“Retirement Readiness” is All About Income, Not Age

“The question isn't at what age I want to retire, it's at what income.” ~George Foreman

I came across an informative article in Monday's Dallas Morning News, “Retirement Readiness.” (This article is also available in the New York Times). Two financial advisors in North Carolina put their pre-retiree clients through a “boot camp” designed to prepare them for what it will feel like when they retire. It helps people determine if they will truly be ready to retire at the age they plan to do so. It got me to thinking about what retirement is really all about.

On the surface, retirement sounds great. No more of the 9 to 5, the lengthy commute, the irritating coworkers and plenty of time to do what you want, when you want and how you want. But as financial advisors Marcia Tillotson and Joy Kenefick note, “Retirees suddenly have no place to be each day, which may not be as blissful as it seeme

d beforehand. The paychecks stop coming…after years of dutifully putting money into savings, retirees have to get used to watching their accounts dwindle.” Thus, in exchange for my waking up and leisurely sipping my coffee, watching infomercials, shopping, volunteering, gardening or just hanging out in the 80s clothes that I could never wear to work, I no longer get to watch my retirement account fill up (or not, depending on the market) with my hard earned paychecks. Instead, I must start relying on those accounts as income, not savings, and hope they will last me until I live to be 100 (and yes,

that is likely since two of my relatives were cenetarians).

After about a year of going through Tillotson's and Kenefick's retirement boot camp, about 80 percent of pre-retirees decide to work longer than they planned, according to the article. In other words, the income target is more important than the age target.

George Foreman couldn't have said it better.

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Comments (6)

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  1. Michael says:

    Pam,
    I would also say it is about the “taxes” too. The world loves usefulness, and we find that the word “retired” means working because they “want to” not because they “have to”.
    When asked a simple question, “What do you believe future tax rates are likely to be?” The majority answer, “higher.”
    So why does traditional financial planning tell us to sock away as much of today’s dollars now, only to be used in the future when it will be worth less and taxed at higher rates?
    If people believe taxes will be higher in the future, they also need to consider if they want their retirement accounts 1)Taxable, 2) Capital Gains Taxed, or 3) Tax-Free.

  2. Michael says:

    Pam,
    I would also say it is about the “taxes” too. The world loves usefulness, and we find that the word “retired” means working because they “want to” not because they “have to”.
    When asked a simple question, “What do you believe future tax rates are likely to be?” The majority answer, “higher.”
    So why does traditional financial planning tell us to sock away as much of today’s dollars now, only to be used in the future when it will be worth less and taxed at higher rates?
    If people believe taxes will be higher in the future, they also need to consider if they want their retirement accounts 1)Taxable, 2) Capital Gains Taxed, or 3) Tax-Free. Knowing this, the income they “thought” they would need may deplete their accounts much faster if they need to take out more to cover their higher taxes.

  3. bob says:

    Hi Pam,

    Thank you for posting the information and links about age vs income for retirement. I love the idea of pre-retirement boot camp.

    For about 5 years now, I have been anticipating retiring and looking forward to it. However, it is overwhelming the amount of information to sift through and the various opinions about how much money you will need, if you should move and to where.

    Incidentally, it became so overwhelming, I decided to share the information I was finding with others in my own blog. You can read about me by clicking on my name on this post.

    Thanks again Pam!
    Bob

  4. Perry Torres says:

    I’ve read your blog and it seems interesting and points directly to issues pertaining to or what retirement or retirees is all about and what to expect out it. When i was researching about retirement I found out there’s always options even when someone has retired. You could always get a descent but not a full-time job to wherever you have decided to retire, just as long as you had planned out your place of retirement and had considered researching of possibly getting a job in your place of retirement. You are free to visit our site for more informative retirement planning specially when retiring overseas.

  5. The responsibility of saving enough for retirement and supporting yourself in your golden years has become more important in light of current economic conditions and the possible degradation of the US pension system.

  6. Frank Walker says:

    As one who retired at age 40, I don’t want to say “much ado about nothing”. But it is something like that. Been retired now for 24 years and still going strong. Never had a “silver spoon”, BTW, not born rich; just knew how to save money and still know how. I practice self discipline. Never have had to watch my nest egg decline in value as article suggests. Lost no money in 2008 like many of my friends. Retirees cannot afford to lose money. It is unwise to do so and can lead to unhappiness.

    I don’t think I have any chance of living to 100. But if I do I’ll have enough money to be OK. Only serious threat is those running America today and their $16T growing debt. That idiocy is the most serious threat to my nest egg, not my own spending. Those citizens lacking personal spending discipline want to steal money from those of us have it. It’s called “redistribution of wealth”, and it’s my only real worry. I cannot save enough money for myself and for them, too.