Contributed by Lewis J. Walker, CFP®
If you were born in 1966, you are or will be age 50 this year. The T-shirt proclaimed, “If you haven’t grown up by age 50, you don’t have to.” Well, yes, you do, if you don’t want to be knocking on your kids’ doors begging for support in your 80’s.
Something interesting happens when you turn 50. You realize that your “full retirement age” under Social Security is 67, and that 17 years isn’t all that much time to accumulate your desired nest egg. Then there is the matter of “life intruding” while you are making other plans. The average age of marriage in the U.S. is creeping up as couples delay tying the knot. It's now 27 for women, 29 for men. Often babies come later, with the first birth in a couple’s late 20s or early 30s. It is not uncommon for couples celebrating a milestone 50th birthday to still have children “in the nest” with big expenses ahead —private school up to K12 in some cases, cars for Junior and Suzy to drive to school or college, college, even weddings at some point. It hits you that the next 17 years could be very expensive!
Then you start thinking about retirement funding midst all the other demands for your time, talent, and treasure. You read somewhere, perhaps in this column, that for every $40,000 per year you want from your investment portfolio to spend on your “golden years” lifestyle, a “not so large” budget of $3,333 per month, at a 4%withdrawal rate, you need a $1 million nest egg. If you target spending $80,000 per year outside of Social Security or a pension, you need a $2 million stash, minimum.
Recently, a gentleman told me that when he retired he and his spouse kept spending at the same rate they did when he had a paycheck coming in. He reflected, “We never throttled back from before I retired. Now we have to make some choices, manage expectations. We have to be more deliberate as to what we want to do.”
Those reaching age 50 are likely to have living parents in their 70s, 80s, or older. Will you possibly have to aid parents in their old age, with time as a caregiver or with financial help? On the other hand, are your parents well off enough that you expect them to be self-sufficient and perhaps bless you with an inheritance? Assumptions matter in planning.
When you reach your 70s, might you have to step in to aid your children or grandchildren? That is a factor more than you may realize. In a March 2012 report, Paola Scommegna at the Population Reference Bureau noted that in 2010, one in 14 U.S. children lived in a home headed by a grandparent.
The Huffington Post on 6/24/13 reported that the average American changes jobs 10 to 15 times between the ages of 18 and 46. That results in a “herky jerky” 401(K) that may be well short of your $1 million to $2 million target. How will you recalibrate your career? Maria C. Forbes, a coach in Norcross, GA, uses a number of diagnostic tests and coaching techniques that could light a fire under your career and work satisfaction quotient. See www.firepowerteams.com. If you hate your job, or are just going through energy draining motions, it is imperative that you recalibrate your career.
It is not uncommon for people over 50 to “light their fire.” Colonel Sanders was in his mid-60s when he started Kentucky Fried Chicken. Grandma Moses did not start painting until she was 76. Ray Kroc bought his first McDonald’s in his 50s. Laura Ingalls Wilder of Little House On The Prairie fame published her first novel at age 65. Forget “retirement.” Call it “restylement” instead.
Whether you just turned 50, or are older and closer to retirement, or are retired, a Life Transitions Checkup can put challenges, meaning, purpose, and money into perspective. Such conversations go beyond money, which is but a tool. You don’t climb a mountain without a plan, resolve to be in the proper shape, and intentional execution.
On the “mountain of life” there are but two paths—one up and one down. How would you define or picture your desired “summiting experience”? Are you climbing, standing still, or regressing? The answers are worthy of serious discussion.
Lewis Walker is a financial planning and investment strategist at Capital Insight Group; 770-441-2603. Securities and advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis Walker is a registered representative and investment adviser representative of SFA which is otherwise unaffiliated with Capital Insight Group.