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      Are You Ready for Retirement?

      We hear of concerns about individuals getting near retirement and not being prepared and we also hear of concerns about Social Security. What can a person do to be prepared for retirement? Jeff Romine, partner, with the Financial Planners of Missouri, stopped by the set of Good Morning Heartland to break it down for us.

      Question: One hears about individuals nearing retirement being il-prepared for retirement. Are you finding that?

      Answer: If you follow the stories in the media, you will find reports that Americans are not well prepared for retirement. This lack of preparation creates a need for people to work late into their lives. For example a recent survey indicated that 53% if American households are at risk of not having saved enough to maintain their living standards in retirement. Another report indicated that one-third of Americaâ??s retireeâ??s get atleast 90% of their retirement income from Social Security with average annual benefits of around $15,000. And Ela, you can imagine it is difficult to live on $15,000.

      Question: What can an individual do to make sure they are prepared for retirement?

      Answer: We advocate that people have a plan for their retirement. It is increasingly apparent that individuals must take responsbility for their own future economic well being. It is not uncommon for individuals to spend more time planning a special trip than they spend time planning their entire financial future. Donâ??t be one of those people. We suggest that individuals and couples become knowledgeable about their anticipated retirement incomes and their expenses. You may need to take action today to prevent economc problems in your future.

      Question: When I become retired, what type of income can I expect to have?

      Answer: The best way to answer that question is with a few questions:

      When you retire, will you have:

      1. A pension from your employer?

      2. Your own 401(k) or 403(b) or IRAs?

      3. Personal savings or assets, both owned and anticipated, that have value, minus any debt?

      4. Social Security?

      What did you answer â??yesâ?? to? Those are your options. The next question is â??how much will you receive?â?? If you want to have a good retirement, you need enough income arriving each month so that you can pay all of your bills timely. If you know right now that you do not have enough money saved up, you know what you have to do; you either have to save more, improve your income, or plan to spend less when you are retired. Many young people are reluctant to assume their will be Social Security, I know 30 years ago, I did not assume I would ever receive Social Security. That puts a great deal of pressure on yourself to save up for retirement.

      Question: When I become retired, what type of expenses can I expect to have?

      Answer: I find the amount of expenses that people have to be interesting. Some individuals are big spenders and some are very small spenders. And interestingly, it does not seem to make a large difference in their happiness. How much you spend on your life style has the potential to make an enormous difference in your retirement days. Your habits here are very important. If having two quarters in your pocket, makes you want to spend two quarters, it does not bode well for your retirement. Or if you have major credit card debt and the debt is growing, you may have future problems. For example, to best understand what expenses you will have in retirement, during the planning process, we talk people through an analysis of their expenses. We will start with consideration their current spending habits, their debt payments, and their tax situation. We then consider any recent unusual items that seldom happen, we consider if they have children at home or in college that will one day be independent, we add in estimates for known actions that they want to take in the future such as paying for weddings, cruises, any big dreams, new hobbies, or any â??bucket listâ?? items. Plus, we add in an amount for expenditures for things like cars or home repairs and then also something for health insurance and health care costs. Then we ask what else is there? When we get done, we typically have a good estimate and we project the expenses into the future using inflation rates for growth or other rates when appropriate. We usually make conservative estimates, which means our projected expenses may be a little higher than what is ultimately experienced. That means that life may be better than we have projected. Which is a good thing!

      Question: There seems to be a lot to consider, what would you recommend for people that are worried about their retirement?

      Answer: If someone is worried about their retirement, I suggest that they take the energy spent worrying and devote it to something constructive and that they do so immediately. Worrying can be exhausting, and very little good comes from it. I suggest becoming knowledgible, try to learn enough to remove the uncertainy about your future income or expenses. I would suggest that you may want to â??Go see a financial advisor or planner.â?? There is software and spreadsheets that enable one to reflect their current situation and to make projections into the future. You can find a great deal of information on the internet. Again, spend as much time thinking about your financial future as you might spend on planning a very special and expensive trip. Most importantly, for your ownself, if you want â??peace of mindâ?? on this topic, you have to be proactive and take control of your financial life for both your present and your future.

      Jeff Romine

      Financial Planners of Missouri

      110 S. Franklin

      Kirksville, MO. 63501