Page 42 - Money - November 2018

THE
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RETIREMENTTIREMENT
GUIDE
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THE
SOLO FUTURE OF A big mental hurdle for retirement savers The financial advice industry still has
SENIORSTIREMENT
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is “present bias”—the human tendency to some catching up to do. Advisors may be
weigh what’s happening now twice as heavily urging people to plan for a long retirement,
as what might happen in the future. “The but the tools and products their firms offer
present is real, tangible, but the future is assume the kind of smooth, upward career
muddy,” says David Laibson, a professor of path that’s becoming more of a rarity these
economics at Harvard University. When you days. Consider the online retirement-income
%X NYWX can’t imagine a future that’s decades ahead, calculators that help you translate your
current savings into the income you’ll have
it’s hard to feel any urgency to save for it.
ERRYEP psychology to help couples plan for the in retirement.
Russell of TD Ameritrade employs some
On its face, this is a good exercise: It’s
MRƚEXMSR distant future. She finds that it’s common for useful to consider your savings as an income
XLI KEPPSR people to dismiss the possibility of living to a stream rather than a lump sum. The typical
calculator asks for your current age and
very advanced age themselves, but to more
SJ QMPO readily imagine and worry about their income, assumes that you’ll get small raises
partner’s possible longevity. Russell tries to
each year until you retire voluntarily at
XLEX GSWXW harness that protective instinct to help both age 65, assumes certain market returns, then
]SY partners plan. spits out a projection of how much monthly
income your total lifetime savings will
The hardest part of establishing an
XSHE] [MPP exercise routine or a retirement savings generate.
habit is getting started. “We’re always of the
Real life involves a lot more detours.
GSWX ]SY mindset that the present time is the wrong Nearly half of all retirees leave the work-
MR time to do the hard work,” Laibson says. We force earlier than planned, often owing to
a hardship such as a health problem or a
think we won’t mind buckling down as much
3 ]IEVW in the future, but when the future finally layoff, according to the Employee Benefit
arrives, it’s the present, and it’s no easier to Research Institute. Those who reenter the
get off the starting block. workforce often do so at a much lower salary
One way to overcome inertia is to put than they earned before. “Most of the
something on your calendar, Laibson planning software today is still pretty
suggests. Choose a fun class at the gym and limited on the what-ifs,” says Jerry Patter-
invite a friend along to make it a date that son, senior vice president of retirement and
you’ll feel bad breaking. Make an appoint- income solutions at Principal Financial
ment with a financial advisor, and enlist a Group. The next generation of tools should
friend or spouse to help you prepare for the help consumers with life’s contingencies, he
meeting. says. For example, if you decide to move into
a lower-paying but more satisfying role
when you turn 50, what do you need to do
)<4)'8 8,) 92)<4)'8)( now to make sure you can maintain your
ODAY’S CENTENARIANS didn’t have standard of living in retirement?
8 fancy tools to help them plan for helpful starting point to gauge whether
Retirement income calculators can be a
life after work. After all, the
Internet didn’t exist when they you’re on track to retire one day. But don’t
were in their fifties and sixties—and neither stop there. “You can’t just run projections,
did retirement, at least not as we know it draw conclusions, and wake up at 85 hoping
8ES 4SVGLSR today. “Before the ’80s, most men were you have a few bucks left,” says Thomas
0]RGL EX dying in their boots,” says Teresa Ghilar- Mingone, a financial professional with AXA
;EMR[VMKLX ,SYWI ducci, professor of economics at The New Advisors in New York City.
E ]SKE LIEPXL
ERH LIEPMRK GIRXIV School and coauthor with Tony James of Instead, make course corrections as
MR 6]I 2 = Rescuing Retirement. needed. Plug in new numbers as your

MONE Y. C O M NO VEMBER 2 018 PHOTOGRAPH BY PATRICK JAMES MILLER