Financially Secure?

Retirees: Do you feel financially secure? The Society of Actuaries, LIMRA, and the International Foundation for Retirement Education posed that question to retirees and reported the findings in aseries of reports entitled, “Will Retirement Assets Last a Lifetime?”
 
Back in 2008, before the market crash, 80% thought that they were as secure as or more secure than when they first retired. The next year, after the markets had their little 50%-plus “correction,” that sentiment dropped a bit. In 2009, only 51% thought that they were as or more secure than when they retired. Strangely enough, by 2010 the numbers were back up to 72%.
 
The key to understanding this sentiment is to realize the retirees were asked if they thought they were as secure or more secure. Whether they were or were not was not part of the question. So let’s examine that.
 
First, an observation. That the stock market has crashes, corrections, or bear markets shouldn’t come as a surprise to my readers. All this has happened and will continue to happen, so this should be taken into consideration when thinking about a secure retirement.
 
The surveyed retirees’ thoughts about their financial security changed. Their actual financial security did not. Some thought they were secure and found out they were not. Others were financially secure, although for a time they did not think so.
 
Recently I gave a few presentations to workers at a local company. The subject was their 401(k) plan, but I also delved into some retirement planning misperceptions. One thing I noted was that the most common way someone determines if they have enough money for retirement—if they feel financially secure—is guessing.
 
If your basis for determining whether or not you can afford to retire is guessing, it should be no surprise that when the market hiccups, and especially when the market nose-dives, you might be a bit unsure of your guess.
 
You deserve better.
 
Now you don’t have to hire an expensive (or at least not cheap) financial planner like myself. You live in the wondrous age of the worldwide web. On it there are thousands of calculators, worksheets, courses, and explanations to help you determine whether or not you are at, or heading toward, reasonable financial security when you are no longer getting a paycheck.
 
Sure, each calculator makes different assumptions, requests different inputs, and comes up with different answers. But you’ll get a much clearer picture of where you are than by guessing. By getting help or taking control of your own research, you’ll be in a position of knowledge. Add to that a basic study of the markets and economics and you’ll gain quite a bit of confidence.
 
That way your thoughts about your financial security will be based on information and facts, not just your gut feelings.

This article was published under the title "Gut feeling not enough to retire on: Do some research" in the WichitaFalls Times Record Newson July 22, 2012.