Your Montana Public Radio
Commentary - January 22nd, 2014
Fri January 24, 2014
Good evening. This is Susan Kohler, CEO of Missoula Aging Services, the Area Agency on Aging for Missoula and Ravalli counties. Tonight I’d like to share some thoughts I have about the very important topic of planning for retirement.
Like many of you, I am beginning to think about when I might be able to retire. It’s not that I have ignored the subject over the last 35 years. I diligently do my best to contribute to my retirement fund and annually monitor my expected Social Security income. But I always knew I needed to focus more attention on it.
Recently I utilized a great tool that helped me take a different perspective on planning for retirement. In this useful exercise I looked at my current expenses and budget, with the goal of figuring out my projected retirement income and expenses. It was a real eye-opener, making me realize some things I wish I had understood at the beginning of my career rather than waiting until now. Although my personal “take aways” may or may not apply to your situation, I’d like to share a few in hopes they may help someone along their road to retirement.
The first “take away” is that I wish I had been more financially literate when I started my career. Like many of you, I rely on a broker to guide my investing. There is nothing wrong with this approach but I wish I had better understood the language of investing and taken a more active role in making decisions. I can’t be sure if this would have changed the outcome, but I now see the importance in terms of the many options we have to manage funds. This is especially true for those who are just starting their careers. Frankly, I think financial literacy should be emphasized starting in high school!
My second big “take away” is the major role Social Security plays in my retirement plan. Although I have been monitoring my projected Social Security Income for years, it wasn’t until recently that I understood that without it I would be in a world of hurt.
As an advocate for Social Security, I have researched it and followed the discussions in Congress about proposed changes. Once I connected the dots between advocacy and me personally, it has been enlightening. I recently read an article from PolitiFact about what a person pays into Social Security compared with what a person will get out during their retirement years. While difficult to summarize because of the many different scenarios and because longevity has increased, in many cases, people get more from Social Security than they put in. In 1950 the average American lived for 68 years. Now the average life expectancy is 78 and many people live into their eighties, nineties and beyond.
Social Security continues to be very important and we need to be part of the discussion for making it stronger. There are many ways to do this but I will save that for another commentary. It is critical that we all get educated about the issues surrounding Social Security from reliable sources, not politicians. Regardless of your age, most of us can’t afford to be in the dark and not involved in this discussion.
My final “take away” is the importance of examining your budget. I have never really operated on a budget because I am frugal, especially in comparison to today’s typical consumer. I always lived within my means and have very little debt. That said, I wish I had at least looked hard at my annual budget to know where my money was going and to determine how much more I could have put towards retirement. Like many people, I worried about locking too much away. What I should have done earlier is the exercise of really evaluating what my necessary expenses were versus choices in spending. I should have made retirement at least as important as saving for my child’s future beyond high school. Our children may not understand our limited ability to support them after they graduate from high school, but they will get it when they don’t have to provide financial support to us when we are old because we saved enough for retirement!
I hope my comments will stimulate discussions in your family that will ultimately help you focus more on your retirement plan. These are just the observations of one person trying to figure this out. But because my career has involved working with people as they grow older and retire, I’ve seen many examples of how well it can work when the best plans are in place.
This is Susan Kohler, CEO of Missoula Aging Services, and as always thanks for listening.
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