To say the least, retirement planning is becoming a tricky — even sticky — situation. The economy is teetering on the edge of financial instability, and low returns are making it tough on the savings of would-be retirees. Those who are seeking financial peace might have to try and take another piece of the pie.
To get a better idea of where retirees stand, we asked Sharon A. DeVaney, Ph.D. and professor emeritus at Purdue University, for her insight. DeVaney taught undergraduate classes in the financial planning program, and graduate courses in family economics and consumer behavior at Purdue University. Retired, she is now the editor of the Family and Consumer Sciences Research Journal for Wiley.
Is it financially smart to set a retirement date when retirement planning?
It is all right to set a target date, but a person should be flexible. For example, your health or job situation might change, and you should adjust accordingly. Also, you should investigate what working longer and delaying retirement will mean in terms of your Social Security benefits. I recommend working until your normal retirement age (67 or later) or until age 70. The latter will allow you to collect the maximum Social Security benefit that will be available to you.
What is the ideal amount needed to retire presently?
It depends on how long you expect to live, what lifestyle you have in mind and your resources. What do you think the amount needed will be in 25 years? The same answer applies for retirement 25 years from now.
Do you have any tips for the retiree who wants to travel during retirement and still remain financially stable?
Establish a budget, carefully research the places you want to visit, learn about health care in other countries, and make a plan for how you will manage your health care. Learn about home exchanges, etc. Perhaps there are part-time jobs that you could do in other countries.
When pre-retirement expense planning, what are a few ways to lessen your monthly costs and save more money for your retirement?
List expenses such as eating out and shopping for extras, and see where you can save. Tell family and friends that you are on a mission to reduce spending so that they understand your change in behavior (if there is a change in behavior). Peer pressure is very powerful, and if you have “friends who spend,” it could be hard for you to decrease spending and increase your saving behavior. Find activities that are not so expensive, if your current activities are draining your entertainment budget.
Is there an advantage to using a retirement planning coach?
I am sure there would be. However, it sounds like an extra expense and a crutch (to be honest).
We would like to thank Sharon A. DeVaney, Ph.D. and professor emeritus at Purdue University, for her insight.