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Julie Jason: Retirement numbers can add up to more than hopes, miracles

This post was originally published on this site

Sometimes it’s nice to do something on the spur of the moment and leave structure and planning behind. Spontaneity is a good trait to have in your life— but not when it comes to funding your retirement years.

That’s one of the conclusions reached by the Franklin Templeton RISE (Retirement Income Strategies and Expectations) Survey ( of 2,004 adults. The survey, in its 10th year, “explores attitudes and concerns about preparing for and living in retirement.” Franklin Templeton is a global investment firm.

One section of the survey dealt with those who were retired and their plans for how they would spend their nest eggs. A third of those questioned said, “I’m spending what I need each year and hoping it will last.” That’s definitely living in the moment.

Another 41% said they were trying to limit their spending “to sources of income and not to dip into … savings.” A much better approach.

Pre-retirees (ages 55 to 64) expressed concern about their futures, with 58% saying they were behind on their saving for retirement. Sixty-three percent did not have a strategy for generating income for 30 years — the possible length of their retirement.

When retirees were asked about what they would have done differently, 48% admitted they should have saved more.

Sooner or later, hopefully, you will be able to retire secure in the knowledge that you have saved enough to maintain your lifestyle for the rest of your life — and perhaps to leave a legacy for children and/or charity.

As regular readers can guess, I’m a fan of knowing your numbers. Specifically, your household cash flow — dollars earned vs. dollars spent. The difference between the two numbers (inflow vs. outflow) defines the retirement income gap.

More specifically, how much money is inflow from “guaranteed” sources (Social Security and pensions) versus what money you have going out. Naturally, the ideal situation has your income exceeding your outflow, after taxes and inflation. (Keep in mind that even if you are blessed to have a pension, it may not increase with inflation.)

When it comes to analyzing your spending, divide expenses into essentials (mortgage, utilities, etc.) and nonessentials (vacations, gifts, etc.), with the idea that you control when to spend for discretionary items — you can delay vacations until you have funds to pay for them, for instance.

Next, you need to make sure you have a solid understanding of your investments. Will your investments (or annuities) create enough cash flow to fill the retirement income gap?

If not, you’ll need the answers to two questions:

1) “How much capital do I need to liquidate to cover the retirement income gap each year, after inflation and taxes?”

2) “How long will my capital last?”

Your financial adviser will address those questions with you. To do some of your own calculations, you can use a free retirement calculator ( provided by FINRA, the Financial Industry Regulatory Authority, which regulates the brokerage industry. By doing these calculations and running a number of scenarios, you can get a better understanding of your current financial preparation for retirement.

The point is to be prepared for the decisions that need to be made, including saving and investing more money now (if possible).

A 2021 Global Retirement Index survey of 8,550 investors by Natixis Investment Managers ( found that 40% admitted that “it will take a miracle” to retire securely.

“Hoping it will last.” Waiting for a “miracle.”

A better approach? Know your numbers. Do some planning.

On another note, the deadline is fast approaching to apply for this year’s 401(k) Champion(R) Award, which shines a light on 401(k) participants who make good 401(k) decisions. If you want to compete for the award, you have until Oct. 1 to fill out an application at