What’s Your Biggest Obstacle With Financial Planning For Retirement?

I was talking with a friend from church last week whose husband works (worked?) for WAMU bank and who told me her husband would find out on Monday whether he still had a job.  Here in Seattle it’s big news that Washington Mutual is going to be cutting 3,000 employees – not good news for this locally-headquartered company.

In the course of the conversation, we chatted a bit about what he might do if he were to lose his job (like… get a new job or work as an independent contractor).  My friend, who is in her early 60’s, mentioned that she and her husband were "bad with figures" and had outsourced all of their financial planning and retirement planning, so she wasn’t sure what they would need to do – financially – in the event that her husband was forced into an involuntary early retirement by his employer.

Do you know where your retirement plan is now?

It’s a tough situation they’re in, and I hope my friends got good news about his job on Monday.  But what I wanted to comment on here is that it struck me as "peculiar" that someone would "outsource" their personal finances and retirement planning to someone else, to the extent that they didn’t have direct control or knowledge of it any more.

Now, in the few days since then I have caught a number of other references to this phenomenon and am beginning to realize just how pervasive this is.  Do you do your own financial planning and investing, or have you put your money in the hands of a professional just hoping he knows more about how to get you ready for retirement than you do?

Personally, I’ve been obsessed with retirement planning since I was 8 years old, so complete outsourcing is never something I’ve considered.  And I’m willing to bet there are a lot of people out there who are like me – the do-it-yourselfer kind – who are trying to actively manage their investments, watch their monthly expenses, look at their monthly statements and yet, know they don’t have all the information they need to really feel comfortable knowing everything will work out when they leave their jobs one day.

It’s easy to be nervous… your retirement plan is something your life depends on and it’s something that can take years and years to build.  When investments fall, like they have in the last year (we’re now officially in a recession that started December 2007, according to the Wall Street Journal (and a new definition of recession)) it’s staggering to see how quickly years of work and planning can be wiped out.

Some folks are unsure of whether we’ll have enough money when we retire and don’t know how to manage their finances when they are finally ready to walk away from the 9-5 job.

Our Relationship With Money Starts At A Young Age

I think one of the reasons retirement planning and stock market investing (and real estate, for that matter) have always been of interest to me, is that they were things that are important to my father and he discussed these topics with me since I was young.  I can remember starting my passbook savings account in elementary school, founding a stock investment club in high school, and writing on my college applications that my favorite book was "How I turned $1,000 into $3 Million in Real Estate, In My Spare Time" by William Nickerson.

Parents out there, take note!  You do have a strong role in shaping your children’s beliefs about and relationship to money!

On Tuesday I was talking with Dad about money again as we drove across town in my minivan (yes, as a new mom, I am now a mini-van driver, too!) to pick up a new couch he had ordered from Crate and Barrel.  He began expounding on some of the stock market moves he was making now that the market is DOWN but still highly volatile and began discussing his retirement spending plan and budget, which he’s in the process of perfecting before he and Mom retire in the next 10 years or so…

As he was talking, my eyes lit up and I looked for a pencil to start taking notes.  "This would be perfect for my blog!" I told him.

As something of a perfectionist and an attorney – I think is middle name is *Disclaimer* – he wasn’t that eager to commit to publishing his ideas right off the bat.  He’s the type that likes to dot his I’s, cross his T’s, drink some Earl Grey tea and think about it over night before committing to anything.

But – I am going to see if I can prevail upon him to share more of his ideas – whether through an anonymous guise (hope I didn’t blow the anonymity by writing this…), in a recorded interview, or in my taking notes of his concepts to share with you.

Dad Has a Very Well-Researched Financial Retirement Plan That Is Involved Enough to Work As The Economy Passes Through Cycles, but Clear Enough That He Can Follow It and Keep His Lifestyle Consistent Through His Retirement Years

My Dad is very conservative, very well-read, very up-to-date on the news, and very opinionated.  He’s the one who everyone in his inner circle asks for financial and business advice.  I’m putting myself on the top of his list so he will start cranking more information out for me and I’ll see if I can capture the details of the plan he’s created in a way everyone can understand, here.

I’m going to start by pumping him for information on a few topics I think will be especially interesting.

Here are some of the questions I’m going to ask him about. 

• How will your finances change when you are retired, do you really only need to spend 70% of what you spent when you were employed?
• How do you plan for unforeseen expenses like medical expenses or long term care?
• What retirement account (401K, IRA, Roth IRA, etc.) should I tap into first?
• How much money do I need to have in the bank before I retire?
• What asset allocation should I have?  Do I really need to be in bonds?  (Emily: I hate bonds!)
• Can I afford to retire early?
• What if I don’t have enough to reach my retirement goals?
• How do I tap into my nest egg so I know I will have enough to support me through a long and healthy retirement?
• What should I be doing before I retire to set myself up for my golden years?

I’d love to add your questions to the list.  Maybe we can make some audio recordings or a regular column from Dad here… we’ll see.

Comment below and tell me your questions on retirement planning and financial planning!  Thanks for your help with this!  I’m looking forward to putting together some really meaty articles.

Emily

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