The Long Haul Myth


Since the day you started saving for retirement you have been told, “You’re in it for the long haul.”  That’s a great strategy when you’re in your 20s, 30s, and even 40s because you don’t need to start withdrawing your retirement funds for many years.  You are accumulating assets for retirement and need to add, but not subtract funds. You have your 401k plan (403b, TSP, etc.) and every pay day your employer withholds some money to put into your retirement account.  (You always need to add at least enough for the match they offer) Now let me ask you, “Have you been saving your money for decades just so you can give it all away?” (Rhetorical – Of Course Not!) You saved so that you can enjoy those funds in retirement.  You’re asking yourself, “Did I save enough to enjoy the money for the rest of my life?” Today, go to the website of one of the big brokers. Try Fidelity, Vanguard or Schwab and run their retirement calculator.  Look at your results and read the disclosure statement.  They will all say that their plan has an 80% potential success rate.  Let’s illustrate it this way.  You have just boarded an airplane and I as your pilot make an announcement. “Welcome folks this is captain Richie and I wanted to let you know that there is an 80% chance that I will get you to your destination today.”  Are you still on the plane or did you run for the exit?  The problem with the big brokers is, that if their plan fails it’s when your too old to do anything about it.  It’s like my pilot announcement, but I did it at 30,000 feet in the air!  Where are you going to go?  There is a time for the long haul strategy and there is a time for guaranteed strategies.  Remember, your not working and you will not be adding to those retirement accounts.  You are transitioning from accumulating assets for retirement to consumption of those assets.  Some piece of the retirement plan needs to be guaranteed to provide for as long as you are blessed to live.  If your married, then your plan needs to provide for 2 people for the balance of both lifetimes.  The long haul strategy should retire the day that you do.

Important Questions to Address Today:

  1. How long before that final work day arrives?
  2. Your retirement budget needs monthly income. How much are you anticipating that is guaranteed for life?
  3. Can your current advisor provide the experience needed to build a plan that you will never worry about out living?

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