The Tortoise and the Chair…
With a title like this, you would think this is going to be some cute, wholesome story with a moral. Wrong, it’s much closer to a tragedy. Imagine yourself working hard all your life, day in and day out, for years on end. You give 8-10 hours of your day to a job that you may or may not enjoy, and you “do your time”, taking only the allotted amount of vacations and putting your heart and soul into your daily labor. Now imagine that you finally reach the age of retirement, and with a sigh and a well-deserved groan, you sink into your easy chair to look at what you have accumulated: the “big number” that you have to live off of for the rest of your days.
And you realize it’s not enough.
Various sources show that over half of all the “baby boomers” haven’t saved enough to retire on. That means every day someone else has this shocking realization and gets the sick feeling that comes with it. So how can you protect yourself and avoid that experience? Or, better yet, what can you do so that when it’s your turn to “hang up the hammer” you’re looking at a number that’s bigger than you ever imagined?
The chair analogy:
The boomers were presented with the “3-legged chair” method for retirement, which means that when they retire, they should have three solid legs to stand on: social security, home equity, and investing through their workplace (401(k), SEP, SIMPLE, etc.). Here’s the problem. Removing one leg of a three-legged stool causes the whole thing to come crashing down. In 2008 when housing prices plummeted, people saw their home equity disappear, and thousands of retirement “stools” dropped their owners onto the floor. As I said before, many boomers are realizing that their “work investing” leg is a little short, and therefore their stools are perched awkwardly, leaning dangerously downwards. On top of that, the Social Security leg is constantly wobbling, with new rumors of a failing system every day.
The Fix: a 4th leg. An extra leg means any leg can fail entirely and the occupant can still sit comfortably by leaning towards the other three. Here are the two proposed 4th legs:
Work Longer- that’s right, cannibalize your retirement years and extend your career into your late 60’s, maybe beyond.
Individual Investing- Start an account yourself, the earlier the better. This is where the tortoise comes in. Start small, and just be steady. Little by little, month after month, contribute to a retirement account (preferably something tax-advantaged like a Roth IRA). Increase your contributions when you can, and decrease them if you have to when life takes a swing.
What sounds better to you? Think ahead so you can build a throne, not a stool.
Different perspective? Questions? Thoughts? Opinions?
brett@centenialsec.com, or use the “Contact” tab above.
