Money Learning Checklist 5 – Retirement Planning

money management



Planning For Retirement

“I have to work after I die to pay for the funeral.”  I overheard this comment from someone that looked like time was not on his side.

What’s happening?  How are people stretched so thin that they feel they can’t even afford to die? I know, salary growth issues are depressing and wealth inequality is making headlines on an almost daily basis, however, we still live in a country where jobs and opportunities are alive and well.

For the people living paycheck to paycheck, there’s a need to closely examine why that is.  If incoming money doesn’t cover all living expenses, it’s time to make a change.  That means moving where income meets or exceeds the cost of living or an increase in income sources is needed.   Translation: better job skills in the form of education or training.

It’s a number game, people.  One article I read drives the point home in a simplistic example.  The article explained how to accumulate wealth while earning the minimum wage.  Wealth and minimum wage are usually not in the same sentence, but the article noted the logistics on a very simple level.  The magic is in living where a minimum wage salary allows for leftover money to save each month.  For someone earning the minimum wage, they need to live in an area where their basic necessities are affordable.  Housing must be inexpensive, along with transportation and property taxes.  A minimum wage salary would not afford someone a lifestyle in a fancy suburb the same that a $100,000/year salary earner could not afford to live in Beverly Hills.

 financial behavior

Income Sources

On the retirement scale, the major event is having income exceed basic living expenses.

Each person’s resources must be accounted for and compared to the cost of living that one anticipates.  The three legs of the retirement easel are pension, 401(k)/IRAs, and savings.  If a pension is not in the cards, the other two categories must suffice.

In The Big Retirement Risk, author Erin Botsford observes that wealth in the form of assets may not pay the bills.  In other words, collectibles and other valuable assets will not pay for your monthly utilities, unless they provide regular dividends or interest.


saving, budgeting, financial-freedom

Start Saving ASAP

Taking advantage of your employer’s 401(k) plan is a great way to put money away and reduce your current taxable income.  Make sure to meet the matched amount and don’t, I repeat, don’t withdraw the amount if you leave the job.  Roll it into an IRA.

Put aside as much as you can and invest it.

Preparing for retirement

See the attached Retirement Plan Excel file, courtesy of The Ultimate Financial Plan.

In the absence of a pension, consider an annuity to provide a guaranteed monthly income.

Decide where you want to live and determine the cost of living.

Check the website for your anticipated monthly Social Security payment.

Other suggestions: start a bond ladder that will provide a constant wheel of interest income.

Retirement Planning
Tasks Plan income sources
Social Security
Personal savings
Annuity income
Choose a place to live
Estimate income
Start a bond ladder
Invest in an annuity
Books/Magazines The Big Retirement Risk by Erin Botsford
Websites to follow
Online tools
Attachments Retirement Plan

Related posts:

Money Learning Checklist 1         Earning/Saving

Money Learning Checklist 2         Spending

Money Learning Checklist 3         Credit

Money Learning Checklist 4         IRAs






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