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Chapter One
Yes, You Can Achieve Your Retirement Dreams
"Are Americans Saving 'Optimally' for Retirement?" (Journal of Political Economy, August 2006) by Scholz, Seshadri, and Khitatrakun. The authors conducted a rigorous analysis of the financial status of working-age Americans and concluded that over 80 percent of the households surveyed met or exceeded their wealth targets, and most of those who were below missed by a relatively small amount. The data for these conclusions came from 1992 and 1993, before the big increases in the stock market later in the 1990s and the boom in real estate prices, so the financial outlook for boomers may be even better.
Woulda, coulda, shoulda. If only I had started earlier. How often have you lamented not having begun to save early enough or making such incredibly naive investment decisions? Is there anyone, at any age, who hasn't felt the same, other than the occasional socially marginal savings zealot who thrives on self-deprivation (and ends up on the cover of one of the consumer financial magazines to make you feel even worse)? You need to get over dwelling on your past financial omissions before you can rationally plan for the future. You've moved on from other past indiscretions. So why is it that we can't get over past pecuniary shortcomings? Because, while we can completely get over most of what we've regretted in the past, we have to live the rest of our lives thinking that we'd be in better shape if we had developed sounder financial habits earlier. Such misgivings are present whether you're forty-two, fifty-two, or sixty. Either you can be despondent or you can take at least some solace from the realization that most—virtually all—baby boomers have the same misgivings. Thanks to the yeoman's efforts of the media and financial services industry, you are reminded of your lamentable state daily. Learn to tune them out.
The retirement planning two-step. Presumably, you purchased or were given this guide to get some ideas about achieving a better retirement. If so, you can do yourself a lot of good by reading these pages with a positive attitude. If you're suffering from the "woulda, coulda, shoulda" syndrome, imagine that today you're are at a fork in the road. You can continue on the same route as you have in the past:
1. I regret my past financial dereliction, so
2. I'm afraid to face my financial future.
Or, you could view your future as an opportunity, rather than a problem:
1. There's nothing I can do about the past, but
2. I'm ready to improve my financial future.
If you'll promise to take the positive fork in the road, I'll make the following promises as you read these pages:
A.You won't be chided for your past financial mistakes, but you will be shown how to avoid making those same mistakes in the future.
B. I won't depress you with stories of people who got rich quick using cockamamy get-rich-quick schemes, like llama farming, but I will show you how to achieve a great retirement, even a rich retirement.
C. You won't find a Holy Grail leading to financial nirvana, but you will be given sensible guidance on all of the important financial decisions you need to make between now and the time you retire.
D. You won't be given a bunch of dubious "can't lose" investment ideas, but you will at last find out how to invest very successfully under all economic and market conditions.
Whether you are two years or twenty-two years from retirement, you'll find ways to retire on your own terms. As you read the pages that follow, my goal is to have you say, time and again, "I can do that," because you can.
Belaboring the Obvious: The Keys to Achieving a Great Retirement
Before launching into the nitty-gritty, a brief review of the keys to achieving a great retirement is in order. Here they are:
1. Living beneath your means.
2. Investing your savings wisely.
3. Eliminating debt.
4. Preventing financial disruptions.
5. Staying active and maintaining your health.
They're pretty obvious, aren't they? But they're still difficult to implement and maintain.
It's all or nothing. One major impediment is the national mentality, perfected by the baby boomer generation, toward "all or nothing," which even affects our financial planning. "I'm ten years from retirement, but have twenty-five years left on my mortgage. I could pay it off in ten years by adding an extra $600 to my mortgage payment." The result is predictable. The $600 extra payment proves impossible to maintain, so it's back to making the regular payments a couple of months later. By that time, the well-intended home owner feels even more disheartened about his financial future. More realistic: He would have a better chance of success by gradually working up to the high extra-payment level, even if it took a couple of years to get there.
That old devil human nature. Human nature also impedes making improvements in our financial lives. It's a lot easier to spend money, and to justify our expenditures as essential, than it is to forgo some spending to save for a retirement that seems a long way off—or may be too imminent, in which case, why bother? Human nature also causes us to avoid contemplating risks to our own and our family's financial futures—unpleasant events such as job loss, disability, and death.
Success tip. Resist the temptation to avoid confronting the future and, when changes need to be made, make them gradually rather than in one fell swoop.This book is filled with guidance and checklists that will help you make some positive changes in your financial future as well as plan for a fulfilling retirement. But before delving in, here's an introduction to the problems—and opportunities—in grappling with the five aforementioned essential keys to achieving a great retirement.
The Boomer's Guide to a Great Retirement
Excerpted from Great Retirement: You Can Do It! by Jonathan D. Pond
All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.
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