The Back Forty
By Roger Pond

The world of retirement planning has certainly changed over the years. The days when folks just quit their jobs and started drawing pensions are long gone for most of us.

People want to retire younger these days, and dependable company pensions are becoming a rarity. That means we have to save for our own retirement. Who knows how much that’s going to take?

My wife and I visited a financial planner some years ago and tried to get a handle on our investments and expenses. We generally know what our investments are worth, but there is some question about how well balanced they are. On top of all that, Connie and I have different philosophies about retirement.

She believes it’s important to have enough money to do the things we want to do. I think it’s less stressful to want to do the things we have enough money for. I’ve never had enough money to do all of the things I want to do. I never really expected to.

I’m reminded of my brother’s comments about receiving Social Security payments. Readers will recall that a person can start drawing Social Security at age 62, or we can wait until full retirement age before receiving payments – and get a much larger sum per month.

The quandary is that a person who delays Social Security payments until age 66 would be around 78 years old before he or she breaks even with the person who began drawing them at 62. There’s a kicker here, though: The person who draws at 62 pays penalties for earned income above a certain yearly total.

My brother said the Social Security people told him about that. Then, they said, “If you wait until full retirement age, you can make all of the money you want.”

“That’s ridiculous!” Kenny told me. “I’ve never been able to make all of the money I want.”

The first thing I learned about retirement planning is we have to make a lot of assumptions. We assume we are going to live to a certain age, for example. Then we assume our investments will return a certain percentage over the years. We might have noticed that has changed quite a bit.

Next, we estimate our expenses and the rate of inflation for the next 20 or 30 years, no small feat in itself. Then, we set some goals. What do we want to do in our retirement years? How much do we want to spend?

Once we have made all of these assumptions and estimates, we can calculate how much money we should have saved and how it should be invested to assure we won’t be out on the street looking for a soup kitchen.

That’s all fine and dandy, it seems to me. But the main thing I’ve learned from the process is this: If I work at it long enough, I can assume myself into almost anything.

Readers with questions or comments for Roger Pond may write to him in care of this publication.