Help for Future Retirees During an Economic Devastation

Retiring Well in a COVID World

COVID threw a wrench in everyone’s retirement planning, even those who were well prepared. Most Americans weren’t well prepared, which only makes things worse. The conspiracy theory of Social Security not being there for you is true. The average Social Security recipient gets $1503 per month in 2020. That’s less than $20,000 for the year — hardly enough to rely on for a demographic whose costs of living normally rise. What’s more, many experts believe the cost of living adjustment (COLA) for 2021 Social Security benefits will be 0.

The average American couple between 56-61 and no retirement accounts held $17,000 in savings. Despite this, it is also true that 42% of Americans aren’t saving 1 dollar for retirement. 48% have less than $10,000, and 50% of Baby Boomers STILL somehow believe that Social Security will take care of their retirement. Here’s an especially telling pair of stats — 40% of Americans spend time strategizing about retirement, and 60% of Americans tell surveyors that they lose sleep thinking about it. Funny how well these numbers match up.

Millennials face the additional burden of starting not from 0, but less than 0. Student loan debt is crushing the Baby Boomer kids, who report that the cost of living is the number 1 hurdle to retirement saving. If you are a Millennial, your average household makes $55,200 and you have a debt load of $30,580. This may seem like Millennials are ahead until you consider this group is coming into peak home buying and child rearing age. All of that surplus (which isn’t much — kids cost an average of $12,978.33 per year to raise) goes towards keeping the home and raising the children.

Doing What You Have to Do

I do my best to help you cut through the noise of retirement “advice.” In my reading, I have seen some incredibly outlandish solutions to the retirement problem.

• Extending your work life: This is certainly an option if you actually like your profession. The jury’s out on whether this is true.

   

• Liquidating assets:I’m old enough to remember the huge push towards reverse mortgages a generation ago. It didn’t turn out well. Financial pros do not agree on much, but most will tell you that liquidating assets for anything other than capital transfer into a better asset is a bad idea.
• Get promoted: I actually see this “advice” more than you’d think. As if asking someone for a raise and putting your future in their hands is that easy.
• Delay Social Security: This may be fine if you are in good health, but what if you aren’t? That’s the benefit of writing about retirement — you can create very specific hypotheticals to solve.
• Diversification: Diversification is actually the worst idea of all if you don’t have enough money to retire. Warren Buffett himself said “Diversification is a protection against ignorance…[it] makes very little sense for those who know what they’re doing.” Diversification protects wealth. Consolidation creates it. Don’t believe conventional wisdom just because it’s often repeated.

No More Digging in the Dirt for Solutions

Maximizing your retirement income comes from a mix of solutions — budgeting, cash flow analysis, estate and tax planning and getting the most out of that shrinking Social Security check. If you have assets and annuities, you are ahead of the game. If you don’t, you can still have a great retirement. Financial planning means planning around what you have, not what you should have had because you should have known something you didn’t know 20 years ago.

Planning for retirement is also about setting goals. You may want to stop working, but your investments can’t. blooom gives you the ability to capture the hidden value in your nest egg, creating your lifestyle while keeping your savings in pace with inflation. There is no reason you have to reduce the value of your portfolio in order to live well.

Get help from blooom, securely link your existing 401k or IRA and let the blooom bots do the research. If COVID tells us anything, it is that the market can take some unexpected twists and turns. You will need professional guidance because we are not through the storm just yet. With discipline and perspective, you can reach your financial goals and live the life that you want.