Ok, we had a guy call in to our firm a few weeks ago inquiring about our services. One of my colleagues returned the call.

The guy started off asking my colleague why it was that I talk about Social Security. He said,

"Obviously she doesn't watch television or read anything of value, or she would know that Social Security will be gone in five to ten years."

He also said:

• Inflation doesn't matter to people like me because I own my house outright. Inflation is for young people.
• I just want someone to give me an investment scheme or strategy that gives me 6-7% conservatively.
• I don't need a plan. I'm successful. I own my house outright. And I have $1.2 million in the bank. Plus I got out of the market two years ago because I'm smart.

If it would have been me, I would have politely said he was not a good fit for our services and exited off the phone as quickly as possible. My colleague is a little more patient and asked the guy a few questions.

He found out he is 62, married, and they spend about $100,000 a year. There will be some healthcare expenses and taxes on top of that. As he believes Social Security won't be there his portfolio will need to produce all of the income he needs. Using some back-of-the-napkin numbers, With $1.2 million earning 6% and withdrawing a total of $120,000 a year, the money lasts about 15 - 16 years. So that gets him to 77.

What the guy doesn't realize is that a plan can show him how to use that money and withdraw it in the most efficient way possible so that $1.2 million becomes like having $1.4 or $1.6 million.

But heck, he's so successful what difference would an extra couple hundred thousand make?

What he needs to do is:

1. Consider a Social Security strategy.
2. Next, he needs to look at inflation and life expectancy and run some scenarios based on different outcomes. Yes, his house is paid off, but does he think health care costs will stay fixed? And what about services like lawn care, home cleaning and other personal services that are in greater demand as one ages? I'm afraid he's in for a surprise.
3. Then he needs to look at withdrawal rate strategies for creating retirement income.

But heck, apparently I must not watch TV or read anything of value, so why listen to me? :-)

In my recent contribution to MarketWatch I address market predictions and gut feelings. With research available that slices and dices investments into every statistic you can imagine, it is amazing to me how many people still go by gut feel. Does it work? Sure, just like a trip to Vegas. Learn more in Market predictions: Follow your gut?

I love this article by Joe Hearn, one of my fellow MarketWatch RetireMentors. It showcases many of the non-financial habits of successful retirees. It's worth the read. Check it out at 8 Habits of Highly Effective Retirees.

This week one of my 61 year old clients came in and said, "I'll never retire... but I want to save for retirement." We got a good laugh.

He has no plans for a traditional retirement but still realizes he needs to put money away now for one day when he may not be able to work.

You may have a traditional view of retirement where you plan to be done at a specific age, or you may want to work as long as you are able. Either way, you do need to save for retirement. The key is how much?

It's always a balancing act between enjoying life today and putting money away so you can enjoy life just as much tomorrow. Finding the right balance starts with taking a look at how much to save. Find tips in How Much to Save for Retirement.

Learn more ~ or join the conversation!

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