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Mark Zaifman's thoughts on money, global economic trends and politics

When it Comes to Retirement Planning, Denial isn’t Just a River in Egypt

Mark Zaifman   |    Wed, May 10, 2017 @ 01:07 PM

2014 Aug me on SUP.jpg

Let’s call this blog my annual financial planning public service announcement for those two years or less away from retirement.

At the end of the day, a financially successful retirement requires an honest assessment of where you are today, financially speaking. Although that sounds like a pretty obvious task to undertake, herein lies the problem.

A large percentage of soon to be retirees are in total and complete denial about their ability to fully fund the lifestyle they desire in the prime years of their lives. That doesn’t mean they have not saved well because many have. A disconnect occurs when you have an expectation of having an ‘ocean view’ retirement but discover a ‘garden view’ is your reality.

How does this happen? For one thing, if you watch any Sunday morning news shows like I do, one can’t help but notice all the happy and joyful couples living large in retirement. They’re either on a lush island somewhere playing in the ocean or watching a sunset in their multi-million dollar home or playing golf in their never ending vacation. It’s fantasy, it’s a commercial, but it sets an expectation.

Getting out of denial about your future is your first task. That requires an honest assessment of your personal finances which is easier said than done. Secondly, you need to have a clear picture of how much you plan to spend once you retire. Third, you need to develop a retirement income strategy that’s tax savvy and well thought out.

The truth will set you free. Being in a state of denial about your ability to fund your lifestyle during your retirement is not just foolish, it’s also dangerous to you, your family and your spouse/partner. If you are the one in the relationship that has been managing your family’s finances, do yourself a huge favor and pay an independent, fee-only financial planner to provide you an unbiased assessment of your current finances and his/her professional opinion if your dreams of the good life in retirement match the reality of your current financial situation.

Waiting until the last minute will backfire, big time. Pushing yourself out of being in denial will not be easy. In your mind, you have probably done the mental arithmetic thinking and hoping somehow this will all work out in the end. Hope is not a strategy. This will only lead to heartbreak and disappointment. Finding out the true picture of what you’ll actually be able to spend during retirement a few years before you reach this milestone at least provides time to make a course correction.

There are no do-overs in retirement. A major obstacle to getting out of denial is the familiar thought of the option of going back to work down the road if needed to supplement income. That may be possible, but the odds of that being an option are 50-50 at best. If you’re fortunate enough to reach your late 70’s/early 80’s, that proposition becomes a moot point. The smart way to handle this is to know where you’re going ahead of time and how you’re going to get there.

Peace of mind is priceless. After a lifetime of work, who wants to worry about money when you finally reach the finish line? Yet remaining in a state of denial about your ability to successfully fund your retirement is a stress like no other you have experienced. It’s human nature to avoid difficult tasks like retirement planning. Yet imagine for a second what it would feel like to know you have put your financial house in order and developed a solid and durable retirement income plan. That feeling is called peace of mind and it's yours for the asking.

Photo by Pat Chiappa