Planning for Retirement

Jul 2020


I saw a recent report by the Consumer Financial Protection Bureau (CFPB) regarding retirement. Not surprisingly, the results were troubling. According to the CFPB, nearly half of Americans who retire cannot maintain their lifestyle five years after retirement. In addition, the report found that two-thirds of people who retire earlier than normal retirement age also do not have the ability to maintain their standard of living for more than five years. Think about it; if someone retires at normal age of 65, according to the report, they have a 50/50 chance of not being able to maintain their standard of living past 70. In the old days once you hit 70 you were considered old and your lifestyle declined thus, the need for money was not as great. However, fast forward to today and 70 is no longer considered old. In fact, many people at 70 maintain an active lifestyle.

As far as I’m concerned, the main reason people are running into problems is because they did not plan properly for their retirement. When I plan for someone’s retirement, I assume they will need a rising income throughout their lifetime; and if someone’s retiring at normal retirement age, I plan for a 25 to 30-year retirement. If someone does not have the assets to last for that length of time, I would prefer to have someone delay their retirement for a few years as opposed to having them have to reduce their lifestyle five years into retirement. In addition, sometimes I recommend that someone get a part-time job when they retire, in order to supplement their income. I never want a client to retire, no matter the circumstances, and then deal with problems when they occur. If a client were to take this course of action, they would find that when problems arise they are not left with any good options, which is never something I’d want to happen. To be old and poor in America is not a very good position to be in.

If you don’t want to be old and poor, you need to properly plan for your retirement. One aspect of this is to know what it costs you to live a month. I imagine one of the reasons many people fail in retirement is that they never truly know what it costs them to live. If you want to have a successful retirement, you need to spend some time to see what your cost of living is. Not what you think it is, but rather what it actually is. I’ve been in this business for over 35 years and find that almost always, people underestimate what it costs them to live. It is only when they start taking pencil to paper and writing things down that they truly get a feeling of what it costs them to live. If you’re thinking of retiring over the next five years, the time is now to calculate your cost of living. In addition, you should calculate your cost of living at least a couple times a year. By calculating it throughout the year and starting at least a few years before your retirement, not only will you know what it costs you to live, but you’ll also know your personal inflation rate and that is important.

One last note, for those of you who are retired and in that group of Americans who are going to have to cut back on their lifestyle, my advice is to start looking for a part-time job. Even in this crazy world that we live in, there are many part-time jobs seniors can do, including many jobs that you can do from home. The key is not to wait until the last second when you may have no options. The sooner you tackle the problem, the easier the problem will be to handle.

Good luck!


Rick is a fee-only financial advisor.  If you would like Rick to respond to your questions, please email Rick at