Three Things You Don’t Want to Hear From Your Financial Advisor

I’ve counseled hundreds of clients as they think about retirement and I guarantee there are three statements no one wants to hear me say as they plan for retirement.

  1. You won’t have enough.
  2. You need to keep working.
  3. You will have to spend less in retirement. 

These three statements are what makes up the biggest fear in retirement according to every survey of pre-retirees I’ve read. Simply, the biggest fear in retirement is running out of money. 

Technically, no one who has worked enough to receive a Social Security statement will literally run out of money in retirement because Social Security pays a benefit for your lifetime. But that’s nit picking. The fear that drives every retirement decision is the need to reduce lifestyle so much that a person is forced to rent a room in a run-down apartment house and eat poor food. 

And many Americans are right to have this fear. For example, did you know that according to a study done by NerdWallet:

  • For households 35 to 44, the median amount saved for retirement is $60,000;
  • The median retirement savings for households 45 to 64 is $100,000;
  • The median retirement savings for households 65 to 74 is $164,000?

That’s not much for any of these groups and for anyone age 45 and older especially, this is bad news. A person who wants to retire at age 65 needs to have way more than $164,000 saved for retirement. 

What can you do to quiet this fear and avoid this fate? Here are five actions to take if you’re behind in your retirement savings:

  1. Save as much as you can which means control your spending.
  2. Invest wisely. 
  3. Pay off debt selectively.
  4. Plan to work longer.
  5. Delay taking Social Security to age 70.

If you need help with any of these five actions, consider hiring a fee-only financial advisor to help you create a plan you can follow. If you want to avoid hearing me say any of the above three statements, you need to start taking action now.