One of the unfortunate side effects of spending a little too much time watching some great college basketball recently has been the overexposure to the accompanying commercials that I suppose are required to finance this annual spectacle we refer to as March Madness. Perhaps it’s an occupational hazard that I perceive a high percentage of these advertisements to be related to financial planning – and more specifically planning for retirement. When you consider that over 10,000 people are turning 65 everyday for the next 19 years1, I guess this should not come as a surprise.
I believe that it is virtually impossible to pass along any really meaningful information in the span of a 30 second commercial, but anything that gets someone to at least think about the topic can’t be all bad I guess. However, it is also my belief that these commercials do an excellent job of highlighting the problem, while offering little or nothing that sheds any light on a solution.
One of these commercials in particular caught my attention over the weekend however and I couldn’t resist the opportunity to try to expound on its message a little. This particular commercial is for an insurance company and it features a woman who is apparently on the eve of retirement. It features everyday images of her life, some of which seem to depict her contemplating this next phase while the voice over represents her thoughts on the subject. To paraphrase, one of her comments is something along the lines of “I don’t know if I have enough money to retire, but whatever I’ve got, it’s got to last.” No truer words were ever spoken...a perfect understatement. You might guess correctly that this particular insurance company was promoting the guaranteed income aspects of their annuity products – though this is not said specifically. However, what they’ve really done is to put a spotlight on the real problem, which is that too many people reach this point without having done any planning and more importantly not knowing if what they have done will even come close to providing the lifestyle they want.
Should we take any comfort in merely knowing that when we reach the eve of retirement, there are products we can buy that will “ration” out what little savings we have accumulated in the form of guaranteed income that will probably not support the lifestyle to which we’ve been accustomed? Now don’t get me wrong, I am not “anti-annuity”. Used appropriately, annuities can be an effective part of many people’s plans. But do we want to find ourselves with this as our only option? Given the choice, would we like to do better? Of course we would.
So what can we do about it? Well, unfortunately if you find yourself in a similar position as the subject of this commercial, the answer is not much. However, if you still have some time, I suggest you take two very important steps...the two most important steps you’ll take as part of developing a real financial plan.
The first step is that you must first develop your vision of financial independence. This step is personal and it could be an emotional exercise. This is not a number you come up with, but rather a picture you paint. How do you see yourself in retirement? How are you spending your time? Who are you spending it with? What I am describing is the lifestyle you want to have or maintain when you transition from going to work every day to not having to.
The second step you must take before actually formulating a plan is to determine the amount of income required each month or year to cover the expenses related to supporting your vision. This step is not personal or emotional, it is financial. It means assigning a value to the monthly or annual cost of a certain lifestyle. Then and only then, a plan can developed from these, evaluating current programs and resources in terms of their projected value and then developing strategies to fill gaps or better utilize available resources.
Taking these two steps won’t guarantee your success, nor will not taking them necessarily result in failure. But when it comes to planning your financial future, if you’re not willing to take these two steps you might well be wasting your time. Without taking these steps, you’ll have no way of knowing if you’re doing the right things or doing enough of them. You’ll end up with the same plan as the woman in the commercial.
Why would you do that? Why would you allow that to happen to you when you know there is a better way? Do yourself and your family a big favor and take the time to nail down these first steps. You’ll be amazed how the subsequent planning and strategy pieces will fall into place having taken these steps. You will also learn a great deal about yourself and what’s really important to you as well.
1Newsmax.com: 10,000 Boomers to Retire Each Day for 19 Years
http://www.newsmax.com/Newsfront/RetirementCrisis/2010/12/27/id/381191
Annuities are long-term, tax-deferred investment vehicles designed for retirement purposes. Guarantees are based on claims paying ability of the issuer. Withdrawals made prior to age 59½ are subject to 10% IRS penalty tax and surrender charges may apply. Optional features available may involve additional fees.
I believe that it is virtually impossible to pass along any really meaningful information in the span of a 30 second commercial, but anything that gets someone to at least think about the topic can’t be all bad I guess. However, it is also my belief that these commercials do an excellent job of highlighting the problem, while offering little or nothing that sheds any light on a solution.
One of these commercials in particular caught my attention over the weekend however and I couldn’t resist the opportunity to try to expound on its message a little. This particular commercial is for an insurance company and it features a woman who is apparently on the eve of retirement. It features everyday images of her life, some of which seem to depict her contemplating this next phase while the voice over represents her thoughts on the subject. To paraphrase, one of her comments is something along the lines of “I don’t know if I have enough money to retire, but whatever I’ve got, it’s got to last.” No truer words were ever spoken...a perfect understatement. You might guess correctly that this particular insurance company was promoting the guaranteed income aspects of their annuity products – though this is not said specifically. However, what they’ve really done is to put a spotlight on the real problem, which is that too many people reach this point without having done any planning and more importantly not knowing if what they have done will even come close to providing the lifestyle they want.
Should we take any comfort in merely knowing that when we reach the eve of retirement, there are products we can buy that will “ration” out what little savings we have accumulated in the form of guaranteed income that will probably not support the lifestyle to which we’ve been accustomed? Now don’t get me wrong, I am not “anti-annuity”. Used appropriately, annuities can be an effective part of many people’s plans. But do we want to find ourselves with this as our only option? Given the choice, would we like to do better? Of course we would.
So what can we do about it? Well, unfortunately if you find yourself in a similar position as the subject of this commercial, the answer is not much. However, if you still have some time, I suggest you take two very important steps...the two most important steps you’ll take as part of developing a real financial plan.
The first step is that you must first develop your vision of financial independence. This step is personal and it could be an emotional exercise. This is not a number you come up with, but rather a picture you paint. How do you see yourself in retirement? How are you spending your time? Who are you spending it with? What I am describing is the lifestyle you want to have or maintain when you transition from going to work every day to not having to.
The second step you must take before actually formulating a plan is to determine the amount of income required each month or year to cover the expenses related to supporting your vision. This step is not personal or emotional, it is financial. It means assigning a value to the monthly or annual cost of a certain lifestyle. Then and only then, a plan can developed from these, evaluating current programs and resources in terms of their projected value and then developing strategies to fill gaps or better utilize available resources.
Taking these two steps won’t guarantee your success, nor will not taking them necessarily result in failure. But when it comes to planning your financial future, if you’re not willing to take these two steps you might well be wasting your time. Without taking these steps, you’ll have no way of knowing if you’re doing the right things or doing enough of them. You’ll end up with the same plan as the woman in the commercial.
Why would you do that? Why would you allow that to happen to you when you know there is a better way? Do yourself and your family a big favor and take the time to nail down these first steps. You’ll be amazed how the subsequent planning and strategy pieces will fall into place having taken these steps. You will also learn a great deal about yourself and what’s really important to you as well.
1Newsmax.com: 10,000 Boomers to Retire Each Day for 19 Years
http://www.newsmax.com/Newsfront/RetirementCrisis/2010/12/27/id/381191
Annuities are long-term, tax-deferred investment vehicles designed for retirement purposes. Guarantees are based on claims paying ability of the issuer. Withdrawals made prior to age 59½ are subject to 10% IRS penalty tax and surrender charges may apply. Optional features available may involve additional fees.
E-mail Kimber with any thoughts you may have regarding this post.