Re-stating the Obvious

Forgive me for stating the obvious but in my experience, it is precisely those things that are most important to restate. People need to hear what is obvious…until they finally get it.

One obvious point is that keeping physically active and mentally engaged preserves one’s health and saves money. Obvious?  Sure. Yet people don’t follow this advice, though they are far more apt to do so when they internalize what the cost of health care is.  The average person spends $275,000 on health care expenses in retirement.  So an investment in good health can play a huge role in making one’s retirement numbers work out.

A second “obvious” is the benefit of setting up multiple streams of income. If you have income from multiple sources that don’t fluctuate because of moves in the market your retirement is much safer than if you are totally dependent on your portfolio to support you.  What are those income sources?  Social Security is one source for almost everybody.  So are pensions.  Another source can be annuities.  If you can get two, three or even more paychecks every month you worry less about the market going up or down.

Third, saving 15% of your pay, applying the 4% rule and steering clear of the “retirement risk zone” that spans the five to ten years before and after retirement makes so much sense that it’s obvious.  But how many people actually follow this obvious advice?

Finally, having a plan prepared by a competent advisor who specializes in retirement planning is an obvious way of tying these points together.  A plan can take the cost of health care into account and see how the risk of a serious illness can be mitigated.  It can define the income streams you need in order to meet your basic needs and your “wish list.”  And it can determine the amount of risk you are taking to meet your retirement goals and warn you about taking too much risk.