by Jac M. Arbour CFP®, ChFC®
President, J.M. Arbour Wealth Management
What is your largest concern about retirement? According to the Wall Street Journal, the number one fear/concern of a retiree is outliving his or her money (the second is requiring Long Term Care due to chronic illness). I have to admit, I understand both of these concerns.
According to most sources available to us today, the average amount of money a retiree has in investable assets the day he or she walks into retirement, is approximately $126,000. It is also estimated that someone retiring today will live an average of twenty five years in retirement. Couple these stats with the uncertainty one can experience in the form of market returns and it is no wonder why people are concerned about how long their money will last. So, what do you do?
In my opinion, the first thing you need to do is run the numbers and do the math. We must run our households like a business and know exactly how much is coming in and how much is going out each month. Second, take a hard look at upcoming capital expenditures and any potential changes in monthly cash flow. The idea here is to derive an accurate number as to how much money will be needed from investable assets in order to pay the bills. The smaller the amount needed, the longer your money will most likely last.
Some people have the ability to tolerate market risk and can stomach some losses when they occur. The contrary is also true. Some households cannot afford to lose five or ten percent of their account balances, never mind thirty-eight percent (which the S&P500 lost in 2008) in a single year.
What is more important to you at this point in your life: Return on Investment or … Reliability of Income? Maybe, just maybe, it is a combination of the two.
Call your advisor and ask questions that directly address your concerns. Determine your probability of success with regard to how long your money should last based on factors such as its current investment allocation and your annual withdrawal rate. Determine which safeguards should be considered and most important, which should be implemented.
Here is what I promise: When you have a clear idea about where it is you are going, it is more likely you will reach that destination.
See you all next month.
Jac Arbour CFP®, ChFC®
Jac Arbour is the President of J.M. Arbour Wealth Management and can be reached at 207-248-6767.
nvestment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.
Responsible journalism is hard work!
It is also expensive!
If you enjoy reading The Town Line and the good news we bring you each week, would you consider a donation to help us continue the work we’re doing?
The Town Line is a 501(c)(3) nonprofit private foundation, and all donations are tax deductible under the Internal Revenue Service code.
To help, please visit our online donation page or mail a check payable to The Town Line, PO Box 89, South China, ME 04358. Your contribution is appreciated!
- THE MONEY MINUTE: Lions, tigers, and bull markets, oh my!
- THE MONEY MINUTE: The new American Dream
- THE MONEY MINUTE: Who will inherit your money?
- THE MONEY MINUTE: Want to make more money? Align with vibration of gratitude
- THE MONEY MINUTE: Do you work 9 – 5 for free?
- THE MONEY MINUTE – Your 401(k): How should you be invested?
- THE MONEY MINUTE: The truth about annuities
- FINANCIAL MATTER$: We don’t talk about money in this house!
- FINANCIAL MATTER$: The two most important days in a person’s life
- FINANCIAL MATTER$ – 401(k): When should you start?