Coming Up Short for Retirement

This is for the people headed towards retirement and coming up short in their savings. According to a 2016 survey  , from GoBankingRates, 23% of Americans have saved less than $10,000 and a third have saved nothing for retirement.

Another survey, by TIAA-CREF, says the number one regret of people approaching retirement is that they wished they had started saving earlier and they wished they had saved more. More than, 52%, of people approaching retirement (age 55-64) say they wish they had started saving for the future sooner, according to the TIAA-CREF survey.

So, for those who have not saved enough, it’s time to roll up your sleeves and attack this problem head on. It’s never too late to start, but that doesn’t mean there may not be consequences – like lowering your expectations for your lifestyle in retirement.

“Hopefully you recognize the seriousness of what’s going on early enough so you don’t make this mistake,” says Kirk Cassidy, president of Senior Planning Advisors in Farmington Hills, Mich. “There are no do-overs in retirement. There is no ‘I’m 80 years old, now I’m going back to work.’

“I think there’s a candid conversation around what they can effectively adjust their quality of life to be able to maintain some sense of independence and make their money last,” he says.

Brett King, senior vice president at Elite Financial Services in Tampa, Fla. says if you get to him late, or close to retirement age, there may not be much that you can do.

“They can do one or two things,” he says. “They can delay their expected retirement or alter the type of retirement that they expecting. Those may be your only two answers.

“If they say I am retiring in a year, I run (the numbers) for everything they have. And I could end up having to come back to them and say you are really not in a positon to have the type of retirement you want. They could have to continue working, longer than expected, or they could have to ramp down their expectations of what their retirement is going to be like if they don’t have much time.

“If I get them five or 10 years ahead of time, then we have time to potentially increase their savings and decrease debt,” he says.

David Blackston, of the Blackston Financial Advisory Group, The Villages, Fla., says he is starting to notice a disturbing trend.

“One of the things I am starting to notice is even retirees are coming up short,” he says. “Here is one of the main reasons. They don’t know what they are spending. They have not taken inventory of their monthly spending. When someone is brand new to me I give them a sheet. I say take out checkbook and let me know everything you spend. I’ve had people come back and say, ”My God I didn’t know I was spending this much.’ People have got to understand what their budget is. What can they stay within? If people would do that, it would help tremendously.

“Today, one of biggest mistakes people make is being in debt and trying to retire,” says Blackston. “You will be surprised by how many people have five, six, or seven credit cards. Take your credit cards. Write them out. What do I owe. What are payments, what is interest. If you  have a card that allows cash advance, pay off higher rates if not, work on higher rates first.

You then have to take it further.

“Are there things I can cut out?” he asks. “How many times do I eat out. I go to ATM and take out $200. Where does that go?  When people are coming up short , nine times out of ten, they don’t know what they are spending. You need to know what you’re spending. When it gets to retirement, it wouldn’t be less, it will be more. In central Florida people are out every night. Their expenses go up.

“You’ve got to do this before retire,” Blackston offers as his general advice.

Cassidy says the conversation starts with the client acknowledging that they are short. “Now, let’s design a plan and see what kind of retirement income strategy we can create.

“There is no secret sauce,” he says.

Your options, according to Cassidy:

  1. More effectively manage our taxes. One of the greatest ways to potentially increase the performance of your assets in retirement without more risk is by reducing taxes. I think of strategies like reverse mortgages. It would not be my first choice, but it could be a possibility for some to consider as an option. If you have fallen short and your home is paid for, we can take out a reverse mortgage, create income stream and stay in my house for the rest of my life.

Look at any opportunity to be more efficient with tax planning and talk about it with your tax advisor and/or attorney. There are many strategies you can utilize, but it goes back to planning. Make sure what you take what you do have from right places at right ages.

  1. Readjust asset allocation and income to more appropriately reflect where they are, to make sure they don’t outlive their money. They may have to downsize their homes.
  1. Part-time work. That’s not always a designed choice.

“Accept the reality,” Cassidy says. “Recognize they are not invincible any more. They are getting older. And you can’t afford to make any mistakes and take any more risks. Identify what is the lifestyle you can live with what you have, and adjust your lifestyle accordingly.”



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