1. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    There are two issues involved in determining the likelihood of running out of money. The first is the amount of money you have accumulated to help provide retirement income and the second is the rate at which you spend that money. The return on the accumulation is important however without sufficient capital and a reasonable rate of withdrawal your retirement nest egg can be exhausted at some point.

    Retirement could last a very long time. Some will be retired longer than the period of time that they work. With improving health and medical treatment for diseases that have shortened the lives of those before us, you could be looking at a retirement of more than thirty years.

    Retirement may start unexpectedly. Waiting to start accumulating money for retirement can be hazardous. Almost forty percent of retirees report that there retirement started because of circumstances beyond their control.

    Losing a job after age 50 could trigger retirement as could the disability of a spouse or parent. Moving capital from your current income stream is critical to develop a retirement fund. As crucial as returns can be, unless there is a movement of capital there isn’t anything for those results to work with. If you are employed you should certainly understand your employer’s pension plan if one is offered. Under normal circumstances the company pension plan will provide the greatest opportunity to shift capital into a retirement fund.

    If you are the employer there are some opportunities for you to provide for your retirement. Many of these are complicated and require expert assistance. The bottom line is that you do have opportunities.

    Individuals can also establish Individual Retirement Accounts (IRA.) This also applies to spouses that are not gainfully employed. The contribution is limited but if started early enough can make a significant contribution to the movement of capital into your retirement fund.

    You might have heard of a Roth IRA and that too can become an important part of your retirement fund but it has different rules and you should consult with a tax consultant and a Retirement Income professional about that.

    The second half of the issue is the way that money is withdrawn from your retirement account. This whole subject is really complex and involves a lot of decisions but the basic thing is to understand the need for a budget. Without a budget you cannot set a withdrawal rate and you cannot know how long your retirement fund will last. Most Americans resist budgeting but it is something that can be started easily and can be started even today.

    While you might not be retired you can start to record your expenses. The longer you do this the better handle you will have on your spending. The more detail you use in your record keeping the more your budget projections will increase in accuracy.

    There are assets that most people do not consider as they come into retirement. The first is their ability to work. If there is something that you enjoy and are good at you should prepare to move into that activity when you retire and with some planning that can be an income producing activity. This can be anything from consulting to a hobby that you love and from which you are able to earn money. Some people write some take photographs; others sell hand made products at trade fairs. These types of activities can enhance your retirement fund by reducing the need for immediate income.

    There are, of course many other issues to consider such as housing, long term care and legacy goals but if you can get these two principles started you will be well on your way to providing a satisfactory and predictable retirement.
    Answered on January 2, 2015
  2. 21750 POINTS
    Jim Winkler
    CEO/Owner, Winkler Financial Group, Houston, Texas
    That is the million dollar question for sure! You are definitely not the only one asking that question, or losing sleep worrying about it, I promise you. There are a few ways that you may want to consider. The easiest is to invest in some annuity products, so that you can receive an income for your entire life. Wise timing for taking your Social Security benefits can help also - the later you take them, the higher the benefit amount. Investing in an IRA, like a Roth, can also help provide a source of income - Roth's are good, because you aren't required to start withdrawals from them, so you can let them grow for as long as you can before tapping into them. Start investing and saving early; reduce whatever debt that you will be heading into retirement with; and have a solid idea of what retirement looks like to you, so you know how much you will need to have put away to make that retirement vision a reality. I hope that helps, please feel free to contact me if you need more help, okay? Thanks for asking!
    Answered on January 7, 2015
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