Roger Roemmich, chief investment officer of ROKA Wealth Strategies, got the idea for his new book, "Don't Eat Dog Food When You're Old: How to Solve the Retirement Cash Flow Puzzle," when he was walking out of his neighborhood convenience store and saw another older customer rip open a bag and start munching.
Roemmich, 66, says his personal retirement planning involves continuing to work. His standard answer to the question, "When are you going to retire?" is "When you are driving home from my funeral, you know I'm retired."
For people who don't think they want to work quite that long, Roemmich offers what he calls the "CAMP" plan, which requires nailing down good plans supporting these pillars of retirement.
Cash flow. Roemmich stopped asking clients to create budgets because nobody ever did it. Now he asks people more basic questions. He asks clients, "Are you saving anything?" If they are, he subtracts that amount from their income and calculates how much money they need based on that number. Then he asks for the amount of money that Social Security says his clients can expect in retirement, and he wants to know how much savings they have and whether they are lucky enough to have a defined benefit pension. From these basics, he calculates what they are likely to be able to spend in retirement. It takes a lot more savings than it used to, he points out. And a lot of people don't understand that. "My dad retired in 1990 when a six-month CD was paying 7.5 percent. ... He could count on making $15,000 a year from $200,000 in savings. Today, somebody who has saved $200,000 is likely to be getting $2,000 in interest from the same safe investments," Roemmich says.
Aging. Predicting how long you are going to live is an inexact science, but Roemmich says, "People view retirement as a sprint -- three to five years and they're through. But I'm seeing research that suggests that in 10 years, we are going to lick heart disease and cancer. If that's the case, most people are going to live into their 90s and beyond. They have to look at retirement as a marathon."
Medical needs. Participation in Medicare Advantage and Medigap plans is low, and even fewer people buy long-term care insurance. Roemmich says anyone contemplating retirement must think through how they expect to pay for both routine health care costs and how they will manage to fund catastrophic care.
Purchasing power. Even if inflation is low, it will have a significant impact on every retiree's spending. Roemmich says one good plan is to delay taking Social Security until you're 70, when you can collect the maximum, plus cost-of-living adjustments. Another consideration could be a longevity annuity that kicks in additional regular income when you are in your 80s. But whatever you do, "If you don't have a plan for inflation, your plan is impaired," he says.
Here are some lame excuses for failing to save for retirement.