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Enough Money to Live Until We Die

July 4, 2013

What is our biggest fear? Embarrassment? Death? Public speaking? According to an Allianz Life Insurance poll, the greatest fear of older Americans is outlasting their savings. We fear living longer than our bank accounts by a margin of 22%.

Stephen Pollan has an interesting solution to this problem. In his book Die Broke, he wrote something to the effect of: "The last check you should write should be to the undertaker, and it should bounce!" I wonder if people like that die because they know they are out of money.

Now, I can imagine a couple of ways to follow Pollan's recommendation. One is to go sky diving, neglect to pull the parachute cord, and pay the sky diving company with a bad check. Or one could go on a massive spending spree, overdraw every account, and stay broke until death. In the latter case, one wouldn't have to worry about running out of money in the least – you don't have to worry about losing something you don't have.

Not New News

Not too long ago, I was quite pleased when my computer would ding and announce "You've got mail!" Now, after spending the day away from the computer, I am not surprised to return to 100 or so messages between the junk mail that makes it through the filters and the emails that actually require my attention.

Like most folks, I've developed a system for quickly scanning and prioritizing my inbox. Every day I get a few from my wife Jo (email from a spouse is a high priority for anyone interested in staying married), as she is forever on the lookout for things I might want to share with my readers. One headline Jo sent caught my eye: Running Out of Money Worse Than Death.

The short article published by AARP covered the results of the Allianz poll; while the poll of 3,257 people was taken about three years ago, my guess is the results would be similar today. Let's take a look at a few of the highlights:

  • Of people ages 44-75, more than three in five (61%) said they fear depleting their assets more than they fear dying.
  • More than half (53%) of poll respondents said their net worth dropped significantly during the [2008] economic downturn. Of those, virtually all have cut back on entertaining and dining out, 47% have reduced their daily living expenses, and 11% have told their children to expect less financial support.

Honestly, this isn't new news. Seniors and savers can no longer rely on Treasuries or FDIC-insured CDs to pay interest rates that will beat inflation, let alone make them any money. We are all having to put a greater portion of our nest eggs at risk to earn enough to supplement Social Security. But the headline still bothered me… a fear even greater than death?

Nevertheless, I started to pay attention to my closing thoughts at night, and I tried to recall what I dreamed about. I don't remember ever dreaming about death or worrying about it late at night. On the other hand, I did find myself doing a lot of problem solving during the night, much of it financially related. Perhaps the survey was right; maybe I do worry more about running out of money than I do about dying.

I touched on this subject back in February, and since then two of my good friends have been diagnosed with medical problems for which there is currently no cure. I am amazed at how both friends quickly dealt with the news and set about reassuring their families that they were OK with the situation. One even went so far as to joke that his kids are being particularly nice, because they know he still has enough marbles to change his will if he wanted to. I admire both of these friends a great deal and hope that when my time comes I will handle my swan song with as much grace as they each have.

Then it hit me! And yes, it was actually in the middle of the night. My real problem with the Allianz survey is that I want to live until I die. I want to enjoy life while I'm here. I worked my tail off for many years to accumulate a nice nest egg. I've earned more than a few low-stress, worry-free golden years. Worry is for young folks with young families.

My kids roll their eyes when I remind them that in my 20s I worked three jobs and went to school at night… for a decade. The only thing I remember from my 20s was working to feed a young family; I had little time to worry about much else. When we reach our 60s, those stresses should be well in the past.

Nevertheless, just because certain worries should be in the past does not mean they are. Retirees need to figure out a way to not run out of money so they can stop worrying about it, sleep well at night, and enjoy the sort of retirement they imagined.

Retirement Success Is Possible

The fact is, the market has changed: investing is a lot more challenging than it was just a decade ago. If one has a nest egg but is worrying about making it last, he is well ahead of most folks. After all, he had the foresight and discipline to save while he was still in the workforce. Frankly, most of our readers fall into that boat.

As I wrote in my book Retirement Reboot, I was terrified in the fall of 2008. The banks had called in all of our CDs; I had a nest egg but was still in a panic regarding handling it. What should I do with it? Where could I find a good return? How do I know which investments are safe? What is a good allocation for a stock portfolio? I could have filled two pages with my list of fears at the time.

As I look back, the solution was really simple. I needed to learn – a lot. I needed to educate myself on investing and learn about issues I had not focused on during my business career. My goal was to invest my capital, earn good returns, not worry, and keep my fears under control. Most of all, I wanted to live life and enjoy the retirement Jo and I had dreamed about for a couple of decades.

A friend told me years ago that fear is a lack of knowledge. The more you learn and understand about a subject, the less fear you have surrounding it. I agree wholeheartedly. Financial fears will take a terrible toll on many of us if we are not careful. Fear not only affects us financially – often paralyzing us into indecision – it also eats away at our emotions and can even damage our physical health. I for one plan to have fun while I'm here and not worry myself to death.

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On the Lighter Side

We sold our Illinois home. We said our goodbye to our friends, took in one last Cubs game at Wrigley Field, probably ate way too much pizza, and headed back to Florida. I was surprised that I was not a bit more nostalgic. For many years I dreamed of an Illinois summer home, and we spent the last 13 summers living that dream.

Instead of looking back as we left, I found myself thinking ahead. We have our Florida home on the market, and when it sells we want to live in the Phoenix area. Right now our life seems to be in limbo until that happens, but we have a lot of cool things we want to experience once we finally land in Arizona.

As I reviewed today's article one last time, I realized just how important it is to feel comfortable with one's financial situation. As seniors, we don't have the luxury of a financial do-over, but that does not mean we cannot have do-overs in other areas of life. Jo and I plan to keep following our dreams wherever they take us, enjoying the ride as long as we can. That's what retirement is supposed to be about.

And finally…

Ed S. sent over more clever paraprosdokians:

  • If I agreed with you, we'd both be wrong.
  • War does not determine who is right, only who is left.
  • Knowledge is knowing a tomato is a fruit. Wisdom is not putting it in a fruit salad.
  • They begin the evening news with "Good Evening," then proceed to tell you why it isn't.
  • A clear conscience is the sign of a fuzzy memory.
  • You're never too old to learn something stupid.
  • To be sure of hitting the target, shoot first and call whatever you hit the target.

I hope everyone has a wonderful Independence Day with family and friends. Independence takes on a new meaning as we get older. May we continue to be blessed with independence as individuals throughout retirement, and as a nation for many centuries to come.

Until next week…

 
 

About the Author

Over the course of his career, Dennis Miller has consulted with many Fortune 500 companies, training hundreds of executives to effectively communicate the value of their company's products to their customers. Among his many multi-national clients are: GE, Mobil, Shell, Schlumberger, HP, IBM, Corning Glass, Eastman Kodak, AC Nielsen, and Johns-Manville.

An active international lecturer for 40 years, Dennis wrote several books on sales and sales management. He was a contributor to... read more