In my recent social post, “Money Management in the Time of COVID” the article outlines five action items someone could consider when planning for retirement. Normally content with such a title consists of content that ranges from generic to painfully obvious. However, in this short read the author puts forth three ideas that are seldom discussed and I would say are deserving of additional space. The length of the article doesn’t provide much room for any real details and as they say, “the devil is in the details.” So, I thought I would add a few additional points to consider.
#3. Start a business vs save for retirement.
It’s true. Most Americans will not save nearly enough to support themselves in retirement by living off their interest and or dividends. So, author suggests starting a business that could create the passive income someone may need during their retirement years. Clearly this idea isn’t for everyone. Starting a business that can continue to run, be profitable and support someone’s lifestyle while retired is a significant accomplishment but would say there is some merit to this idea. Maybe the business doesn’t produce 100% of your income objective but it could possibly produce enough money to make a difference. If you find something you have a true interest in, you enjoy doing and you can find a way to share that with others, you could be on to something.
#4. Long-term Care
The topic of long-term care (LTC) is the 800 lbs. gorilla in the retirement conversation. The suggestion of having a life insurance policy that includes a long-term care rider may be a solid option for many people. Too often the topic is being addressed when someone is very near their retirement date and by then the acquisition of meaningful coverage may have long since passed. Nearly all of us are going to have to deal with a long-term care event at some point in our lives. The statistics are startling. So, if the thought has even crossed your mind, don’t wait. Explore your options now, the sooner the better. And if you have adult children, encourage them to have a conversation with a financial professional that can explain to them the features and benefits of such a plan. I know its not as fun as planning a vacation, but it can be a life changing decision.
#5. Create your own Pension
Pensions are becoming a thing of the past. Very few people today are stepping off into retirement with the security a life pension can bring. But you can create your own pension like income. The article suggests overfunding a life insurance policy. That could be an option. But there are other ways to create income in retirement that you can’t outlive. Again, creating a plan that can produce income for life may not be as fun as planning a vacation, but I can be a life changing decision.
Make the conscious choice to plan for your retirement and live intentionally.