Written by Brent J. Welch, CFP®, ChFC, CRPS®, CLU, AIF®

Did you know that forty-four percent of American’s don’t know if they are on track for retirement¹? Sixty-Two percent of Americans have never had a retirement plan put together for them.¹ Eighty-four percent think that they need guaranteed lifetime income, but only fourteen percent of them have guaranteed income besides Social Security or the Wisconsin, Minnesota or Federal retirement system.¹

With these staggering statistics, and 10,000 Americans turning age 65 every day² and living longer than ever before, it’s no wonder a lot of people are worried about their retirement years. People don’t plan to fail, they usually fail to plan. There might be a cost of time or money to put a plan together for you, but this cost may be viewed as an investment in your future. There is a cost for doing something and a cost for doing nothing. Quite often, doing nothing costs much more.

So what do you do about this? How do you know if you are on track? How can you stay on track?

Consulting with a Retirement Wealth Advisor can help you put a plan together that does the math for you. This math is quite complicated since the program used to calculate your retirement surplus or deficit uses interest rate assumptions, life expectancy assumptions and tax rates from now until the program assumes you die. Of course, the computer doesn’t know when you will die, but it uses life expectance tables to estimate your average life expectancy. Let’s assume that you are now age 60. The 2010 US Life Tables published by the Centers for Disease Control and Prevention 11/06/14 tell us that if you are a 60 year old woman, your average life expectancy is 24.7 years or just short of age 84 ½. Half of all women live longer than that and half live shorter than that. If you are a man, then your average life expectancy at age 60 is 21.7 years, or age 81 ½.

The two primary documents that you need to put together are your income statement and your balance sheet. Your income statement is a list of all your income and expenses and a balance sheet documents all of the assets you own with the liabilities listed as well.

When you put your income statement together as you approach retirement, I have one more task for you, prepare a post-retirement income statement as well. This budget will help you understand what income needs you may have and how far your Social Security and other pension income will go. Then your balance sheet will help you assess what income producing assets you have and what amount of income you may need.

Your income statement will include what amount of money you budget for fixed and variable expenses. Fixed expenses include taxes, saving for short, intermediate and long-term needs. Fixed expenses also include insurances, housing costs, car expenses, health care, food and clothing. Variable expenses include categories such as travel, gifts and entertainment.

Your balance sheet is a list of everything you own and everything you owe. Your assets are to be itemized on one column and your debt should be on another column. The assets minus the liabilities equal your net worth. The asset base of investments will help you determine what income stream those assets may generate. Imagine a huge bucket that you place all of your investments into. If that bucket had a spigot, then you might turn that spigot onto the place where it pays you 4% per year. Of course, you can’t be guaranteed a 4% payout for life. That payout is contingent upon the average total return of your portfolio. Past performance is no guarantee of future results. All investments have risks including loss of principal.

You can then transfer this information onto Welshire’s Confidential Profile and Asset Allocation Questionnaire forms. Please request these forms from your Welshire Retirement Wealth Advisor and they will help you create a customized Retirement Wealth Plan just for you. We would be happy to help you get on track and help you stay on track to and through your retirement years.

¹TIAA-CREF Lifetime Income Survey Executive Summary 2015 and 2019, https://www.tiaa.org/public/about-tiaa/news-press/press-releases/pressrelease766.html

²US Census Bureau International Database May 2019


Contact the author at 1-800-TAX-PLAN