Retirement Planning

There is a cliché that states “A man who fails to plan, plans to fail”. It is amazing that consumers will spend hours, days, weeks and months planning for life’s events such as a wedding. Of course, wedding events are very important. However, retirement planning is equally important. With weddings plans, some people go to great lengths to ensure that the wedding dresses are altered to fit well, the cake is beautifully decorated, the food is deliciously prepared, the wedding site and reception place are accommodating, and the invitations are elegant and pretty. People will utilize and exhaust their time, talents and treasures to ensure that their wedding plans are perfect or at least almost perfect. Why do people put forth so much effort in wedding plans or other life events but not in their future retirement? Why do people consider retirement planning less important?

Many people do not plan for retirement “now” because they believe they have enough time “later”. The problem with “later” is the missed opportunities during the years of waiting. The more time consumers have investing in their retirement greater the benefits during their retirement. However, there is still time to plan for retirement even for those consumers who have been working for years and only have a few years before their retirement. As long as you are able to work and generate income, you can still plan for retirement. Even if you are in your retirement years, you can still improve your retirement.

Here are 2 steps to help you plan for retirement:

  1. Assess where you are financially. As with many of my clients, a number of people rather not know their current financial outlooks because they are under the impression that life will never get better for them or they are just embarrassed to find out. Assessing where you are financially is critically important because it helps with planning and implementing your retirement plans. Here are 2 areas used to determine where you are financially:
    1. Debt management. Before meeting with me, many of my clients have never compiled all of their debt obligations. Why? Because, they really do not want to know the truth. I am reminded of an insurance company commercial involving Pres. Abraham Lincoln and his wife, Mary Todd. She asked her husband that infamous question that a lot of wives ask their husbands “Does this dress make me look fat?”. Well, she should not have asked Honest Abe. So what was his answer? Let’s just say, he probably slept on the couch for a couple of nights even though he answered her question truthfully. As with Honest Abe, we must be honest with ourselves. It is important for consumers to know just how much debt they have accumulated. Therefore, I recommend making a list of all of your debt obligations (mortgage, auto loan, personal loans, etc). Once you have compiled a listing of your debts, implement a debt management plan of action to pay off the debts (preferably from smallest to largest), by paying more than the minimum or required monthly payment. As you pay off your debts, money becomes available that can be used in retirement planning.
    2. Budgeting. I have worked with a number of clients who have never used a budget or operated their households utilizing a budget. Many of them were under the impression that budgeting was a one-time event to get out of a financial situation or crisis. To the contrary, it is not a one-time event. Budgeting is an ongoing analysis and management of one’s income and expenses. It summarizes your income and expenses and helps determine if you have a surplus or a deficit over a period of time. Budgeting is listing your income sources and subtracting out your weekly or monthly household expenses such as utilities and rent/mortgage payments. Here is the formula: Income – Expenses = Net Profit (surplus) or Net Loss (deficit). Surplus means that you have money left over after your expenses are paid. Deficit means that your expenses exceeded your income and you do not have any money left over. Start a budget as soon as possible to determine how you are spending your money. Look for ways to minimize or cut your expenses. Every dollar you save can be used in your retirement.
  2. Determine where you want to be. This can be done by establishing financial goals. Financial goals can consist of paying off credit card debt or car loans, saving for a down payment of a house or car, or starting a business. After you determine where you want to be, then create an action plan or road map and start saving your money. Here are 3 ways to start saving:
    1. Establish an emergency fund account. An emergency fund account is an account set aside to help you through 5-6 months of expenses in the event of a job loss or some other life event that eliminates or minimizes your income. This account can be a savings account or a money market that pays interest with no service charge and no balance requirement.
    2. Enroll in your company’s 401(k) or company matched plan. A number of companies will match up to 6% of your contribution. If you are already enrolled in a 401(k) plan, consider maximizing your contribution and take advantage of your employer’s matched contribution. Consider opening an Individual Retirement Account (IRA – Traditional or Roth). IRAs are great options to consider when consumers are looking to save money for retirement. They also offer some tax advantages as well.
    3. Seek help from a licensed professional financial/investment advisor. Financial advisors are trained in assisting people with managing their money and retirement planning.

As we should never get caught in the rain without an umbrella, so we should never go without planning for retirement. Every year that goes by without planning could potentially reduce the quality of your retirement. However, there is no better time than the present to start planning for your retirement. So start now.

Lionel Shipman is the owner of Shipman Consulting, a personal and business finance-consulting firm specializing in helping individuals and businesses improve their financial outlooks. The primary focus of the firm is facilitating seminars and classes to educate, motivate, and empower people to take charge of their financial lives. The firm also offers one-on-one consulting services. Please visit the firm's website for information at Email address:

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