How Typical Are Your Retirement Attitudes?
By Phillip Hamman
President
Linscomb & Williams
Thanks to syndicated television, regardless of your age, you may well remember what was once the most popular game show on American television: Family Feud. Two families competed to name the most popular responses to survey questions in order to win cash and prizes. After the competing guesses were recorded, the host introduced the correct response by saying, “Survey says…”
A Senior Living Community provider recently released their survey1 of 2,000 Americans on the subject of how to define the “ideal retirement.” The answers from the national survey are interesting, and they might contrast significantly with your responses.
What is the right age to retire? Survey says: age 60. The answers varied based on the age of those responding. Boomers answered with an average age of 64, while Millennials answered with an average age of 56. Maintaining lifestyle in a retirement starting at age 56 is a considerably greater financial challenge than starting at 64. The reason is simple: fewer years to save money and more retirement years to be funded.
More than 1 in 5 Americans desire to retire and live abroad. What is their top choice for a country to live in? Survey says: Italy. Apparently, the draw of the Tuscan wine country is powerful. We have a few clients who have pursued this course and learned that the legal and paperwork requirements for Americans to live abroad can be challenging and certainly require advance planning.
Name the top 5 cities Americans prefer as a retirement location. Survey says: (this might be surprising, but here they are, in order…) – Miami, San Diego, Denver, New York, and Orlando. We know from much experience with this question that these particular cities are not on the list for many of our Houston-based clients. Whatever your personal leanings, however, retirement location is an important variable in your financial plan. Miami is 24% more expensive than Houston, for example2. San Diego is 41% higher, Denver 27%, and New York is double. Only Orlando is reasonably close, but is still about 7% more expensive. Clearly, when planning the ideal retirement, WHERE you intend to retire can have as much or more financial significance than WHEN you desire to retire.
How much in savings would be ideal by the time you retire? And how much do you realistically expect to have? Survey says: To supplement Social Security and pensions, an ideal savings target would be $610,000. Unfortunately, the second half of the question on expected savings leaves a big gap: $276,000. This is less than half of what would be desirable.
In an unrelated survey3 conducted for the Certified Financial Planner Board of Standards, Inc. (CFP Board) by Heart + Mind Strategies of 1,000 voters on election day, 2018, there were a couple of important insights which bear upon this last question.
- 60% of the respondents indicate they expect to work with an advisor for planning their retirement needs.
- However, 23% intend to wait until just 3 to 5 years before retirement to engage a professional financial planner.
- 82% want someone who can provide a comprehensive plan that takes their holistic financial situation into consideration.
- 79% believe their financial advisor should always work in their best interest (the “fiduciary” business model).
In our nearly 50 years of helping clients plan their own “ideal retirement,” we think there are three key elements that transcend the various visions of what might be ideal:
1. If you don’t have a well-conceived plan for your ideal retirement, the best time to start working on it is today. Unless you are willing to do considerable homework on your own, seek the help of a qualified professional financial planner sooner rather than later.
2. Choose a planner that is well experienced and qualified. Credentials can be important indicators. Look for the key 4 credentials: CFP® certification, CPA, Chartered Financial Analyst, and JD (Juris Doctor).
3. Choose a planner that commits, in writing, to always interact with you as a fiduciary, with a legal obligation to work in your best interest.