Get Ready for Retirement
Monday, May 26, 2008SUSIE GHARIB: One of the nice things about retirement is that it offers people the freedom to do many things they couldn't consider when they were working. As a result, retirees have lots of options in terms of what to do in retirement, where to live and how to spend their time. So the first decision that a person must make is about a retirement lifestyle. And as Connie Hicks and Joe Collum report, it's a decision with major financial implications.
CONNIE HICKS, NIGHTLY BUSINESS REPORT CORRESPONDENT: For millions of Americans, this is the dream of an ideal retirement: stress-free living in a community that offers lots of sunshine and plenty of leisure activities. Hello, I'm Connie Hicks.
JOE COLLUM, NIGHTLY BUSINESS REPORT CORRESPONDENT: And I'm Joe Collum. Now, golfing all day would be fine with me, but it may not be your idea of how you'd like to spend your retirement.
HICKS: And when it comes to thinking about your retirement finances, determining your retirement lifestyle is a good place to begin. Because no two people retire in the same way, financial planning for retirement is far from a one-size-fits-all matter.
COLLUM: For example, take Joal Fischer and Deborah Langsam of Charlotte, North Carolina. Leaving careers as a physician and a university instructor, the couple retired while still in their 50s. They're staying put in the same large house where they spent the last decade of their working lives. Now they spend most of their time making gourmet chocolates and volunteering and they say their retirement is based on the idea of living simply.
DEBORAH LANGSAM, RETIREE: In terms of our lifestyle, we'd rather spend a lot less and go on vacation.
JOAL FISCHER, RETIREE: Debbie's a very, very good cook, and so when we want a really good meal, we stay home.
HICKS: On the other hand, Joseph and Sandra Cummings would rather spend less of their retirement in their kitchen and more time walking to nearby restaurants. So they sold their single-family home in Coral Gables, Florida and moved to a smaller condominium in the downtown part of that city.
JOSEPH CUMMINGS, RETIREE: If you travel and we travel, you just close the door and walk away.
SANDRA CUMMINGS, RETIREE: It's just easier here because when you live in a condominium, you pay one check each month for your maintenance and then everything is done.
COLLUM: So how important is lifestyle in making a financial plan for a person's retirement? Certified financial planner Meg Green says its role cannot be minimized.
MEG GREEN, CEO, MEG GREEN & ASSOCIATES: Lifestyle is everything. It's what they do, what they need to spend, how are they going to keep the party going, if you will.
COLLUM: So if you're within a few years of retirement, it's time to start thinking about the type of retirement lifestyle you want. Then you need to figure out its price tag. As "U.S. News & World Report" retirement correspondent Kerry Hannon notes, living your retirement dream often can turn out to be more costly than you think.
KERRY HANNON, RETIREMENT CORRESPONDENT, U.S. NEWS & WORLD REPORT: And experts will tell you also is that retirement is not necessarily a cheaper lifestyle. You may travel more, your hobbies may be expensive, you may choose to retire on that golf course in Florida and the fees are quite high.
HICKS: And being able to meet expected retirement expenses is only part of the equation. Hannon and Green note that one of the challenges of planning for retirement is that there are so many unknowns.
HANNON: You know, for example, if you're saving for a college education for your child roughly what that's going to cost you. You have no way of knowing how long your money is going to last in retirement and you want to be very careful that you don't spend it too quickly.
GREEN: In my planning, I'm always saying, "what is your plan B?" You never can go into retirement without a plan because very often what you think you're getting is not at all what you end up with.
HICKS: Still, Green says it can be helpful to put together a description of how you envision your retirement lifestyle. She says that alone should make financial planning for the transition much easier.
GREEN: It's a totally different story for every person. Everybody has a different set of dreams, a different set of things that they bring to the table. And you have to kind of take what they have and what their dreams are and put them together. And I have never found two exactly alike, ever.
HICKS: So once you've got a better idea of what your retirement lifestyle will be, your next step should be to figure out how much money you'll need to pay for it.
COLLUM: That's a crucial number for anyone who's getting ready to retire and we'll tell you how to come up with it in our next segment. Joe Collum.
HICKS: ...and Connie Hicks, NIGHTLY BUSINESS REPORT, Aventura, Florida.
