Here’s How You Can Plan for Retirement—at Any Age

One family prepares for its financial future and provides insights for the rest of us.

Plan for retirement at any ageMatthew Cohen/

Vincent Martin is 56 and on track to retire right on time at 65. That’s no small feat, considering that he has never used a financial adviser or other investment advice. A Navy veteran and an IT engineer who lives in Aurora, Illinois, Vincent is proud to have gotten here on his own. “There’s nothing a financial adviser will tell you that you can’t find written online somewhere,” Vincent says. He has tried to help his daughters start their own retirement funds too.

Self-driven financial planning isn’t for everyone. We all face a future of fluctuating costs—especially the costs of living and health care—and that means preparing for retirement can feel like trying to hit a moving target. Vincent’s path provides many good, all-purpose lessons on how to maximize your nest egg. But we also did what he wouldn’t: We asked financial advisers for further insight on his strategy. Plus, here’s more financial advice that your financial adviser won’t tell you.

Vincent’s retirement goal all along has been clear: “I don’t want to have to work,” he says. “I’ve been working since I was 14, and quite frankly, I’m tired.” Starting to save was perhaps the hardest part. After serving in the Navy for 15 years, Vincent found himself working full-time as an IT consultant and “just barely getting by.” On top of that, he was enrolled in college and got married to his wife, Pamela Martin. He wasn’t able to contribute much to a 401(k) retirement-savings account until his mid-30s, when he became a systems administrator at a bank.

In many ways, Vincent’s story is typical. A March 2018 Bankrate survey found that one-fifth of Americans aren’t saving any money for things such as retirement, chiefly, they say, because they can’t afford to. “Like a lot of Americans, I was in survival mode,” he says. “I didn’t have any money to put away for retirement, and all of my money was tight. I had no liquid assets after I paid all of my bills.”

But as Vincent’s career and paychecks progressed, he taught himself the ins and outs of retirement preparation. He sought out as much educational material as he could, including financial magazines and Vanguard’s online investment tools and calculator. He contributes 5 percent of his pretax salary to a 401(k) through his employer and receives a 5 percent company match. He invests in a mix of bonds held in an IRA to ensure stability in retirement and CDs, and he has gradually funneled more of his money to less volatile investments as he has gotten older. So far, he has managed to save about $400,000, and he hopes to double that by the time he retires.

To maximize his benefits, he also plans to wait as long as ­possible—until age 70—to draw from Social Security. He expects to receive around $3,500 per month, or $42,000 a year, before taxes. (Yes, Social Security benefits may be subject to taxes.)

Will that be enough? Possibly. Assuming that Vincent’s planned $800,000 nest egg earns a very conservative 6 percent, that would mean $48,000 a year in proceeds (also before taxes) that he could draw on without touching any of the principal. According to the Bureau of Labor Statistics, the average retired family spends $45,756 a year. His 401(k) and Social Security would easily cover that. Find out more about how much money you really need to retire.

long-term care policies give you liquidity when you need it.

Yet despite Vincent’s planning, life has thrown some curveballs at the Martins. The biggest is that Pamela was diagnosed with multiple sclerosis and hasn’t been able to work for 20 years. She draws a Social Security disability income, around $1,500 per month, and receives benefits from long-term disability insurance, which will disappear when she turns 65. Vincent has been creating an additional pool of funds, what he calls a slush fund, to cover both of their medical costs.

“We’re doing as well as we can to prepare,” Vincent says. “I’ll care for her for as long as I can in our house, but there will come a time when she will need at least part-time nursing care.”

Joyce Petrenchak, wealth strategy regional director at PNC Wealth Management, says that people who are worried about rising health care costs should look into long-term care policies. The catch, however, is that these plans may not cover preexisting conditions, so it’s important to enroll sooner rather than later. Smart people do these things when preparing for end-of-life plans.

Also, these policies don’t cover every cost. The most affordable ones will help pay for in-home assistance with daily activities, such as bathing and dressing. You can pay for more care, but the “bells and whistles” you get are less important than the peace of mind, says Petrenchak. “These policies give you flexibility and liquidity when you need it,” she says. Here are some more retirement facts you need to take seriously.

Mindful of his own struggles to save, Vincent has been working overtime to support his children’s efforts. Cherlyn Thomas, the Martins’ oldest daughter, has her retirement savings on autopilot. A vice president of education services at a school in Chicago and a single parent to 13-year-old Jason, Cherlyn has a 401(k) and 403(b), a similar tax-incentivized retirement account. She has increased her contributions twice but doesn’t keep an eye on her investments. That’s actually a good thing. Experts warn that obsessing over investments is often counterproductive because timing the stock market’s highs and lows is impossible. That said, now that she’s in her early 40s, Cherlyn realizes the value in having a clearer picture of what’s ahead.

“I want to do better and be aware of what’s going on with my finances,” she says. “I know I’m going to get Social Security benefits, but I’m not quite sure where that really puts me at each month. It just seems so far away.”

The planning often intimidates people. Vincent and Pamela’s youngest daughter, ­Emerald Martin, 24, goes to school and works part-time in Arizona. Her employer offers a 401(k) plan, but she hasn’t enrolled. To her, the program is confusing, and she prefers to save on her own, despite losing her company’s matching funds.

Plan your retirement at any ageCourtesy Vincent Martin
Clockwise from top left: Pamela, Vincent, Cherlyn, and Jason

“I wish people would explain it instead of just being like, ‘Here’s a thousand documents on our website, and you can determine whether or not you want to participate,’” Emerald says. “It would be more comprehensible if they explained each one in detail instead of just throwing a ton of information at me.”

Petrenchak suggests that employees focus on the fact that benefits are a part of their compensation. If they don’t use them, they aren’t being paid what the job is worth.

Abigail Gunderson, a certified ­financial planner and wealth adviser at Tanglewood Total Wealth Management, recommends that Emerald think about smaller, more tangible goals for now, rather than the big, far-off picture.

“Taking baby steps can help people who are overwhelmed by the process,” Gunderson says. “And even if they see a financial planner or adviser for just an hour, or talk with their parents, it can help clear the confusion.”

In fact, kids whose families discuss retirement planning with them seem to be better prepared for the future. A report by the FINRA Investor Education Foundation and the CFA Institute found that nearly 50 percent of millennials with taxable investment accounts reported their parents had talked to them about investing before they were 18.

So even if Vincent’s advice hasn’t yet fully resonated with Emerald, their open dialogue around the topic has the potential to benefit them all in the long term.

So what’s next? Emerald hopes retirement conversations with people her age will become simpler and more relatable. Cherlyn plans on getting together with her father to go over her asset allocation. And Vincent is doing his best not to let market fluctuations shake him. “Everyone needs to be an active participant in his future,” Vincent says. “Read as much as possible and prepare as best you can.” Start with these retirement planning steps experts want you to take before age 50.

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