The Herald Bulletin

March 23, 2013

'Big Joe' Clark: Realistic retirement will meet your needs

By Joe Clark
For The Herald Bulletin

— It seems more Americans are coming back to the table regarding investing. They are voting with their dollars and putting money in the market. Millions of investors were scared away after the financial collapse in 2008 and the tech bubble of 2000. Market volatility has provided painful memories for many investors over the years. The fluctuation in the emotions of investors reminds me of watching the Olympics when I was a child. The announcer would say “The thrill of victory and the agony of defeat” as the poor guy skiing wiped out. The market can be just as painful and just as exciting.

There are just a few realistic ways for us to have sufficient assets in retirement. At the end of day, regardless of how much you saved, you need an income that replaces the funds needed to provide for your standard of living. That can come from inheritance, rental income, pension or your own investments. A shocking study by the Financial Planning Association found that 21% of those surveyed think winning the lottery is the most practical way to fund retirement! It is sad to think the lottery is even an option.

You can retire when you have a source of income to provide for your needs. Retirement is a function of money far more than age. Most of us will have two sources of income at that point coming from three potential areas. We – at least for now – will get a “mailbox check” in the form of Social Security. The majority of us will need more and that will come from our personal savings and/or another job of some nature.

The first piece of dynamite in retirement planning can come from procrastination. Just like it’s important to begin funding retirement accounts like Roth IRAs from an early age, it is just as important to be serious about your chosen career. Whether that’s starting a business or hoping to climb the corporate ladder, you need to be focused on where you are headed. A solid career is the first key to creating a viable plan for your life after work.

The second realistic method of funding retirement is by asset appreciation. Investing can be scary; some of the smartest minds in the world have attempted to master the stock market only to have fallen short. Isaac Newton, considered one of the most influential scientists of all time lost a great deal of money investing.  He was quoted after making a poor investment in The South Sea Company in the 1720s, “I can calculate the motions of heavenly bodies, but not the madness of people.” If Sir Newton failed then anyone can. Those that are successful create a plan and stick to it. Some do it with advisors and some on their own. I have witnessed success by both methods. The key is having a plan, following the plan and controlling your emotions along the journey.

Joseph “Big Joe” Clark, whose column is published Sundays, is a certified financial planner. He can be reached at bigjoe@yourlifeafterwork.com or 640-1524.