By the time you read this, school will have started; many, now virtually. At CUNY, this fall semester, I am teaching Retirement Planning. In our temporary “new world,” this should be a very interesting topic this semester.

 

But let’s start with a very simple premise.

 

What is Retirement Planning? For many, it is the objective of achieving financial security and independence. While we all, I am sure, want to achieve a desired financial lifestyle – what many do not understand is that to achieve that future financial independence, one has to be willing to forego a certain sum of money in the immediate-term, in order for it to accumulate and grow in the long-term.

 

While the class itself will cover many angles of retirement from public to private employees, employers to the role of government and financial advisors, and though it is a complex topic; we will keep this explanation simple.

 

One has to understand funding opportunities, life expectancy, the projection of inflation & investment returns, and retirement life expectancy.

 

Why? ‘Cause at the end of the day, retirement planning is about determining the optimal distribution amount desired in the future to provide that financial independence for your retirement life style and life expectancy.

 

Today, with many using non pension-like retirement accounts, the areas of risk have been transferred from the work place or institution you use to the private individual.

 

So, are you saving money for retirement? Some are and some are not! Why? Many say it is because of the high cost of living and the day-to-day expenses they incur. While that is truly understandable, a 2019 Employee Benefit Research Institute (EBRI) retirement confidence survey concluded that:

• only 66 percent of workers are saving for retirement;

• 40 percent of workers have less than $25,000 in savings;

• 51 percent of workers have over $100,000 in retirement savings, but only 42 percent of workers have completed a retirement needs analysis.

 

Even worse, in today’s working world, the employer is less informed about retirement than the employee or private individual, which is why many hire financial advisors for assistance.

 

Can the government help? Of course it can! The government sponsors social security, and creates tax related policy for retirement plans to provide us an incentive to save.

 

There is so much more to cover on this subject from the retirement tools one must use to better understand retirement accumulations and distributions to proper saving and investing, and understanding the tricks of Social Security. But this is what the retirement planning class is all about!

 

Want a simple scary example? Let me share with you what I share with my clients. I call it “the worst case scenario”.

 

Let’s say you are 45 years old and make $50,000 a year, and your goal is to retire at 65. So at 65, how much income will you need, since you will not be working? $50,000 a year! Planning on living to age 85? Well, then that means you need $1 million in total savings. And I did forget inflation, didn’t I? At age 45, applying an inflation rate of 3 percent per year for 20 years, then that $50,000 is really $80,000 by the age of 65.

Applying that same inflation rate until the age of 85, it is now $128,000 per year. Now, do you have non-working income to make that up in your traditional savings? In your retirement funds? In your social security? Oh, and I did forget the effect on your taxes! Understand a bit better now?

 

Too much to cover in this article? Absolutely! But I intend on occasion to cover parts of these areas in future articles. However, if you have Facebook, let me reference you to the FB page below which we hope to cover on a weekly basis starting September 20th.

 

The year 2020 brings many perils. Retirement planning should now be a priority.

 

Professor Anthony Rivieccio, MBA PFA, is the founder and CEO of The Financial Advisors Group, celebrating its 24th year as a fee-only financial planning firm specializing in solving one’s financial problems. Mr. Rivieccio, a recognized financial expert since 1986, has been featured by many national and local media including: Kiplinger’s Personal Finance, The New York Post, News 12 The Bronx, Bloomberg News Radio, BronxNet Television, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Co-Op City News, The Bronx News, thisisthebronX.info, The Parkchester Times and The Bronx Chronicle. Mr.  Rivieccio also pens a financial article called “Money Talk”. Anthony is also currently an Adjunct Professor of Business, Finance & Accounting for both, City University of New York & Monroe College, a Private University. Professor Anthony Rivieccio Facebook page is: www.facebook.com/yourfinancialdoctor You can reach Anthony at 347.575.5045.