By Professor Anthony Rivieccio MBA PFA
By the time you read this, school would have started, many now virtually. At CUNY, this fall semester, I am teaching “Retirement Planning”. In our temporary ” new world” this should be a very interesting topic this semester.
But let’s start with a very simple premise:
What is Retirement Planning?
For many, it is the objective of achieving financial security and independence. While we all , I am sure , want to achieve a desired financial lifestyle, what many do not understand is that one has to be willing to forgo an immediate amount of money, so it can accumulate and grow over time, to achieve that future financial independence.
While the class itself will cover many angles of retirement: from public to private employees, employers, the role of government and financial advisors, we will keep this simple, although of course the area is very complex.
One has to understand; funding opportunities, life expectancy, the projection of inflation & investment returns, and retirement life expectancy.
Why? Cause at the end of the day.
Retirement planning is about determining the optional distribution amount desired to provide that financial independence, for your retirement life style and life expectancy.
Today, with many using non pension like retirement accounts, the areas of risk have been transferred to the person instead of the place you work or institution you use.
So, are you saving money for Retirement? Some are and some are not! Why? Many say it is because of the high cost of living & day to day expenses. While that is truly understandable, a EBRI 2019 Retirement confidence survey concluded:
Only 66% of workers are saving for Retirement
40% of workers have less than $25,000 in savings
51% of workers have over $100,000 in retirement savings but only 42% of workers have completed a retirement needs analysis.
Even worse, in today’s working world, the employer is less informed about retirement than the employee or person, which is why many hire financial advisors for assistance.
Can the Government help? Of course they can!. The Government sponsers social security and creates tax related policy for retirement plans to provide us an incentive to save .
There is so much more to cover in this subject matter; to the Retirement tools one must use to understanding Retirement accumulations and distributions, to proper saving and investing and understanding the tricks of Social Security- but this is what the Retirement planning class is all about!.
Want a simple scary example? Let me share with you what I share with my Clients. I call it ” the worst case” secnerio.
If you are 45 years old and make $50,000 a year. Your goal is to retire at 65. So at 65, what will you need since you will not be working? $50,000 a year!. Planning on living to age 85, well than that means you need $1 million in total savings. And I did forget inflation didn’t I? At age 45, assuming inflation at 3% a year for 20 years, than that $50,000 is really $80,000 at age 65.
Assuming that same inflation rate till age 85, it is now $108,000 a year. Now do you have non working income to make that up? In your traditional savings? In your retirement funds? In your social security? Oh and I did forget the effect on your taxes!. Understand a bit better now?
Too much to cover in this article? Absolutely! But I intend on occasion to cover parts of these areas on future articles. However, if you have Facebook, let me reference you to the FB page below which we hope to cover on a weekly basis starting September 20th.
The year 2020 brings many perils. Retirement planning should now be a priority.
Professor Anthony Rivieccio, MBA PFA, is the founder and CEO of The Financial Advisors Group, celebrating its 24th year as a fee-only financial planning firm specializing in solving one’s financial problems.
Mr. Rivieccio, a recognized financial expert since 1986, has been featured by many national and local media including: Kiplinger’s Personal Finance, The New York Post, News 12 The Bronx, Bloomberg News Radio, BronxNet Television, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Co-Op City News, The Bronx News, thisisthebronX.info, The Parkchester Times and The Bronx Chronicle.
Mr. Rivieccio also pens a financial article called “Money Talk”. Anthony is also currently an Adjunct Professor of Business, Finance & Accounting for both, City University of New York & Monroe College, a Private University. Professor Anthony Rivieccio Facebook page is.