How Many Legs Are On Your Retirement Stool?

     “Go to the ant, you sluggard! Consider her ways and be wise, which, having no captain, overseer or ruler, provides her supplies in the summer, and gathers her food in the harvest.” (Proverbs 6:6-8 NKJV).

     Since the early 1900s, different countries have been thinking about their workers retirement, disability and survivor benefits. In Europe several countries began to realize the importance of their wage earners, their spouses, former spouses, widows, widowers and children. In 1935 America enacted an insurance program for those reaching old age and for their families needs due to retirement, disability and survivor benefits. The tragedy is that many people began to lean on this one leg of the stool for their retirement and long-range planning needs. Today, as we all know, there are many more legs needed in order for people to have any kind of quality of life in their retirement.

     Below are several legs of the stool that you should be very concerned about in order for you, too, to have a secure and hopefully happy and fulfilling retirement. I call this The Legacy Stool. Because our life expectancy has changed so drastically since the early 1900s it is affecting everything we do. This is especially true about the challenge of keeping up with taxes, inflations and what I call the WYWLTD (What You Would Like To Do) lifestyle. Elena Slough and her daughter were featured in many newspaper articles in 2003. When Elena passed away, she was 115 years of age. What really got my attention was that her daughter, Wanda Allen, was 90 years old. Imagine having a daughter 90 years of age, Wow!

     It is so very true that you will outlive your money or your money will outlive you. Your decisions today will mean everything regarding your quality of life tomorrow. Look carefully with me at the following legs of the stool we call The Legacy Stool.

     The first leg of the stool is Social Security. I believe it will be around for many decades to come; only with serious adjustments in benefits and in age categories. Many people who have good incomes in retirement face the surprise of being taxed and even penalized when they are subjected to their Required Minimum Distributions (RMDs). Often people come to us at Metro Financial Group, Inc. and are angry or to the point of tears. Why? Because in some cases they have had a cost of living increase in their Social Security and with having to take their RMDs, they were suddenly pushed into a higher tax bracket. This means for them a Net Deficit!

     The second leg of the stool is your Company's Retirement Plan, in which you are a participant. The Bible declares, "In all labor there is profit" (Proverbs 14:23 KJV). This stool has been in the past more like a pension or some kind of defined benefit plan. However, today 401ks or some other kind of qualified plan (ex. 403b, 457, SEP, etc.) has become a standard benefit in most companies. Because this is the case, we are discovering that many employees, both professionals and blue-collar workers, may participate only in a company 401k plan for their retirement and in many cases without a match from their employer. This is why everyone needs to sit down with a professional and learn their options on personal investments and strategies for their future retirement needs. Remember, these type retirement accounts have never gone through "The Tax Ringer." These qualified plans are what we call pre-tax dollars with the age 59 rules where early withdrawal means a 10% penalty, as well as taxation on distributions, and age 70 rules where there are RMDs and 50% penalty for failure to take the distributions.

     The third leg of your stool is your Personal Asset and Investment Management Account, (PAIMA) "If you don't pinch enough pennies they will come back to pinch you." How many people can make a cash donation of $1.5 Billion Dollars into the Salvation Army Kettle? This is what came from the estate of Joan B. Kroc upon her death. She was the widow of Ray Kroc who was the founder of the McDonalds Corp. Not everyone will inherit or soar to such success. Therefore it is wise to seek the help of those who can help you in your personal asset and investment planning ideas. We give out many copies of the book called, The Richest Man in Babylon. In this little book there is great wisdom on how to save and conserve your money efficiently for those rainy days to come. George Clason, the author, relates the importance of making money a slave to you and not you becoming a slave to it. We urge every client, affluent or just starting a PAIMA portfolio, to read this book.

     The forth leg on the stool for your future life-style and retirement needs is YOU. "Let him labor, working with his hands what is good, that he may have something to give him who has need" (Ephesians 4:28 NKJV). I read recently about the famed 96-year-old surgeon, Dr. Michael DeBakey, who still rises at 5 am, goes to work and comes home around 6pm each evening. Although he has laid down the scalpel, he still consults and helps people in medical training and students in the field of surgery. However, not everyone will enjoy that kind of health. What if you cant work in your retirement? Then you must lean upon the other legs of your stool. Someone visiting our offices said to us recently, "I know a person who is trying to get by on a one-legged stool. That means you will crash!" That person is right.

     Another leg on many peoples retirement stool could be An Inheritance if you are so blessed. The Bible tells us, "A good man leaves an inheritance for his children's children" (Proverbs 13:22 NIV). Not everyone will inherit assets from their parents, grandparents or other relatives, but one never knows. This past year a dear friend left me money in her will. The $2,000.00 she allocated to me helped to launch the Retired Ministers Fund. I established this fund to help ministers and their families in the event of retirement needs, disability, other special needs or death. I was amazed to read in the Denver newspapers recently about the Pearl of Allah, which was left as part of an estate. This football-sized pearl weighing 14 pounds is said to be worth $60 million. A jury in El Paso County awarded millions to the owner of the pearls three children who had to sue in order to secure their rightful inheritance from their fathers estate. Yes, today as never before trillions, not millions or billions, but trillions of dollars are changing hands from the "Greatest Generation" families into the hands of Baby Boomer" families. I would not count on it as we tell our clients, but you may well be the recipient of the fifth leg of the stool, an inheritance.

     I urge you to stop and take time to visit with your professional advisors: Attorney, CPA, Insurance Agent, Investment Broker, Financial Planner or Legacy Planner. "Do your planning and giving while your living so you'll be knowing where its going." Do not make the mistake of Terri Schiavo. Everyone in the world now knows of her problems and those of her family. Think of how all of this could have been avoided by Terri taking the time to "get her house in order." Be wise and take the opportunity to plan for your future and for those you love the most. Start today building those legs under your stool. Make them as strong, sturdy, and sound as possible so you can face whatever adversities may come against you in the future. Look into the mirror at your own stool. How many legs are supporting your retirement stool?