we have to quit working at age 65. They note that everyone is living longer, often 15 to
twenty years past the traditional retirement age of 65. People need to keep active. By
continuing to work, even if just part-time, the need and pressure to accumulate huge
retirement funds by age 65 is unnecessary. And it will likely extend your longevity.
Finally, the authors say we should “die broke”. They say that we are too obsessed with
leaving a huge inheritance to our children. And they say we should not expect to inherit
anything from our parents. They recommend purchasing fixed annuities and obtaining a
reverse mortgage on our homes. Once these income streams, when coupled with
company pensions and Social Security payments, provide enough income, we should
then begin spending our other assets so that when we die, there is nothing left. In fact
they say your last check should be to the funeral director, and it should bounce!
Spending your remaining assets allows you to give to your children and charities while
you are alive, and allows you to see your gifts put to use.
While we find the authors ideas intriguing, they are clearly not for everyone. We
particularly have problems with investing too heavily in fixed annuities. It’s good to have
some portion of your retirement funds in annuities. While they provide income for life, if
one were to die unexpectedly at a relative young age, the life insurance company gets
to keep all of your money.
In summary, if you are nearing retirement, you need to give thought to what you’ll do
once you retire. Some people start new careers; some do charity work. Regardless, it
makes sense to do some planning well in advance of your retirement date. It’s possible
you may need to rethink altogether what retirement means to you!
David C. Patterson, CFP® and Erin Patterson, CFP® are the owners of Patterson Advisors, LLC, a fee-
for-service-only financial advisory firm. Patterson Advisors, LLC is a Registered Investment Advisor,
registered with the State of Michigan, helping clients in Waterford, Clarkston and Royal Oak, Michigan
as well as other Oakland County, Michigan communities . Visit www.pattersonadvisorsllc.com for more
information or call 248-674-2108.
Published in the Oakland Insider, September 2007, Re-titled as: Work Longer, Live Fully
and Die Broke. Maybe
Rethinking Retirement
By David and Erin Patterson