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Dana Anspach

What Are You Saving For?

By March 21, 2012

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I spent last weekend in Des Moines visiting family. Then I went on to Chicago for one of my favorite events of the year - the Retirement Income Industry Association's  (RIIA) Spring Conference held at the Morningstar building. (I am a member of RIIA.)

As usual, the intellectual capacity of the attendees and speakers was off the charts.

The most startling realization I had was that many of the companies - mutual funds, insurance, banks, 401k providers and software developers - care more about your retirement income than you do!

They are spending oodles of money in time and research to find ways to make your savings and investment decisions easier. If each of us spent a fraction of that time figuring out how to save a bit more and invest wisely, no one would have to worry about retirement.

One of the themes that came up at the conference is that many of you are striving for a "number"; a certain savings target you think you need to achieve in order to retire. What you need to be striving for is a level of retirement income. To get you thinking in terms of future income, you'll see the forward thinking 401k providers start to put things like "income units" on your statements in addition to your account balance.

The key to good retirement planning is realizing you aren't saving just to save. Your money has a job to do for you.

It can be difficult to translate an account balance into a monthly income amount. In Comparing Retirement Income Investments I show you about how much it costs to buy $1,000 a month of retirement income. The cost will vary depending on interest rates, age, and your personal retirement plan. Start thinking in terms of income, not account balance and you'll have a head start on your retirement planning.

I'll be sharing more insights from the conference over the next few weeks, so stay tuned.

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