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What If You Haven’t Been Saving Enough For Retirement?

Todd D. Heckman

This is a tough question, because it can be hard to make up for lost time. And because how do you define “enough?”

What you’ll need depends on what lifestyle will keep you happy in retirement, how money-smart you are in supporting that lifestyle, and what good and bad luck you experience along the way. None of that is easily quantified, and despite what you may have heard or read, there is no “Number” out there that can possibly specify ahead of time just what’s going to work for you.

Even so, you probably have a feel for whether you’ve been a good saver or not, and some sense of other resources you’ll have available (Social Security, pensions, home equity, etc.). Most people really can tell whether they’re heading for a financially comfortable retirement, or definitely not, or somewhere in the squishy middle. So, what if you’re in the “not” group?

The obvious solutions are to start saving more, or plan to either postpone retirement or work at least part-time during retirement. These are valid strategies, and they might do the job, but they really should be secondary to your most powerful solution: reining in the cost of your lifestyle.

Actual sacrifice, of course, goes against the grain. But the sacrifice is probably a lot less than you imagine, and the financial benefits are greater than any other change you can make. First, whatever you stop spending can go into savings (or paying off debt), and that will give you more flexibility down the road. Second, and much more important for most people, is that however much you reduce your living expenses, assuming you acclimate yourself to that and stick with it, you will save that money every day for the rest of your life. By contrast, if you keep spending the same but just try to save more by taking on additional work or by delaying your retirement, you can do that only during your remaining working years, a much shorter timeframe, so you need to go after bigger amounts. Third, money you don’t spend is tax-free savings, compared to money you earn, which is taxable either now or later.

But what about the sacrifice? The quick answer is that studies of happiness repeatedly show that it is not related to wealth. Or rather, the truly poor and (perhaps surprisingly) the truly wealthy both tend to be unhappier than the rest of us, but apart from those extremes, you can probably be just about equally happy with quite a bit or not so much. The main unhappy part is the transition from more to less. It hurts to give things up, because we confuse having them with actually needing them.

Once you make the transition and adjust to it, though, you’re likely to find yourself just as happy as before. You’ll realize that most of what you’ve still got is as satisfying as what you had before, and there are cheaper or even free substitutes for most things. Plus most people find that having a somewhat simpler life increases their happiness.

But what after you’ve made the ‘Sacrifices’ and you still find yourself ‘short’. You need to reevaluate how and what you ‘invest’ your retirement nest egg into. This is where financial products like Annuities (guarantees an income you cannot outlive) and Long Term Care Insurance can start to make some sense. I personally own a lot of both products as I want a steady ‘paycheck’ every month in retirement and not to be a financial burden to my children, or the government as my health care needs change as I age.

Perhaps you’re sold on this, or perhaps not. But the main take-away here is that even if you haven’t saved what you should have, it’s not too late to make changes, and you’re probably not heading for a life of misery. Just one that is more carefully fitted to your actual needs. There’s no call to despair, just to act. In need be, seek the help of a veteran retirement planning adviser.

Click here to see more articles from Todd Heckman.

About the Author:

Todd D. Heckman CLU, ChFC, CFP®, AEP®, MSFS is the President of Life resource Planners of the Treasure Coast (a division of  the Estate Planning Advisors) , a firm specializing in Retiree Healthcare and Retirement Income issues is located in Vero Beach, Florida. He can be reached @ 772-567-7970 x102 or a


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