Q&A with John Rush, CRPC® Financial Advisor
Author: Jeff Page | Photographer: Mark Staff Photography
Jeff Page: Are today’s baby boomers confident in what they have saved for retirement?
John Rush: No, in fact it is quite the opposite. Recent studies have revealed the following:
-42 percent fear that they might outlive their savings.
-57 percent of pre-retirees do not have a concrete retirement plan.
-70 million Baby Boomers lack confidence that they will have enough money to cover their medical expenses during retirement.
When you consider that pensions are becoming a thing-of-the-past, and couple this with our current market volatility, low interest rates, and low consumer confidence, addressing these issues is more important than ever!
JP: So, what do people need to know to start planning for retirement?
JR: What many people who are near ing retirement do not realize is how critical all the decisions are that you make at this stage:
-What should one do with their 401(k), IRA?
-What selections does one make with Social Security—take it early, at retirement or delay until later?
-How does one cover medical insurance after retirement?
Every decision can impact your entire retirement. It is important to make educated decisions, because mistakes in retirement can be costly. It is important to understand that all your financial products must work together.
JP: What advice would you give to someone wanting to feel more confident about their retirement?
JR: Here are a few ideas and actions I encourage people to consider to help ensure long-term financial stability:
Be true to yourself. This is first and foremost; understand your own financial circumstances and resist the urge to keep up with “the Joneses.” Instead, consider your budget, your long-term goals and your personal values. Pursuing your happiness within your own terms will likely lead to the ultimate prize: a secure financial future.
Pay yourself first. Take advantage of every opportunity you have to fund your savings with minimal effort. Automatically invest a portion of every paycheck into your retirement account, and be sure to maximize any employer match that is available to you. Or, another alternative is the set up an automatic transfer from your checking to your savings account. Make saving a priority!
Be prepared for change. Unexpected events are a fact of life, but by planning ahead, you can be pro-active instead of re-active to the effects an event like disability, illness or a natural disaster may have on your financial security. It’s difficult to imagine these circumstances might occur, but having an emergency fund or the proper insurance in place could be your saving grace someday.
Control your debt. This is another big one! Payments on consumer debt, student loans, and excessive car and mortgage payments can cripple your ability to save. The best approach is to minimize how much you borrow—don’t borrow beyond your means (see Rule 1—be true to yourself!). Next, take control of your current debts by establishing a plan that will systematically reduce outstanding balances on existing loans.
Put your plan in writing. Create a plan that outlines your personal dreams and goals, as well as the actions you need to take to achieve them. It can be extremely challenging to prioritize, but your financial security depends on it. If it seems overwhelming, consider consulting with a financial advisor and other professionals, such as an accountant and attorney. They can help you make rational rather than emotional decisions about your finances.
JP: How does one get started planning for a confident retirement?
JR: We can start with a simple conversation and begin a financial planning process. My team puts a great deal of thought and time into helping people feel confident about nearing retirement, moving into retirement and then enjoying their retirement. I get excited about the peace of mind this process can bring, especially during the turbulent times we are currently facing in the world and in the market. I value the opportunity to start this conversation with anyone wanting to improve the confidence they have regarding their own retirement. Whether that retirement is 10 years in the future or quickly approaching, it is never too early to start!
JP: Is it really as easy as having a conversation?
JR: It all begins with a conversation, and from there we work to create a road map for your future. Planning for retirement can be complicated, but breaking it down into basic steps can keep it from being so overwhelming. Ameriprise Financial has developed an approach called The Confident Retirement®. This approach takes into account four fundamental areas:
1. Covering Essentials 2. Ensuring your Lifestyle 3. Preparing for the Unexpected 4. Leaving a Legacy
JP: Sounds simple enough, but what does this all really mean?
JR: Let’s take it step-by-step:
Step One is covering the essentials. This is the foundation to any retirement strategy. Essentials are the necessities in life such as food, housing, medical expenses, utilities. My goal in working with someone is to fund these essential expenses with sources of stable or guaranteed income. Solutions could include Social Security, a defined benefit plan, annuities and CD’s.
Step Two is ensuring your lifestyle. Most people have additional goals they want to pursue in retirement such as travel, hobbies, spoiling the grandkids—the list can be endless! I look at this as the “How” you want to live. For these, we need to build a flexible investment and withdrawal plan to help ensure this lifestyle. Using products such as equities, variable annuities with guaranteed withdrawal benefits for your lifetime or cash-value life insurance can help provide this income.
Step Three is preparing for the unexpected. When life throws you a curve ball, being prepared is important. I am a firm believer in being pro-active and not re-active to unanticipated events, as they can have a devastating effect on your retirement plans. Personal liability, an accident or medical emergency and loss of a spouse are some of the common unanticipated events. Solutions to consider in preparing for these can include property and casualty insurance, long-term care insurance and cash-value life insurance.
Step Four is leaving a legacy. Thus far, we have accounted for essential, lifestyle and unexpected expenses; now it’s time to create a legacy plan. Legacy is all about giving to family, charities or causes that are important to you. I look at this as “smart giving,” and it is all about control and leverage. Control means having the appropriate documents in place: healthcare directive, living will, power of attorney. It also includes keeping your beneficiary designations up-to-date. Leverage is understanding that life insurance can be used to provide for survivors in the event of a premature death or to pass along to heirs.
JP: You seem really passionate about creating a confident retirement for people. What drives this passion?
JR: As I mentioned earlier, seeing the peace of mind this process has brought to the people I have worked with creates a passion to want to help others in the same way. If I can offer just a few words of advice, I would tell everyone it’s never too early—or too late—to start preparing for retirement. Whether you choose to meet with us or another financial professional, I encourage your readers to enlist help to define and work toward their retirement goals. It’s far more than just a number or a rule of thumb. Too many people spend more time and money planning a vacation than they do planning their retirement. Take the time and gain peace of mind!
John Rush & Associates are located at 1533 Fording Island Road (Moss Creek Shopping Center) Hilton Head Island. For more information call 843.837.1220 and/or visit www.ameripriseadvisors.com/john.b.rush