As Americans' life expectancy grows, so too do the demands on our retirement savings. Today's workers need to plan differently in order to ensure they'll have sufficient funds for a long and happy post-work life.
There is a very good chance you will live a lot longer than you think. One of the reasons is physicians are simply doing an absolutely terrific job at keeping us going and that’s a good thing.
I could rattle off a bunch of statistics about life expectancy, but today I think I’ll share a few personal stories about my own family. I know it's only anecdotal but I want to make a point.
I remember years ago my mom had heart disease. Her cardiologist called a family meeting. She was breaking the news to the family that she didn’t think my mom had much time left. Needless to say I was devastated. I was about to get married and the doctor didn’t think my mom would make it to the wedding. My wife tells me that stubbornness is an Alemian family trait, and my mom wanted to be at my wedding. Not only did my mom make it to the wedding, she lasted another 10 years and was active right up until and on the day she passed away.
Two weeks ago we celebrated my dad's 90th birthday. He’s got a pacemaker, he’s had bypass surgery, and both knees replaced. He still drives, plays poker one night a week, and plays bridge another night of the week. During the day, he serves with an all-volunteer group with the American Legion.
The group is called the Beaver County Special Unit. It’s an 18-member group of veterans who perform full military honors for free at the funeral of any veteran in the county whose family requests it. My dad is the one who plays Taps on the bugle. Here the really amazing part; my dad does about 250 of these military funerals a year. Sometimes he does as many as three in a single day.
I have an aunt — her name is Starrie Alemian – and she’s a survivor of the 1915 Armenian genocide. My aunt will be 106 years old next March. WOW!
The point is, saving for retirement needs to be taken more seriously than ever before because we really are living longer and more active lives filled with vitality. It also means that you have to be financially prepared for this. The old ways of just putting money in a 401(k), 403(b), or IRA and hoping for the best is not a plan that works. On average those plans run out of money in about 12 to 14 years.
To be on the safe side, you have to figure you’ll live about 30 years in retirement. The last thing you want is to run out of money at age 79 and then have your doctor tell you you’re going to live at least another 15 years. Instead of saving up a lump sum that the government will tax, (which is a surefire way to run out of money), you need to create a lifelong tax-free income stream that will fully support your lifestyle and last as long as you live. It’s time for you to take action now, because the longer you wait the less you’ll have, and if you wait too long it’ll be too late.
At the very minimum do this:
1. Determine how much you will need to live in retirement. Whatever it costs to live now, double that amount every 21 years. Then subtract any expenses that will eventually go away such as a paid off mortgage.
2. Put enough money into an indexed universal life insurance policy to produce a tax free income stream equal to the amount you’ll need for retirement.
3. Retire and enjoy a long and active life.
If you have questions send me an email to David@TheAlemianFile.com. Check out my website PhysiciansRetirementPlan.com. Follow me on Twitter, connect with me on LinkedIn, and absolutely make sure you come back here next week to Physicians Money Digest for another edition of The Alemian File.