Show #380 Airing Sunday, 3/25/07
A long bomb thrown in the last seconds to win a football game is a great surprise. But an unplanned financial time bomb can blow apart your retirement plans. Here to help us defuse the bad bombs and throw us the good bombs that will reward us with a winning retirement game plan is our financial quarterback, Jim Lineweaver, founder of the Lineweaver Financial Group.
Question: What do you mean by a "retirement time bomb"?
Answer: No one wants to be surprised and find out retirement isn't what he or she expected. You need to be aware of the time bombs, and how they can blow up your retirement. We are going to talk about a couple of them today.
Question: The first "time bomb" to talk about is the Age Wave. What is that?
Answer: The Age Wave refers to the largest generation in American history-the baby boomers-aging and beginning to retire. Corporations, the government, and other institutions are looking at this wave and the impact it will have on society. You need to do the same thing. How does this Age Wave affect you and your plans?
The Age Wave has two components. CHART. From 1950 to 2002, the average retirement age in the United States has decreased from 76 to 65. Now look at what has happened to life expectancy over the same time period. Life expectancy has increased from under 72 to almost 84. You can expect on average to spend 20+ years in retirement. Are you prepared financially to do that? We as a society have not had to be prepared to face this issue. (Source- National Vital Statistics Report 2003)
The bad news? It is going to take a lot of financial resources to get your through retirement. The good news-and this is one of the issues employers and labor unions are grappling with-who is going to replace all of the retiring workers? There will probably be much greater opportunities for older workers to remain in or re-enter the work force.
According to life expectancy charts, Americans are living longer. How are you going to afford it? Is your previous employer going to be there to help you? Not with a traditional pension. They have seen this age wave coming, and have gotten out of the pension business.
Question: Let's take a closer look at the pension issue.
Answer: In 1950 there were 114,000 pension plans in the US. In 2004 that number had dropped to 29,000. And there is every indication that trend will continue at an accelerating rate. If you have a pension, consider yourself lucky. (Source Time Magazine January 4, 2005)
Question: So what can we do?
Answer: We are living longer, retiring earlier, and have no pension. Preparing a financial plan as soon as possible is so important. The sooner you put a plan in place the longer you will have time as you ally as opposed to your enemy.
Do you have a plan in place? Have you reviewed it recently? Do you need to make changes? Have things in the marketplace changed? For your retirement plan to work you had better review it on an annual basis.
Is your retirement plan a minefield, or have you cleared a pathway to a secure retirement? For more helpful tips, give Jim a call. The number is next.
