Elder Q&A: Retirement planning should start early

/Home/c. Financial Information for Retirement/Retirement Financial Planning

Elder Q&A: Retirement planning should start early
April 10, 2009
Rosanne DiStefano
EagleTribune.com

My husband and I both worked hard all our lives and provided the best life we could for our children. After we retired, we discovered that we were going to have to live very frugally in order to survive. We were not prepared for the sudden drop in income and had not saved enough to compensate for the loss of two paychecks. We are trying to encourage our adult children to make wiser choices than we did, but they seem to think they have plenty of time before they need to consider planning for retirement. How can we get them to look at this as a priority and not put it off until they are older?

Planning for retirement should start long before the idea is even a remote possibility. Workers in their 20s and 30 may find it difficult to focus on retirement issues when they are just starting a career and family. The "smart" young professionals realize that it is never too early to begin thinking and planning for that day, even when it is far in the future. Individuals who put a lot of thought into the process will be much better prepared financially and emotionally when that day finally does arrive.

Life expectancy has steadily increased over the last several decades. It is reasonable to expect some individuals will live 20 to 30 years after retirement. That is a long time to stretch out meager savings if someone has not planned wisely. Years ago, the majority or retired workers relied on their Social Security benefit as their only means of income. How many of your son's friends and colleagues could imagine existing, no less continuing their current lifestyle, on the estimated amount they would receive?

Every year, about three months before a worker's birthday, the Social Security Administration sends out an updated earnings record with potential benefits. This information provides financial figures for people to use in their overall long term financial planning. Social Security is not intended to be the sole source of a worker's retirement income. Whether a person is considering working part-time, starting a new career or taking it easy when entering the first phase of retirement, it is important to have a good idea of how much money will be available to them.

Social Security should be viewed in conjunction with pensions, savings and investments. Diversification is the key word along with early planning. Individuals and families should reflect on their values and the lifestyle they would like to be able to maintain in the future to assist them in determining how much they will actually need in retirement income. The Social Security Web site www.ssa.gov has a Benefit Planner for use in setting financial goals and gathering additional information.

© Copyright Eagle Tribune Publishing Company. All rights reserved.