To be financially solvent, an individual must have the ability to properly attend to all financial obligations. Unfortunately, current statistics of those close to retirement are sobering. A failure to plan has put many that are at that magical age in a financial crunch that will be very hard to overcome. This stressful situation could have been avoided in most cases, and if a retirement plan had been put in place and followed.
A sound retirement plan will look at all aspects of one’s life, taking into consideration the possible life changing scenarios. Looking back 20 years, when a person retired that was the end of their working life. Either a company pension plan or Social Security benefits were sufficient to meet all financial obligations. Today, the retirement landscape could not be more different.
Quality of life is the mantra of those in retirement or nearing that time of their lives. Today’s retiree in many cases is going to live longer than the previous generation. Those 70 year olds are the new 60 year olds. The 60’s are the new 50’s and so on. Nowadays, retirees are not allowing dust to collect under their feet. Not ones to sit back and watch life pass by, they are traveling, starting a business, going back to school, volunteering, or even working part time to stay active. As a result the money saved has to last longer, and even increase in value to match the cost of living as it continues in an upward climb.
Those moving towards retirement have to take into consideration the potential reduction in Social Security benefits. Today, when planning for financial solvency, the benefits promised for years should be but a small part of the overall plan. This is due to fewer workers paying into the system as the recipients live longer, the current state of the national economy, the unwillingness of politicians from both sides of the aisle to work together in salvaging what is currently in place, and the realization the “lockbox” paid into for years is nothing but IOU’s. This is a stark reality that cannot be ignored when creating a plan for retirement.
The now famous words, “But we have to pass the bill so that you can find out what is in it…” creates a void when planning for retirement. Nancy Pelosi’s statement in regards to the Affordable Health Care Act could not have been more accurate. As 2012 gives way to the New Year, planners are guessing how this new law will affect them long term. The idea of free health care goes along with the statement, “There is no such thing as a free lunch.” Without an accurate determination of what the out-of-pocket cost will be, financial solvency becomes all the more critical as the retirement clock ticks.
Certainly, the challenge is creating a workable plan that is flexible, yet keeps the goal in sight. This can be a daunting task due to the ever changing financial markets. Unless there is a willingness to take on this chore, the time has come to hire a financial planner.