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Planning for Retirement

Posted February 13, 2013 in Uncategorized

Man, it’s gonna be great.

Let me paint you the picture.

When I retire, I’m going to sleep late every day. I’ll have a sprawling, beautiful house in the country, and it will finally be paid off. No mortgage, no bills to worry about.

When I retire, I’m going to travel whenever I want. I’ll spend February in Hawaii; I’ll cruise to Alaska in July. I’ll go on in safaris to Africa, climb the Great Wall in China, and peddle my way through Europe like a college student.

When I retire, I’ll never worry again.

That’s a great picture, just as long as one never talks to a person who has actually retired. Reality can be such a messy thing compared to our dreams.

Reality… well, it can be a different picture.

Pipes never burst, furnaces never grew old, and the unexpected bills we have today may pretty much be the same unexpected bills we face in retirement… but without the weekly paycheck.

Bones never break, hearts never grow weary, and the health we take for granted today may be our greatest regret sooner than we ever imagined.

Life, if you live it long enough, doesn’t always get easier.

Brenda Lastine with son Colten. Saving for college and saving for retirement is a       balancing act for most parents.

Brenda Lastine with son Colten. Saving for college and saving for retirement is a balancing act for most parents.

Fortunately, the life skills that make for success at any age are pretty much the same skills that can help assure a better life in retirement. It’s a lesson that today’s younger generations are taking to heart as retirement planning begins younger and younger. And no age is too young to start, or even too old.

Mitch and Jamie Lunn are a Fort Dodge couple in their early 30s with two young children of their own. The couple say their parents stressed the importance of saving, even from an early age.

“My parents have always been very smart with money, and so have Jamie’s. Growing up and then being married, I think we both had good influences on us,” Mitch says.

The retirement years seem far off for this couple, and indeed they are, as even Mitch and Jamie’s parents are still working and have not retired. Still, it’s something that Mitch says should be factored in all throughout one’s life.

“I started back when I was with HyVee,” he recalls.

Mitch started working with the grocery chain when he was 19 and attending college, and worked there full-time for his first year after college graduation. He enrolled in their 401(k) program as soon he was eligible. As happy as he was to participate, he also acknowledges that it was the first financial mistake he made, and one that’s he’s happy to share so that others learn from it.

“The one thing I learned is that cashing out when you change jobs is not a good idea because you get hit with a penalty a lot of times, and it’s going to increase your taxable income that year,” he explains.

Fortunately, after only one year, he didn’t have much in that first 401(k) and was able to learn that lesson on the cheap. When he made a professional change more recently, he was certain to protect what he had established in his 401(k) and continue building and saving for the future.

As a couple, Mitch and Jamie focus not only on what they are putting away in savings, but they also work to trim their spending. Making smart choices, even as college students, enabled them to start marriage with little debt and no student loans.

Again, the couple gives credit to their parents for helping them with college, and also encouraging them to make smart choices about their schooling. Mitch and Jamie are both graduates of Iowa State University, and each of them started their college careers at Iowa Central Community College in Fort Dodge.

They are huge fans of Iowa Central and believe that it gave them a good leg up on starting their professional lives on sound financial footing.

“I know that I saved my parents tons of money by doing that, getting the basic classes out of the way. Iowa Central is such a good place to do that, and I lived at home and worked and saved my money,” Jamie notes.

Jamie’s mom, Shari McGough, says she and her husband were happy to help as parents, and is equally glad that the lessons about the value of saving for the future seem to have taken hold.

“It’s never too early to start saving,” Shari says.

As a young grandmother, Shari enjoys being spending time with Cambree, 6, and McKade, who will turn 3 in March. While retirement is still a ways off, one wish for when those years do come is being able to spend more time at the couple’s home in Florida.

Shari McGough spends a few afternoons a week with her grandchildren, McKade and Cambree Lunn.

Shari McGough spends a few afternoons a week with her grandchildren, McKade and Cambree Lunn.

Now as a mother herself, Jamie sees the benefit of that little extra time at home to really determine what she wanted to study, and then be serious about it when she did reach the university.

“I didn’t know exactly what I wanted to do at first, so I don’t think I would have been ready to go away,” she says.

The couple has made the most of that sound financial start by continuing to save and plan for the future. Many of his generation, he notes, doubt that Social Security and Medicare will still be around — at least in their present forms — for their generation.

“I think most people our age wonder if it will be there,” Mitch says.

Those concerns make saving even more important, even if it’s difficult. The best thing to do is start, even if you’re starting small.

“One of the mistakes people make is saving very little or not saving at all. If you create a goal that you want to save 10 percent, but you can only afford to put away 2 or 3 percent, start with that. You can always do better; you can always increase that later,” he says.

A common impediment to saving should be obvious, but can often be overlooked. After all nothing robs from the future faster than     debt.

“One of the problems I see is that people carry too much debt and they are unable to save for retirement because they have too much house loan, or too much car loan, and it hampers their ability to save,” he explains.

Mitch and Jamie are working to enhance their retirement years in another way as well. They try to protect their health by staying active and working out often. Indeed, taking care of one’s health may be one of the most effective and often overlooked ways to save money for the long run, and make it possible to better enjoy those retirement years.

In her early 40s, Brenda Lastine also stays active, works out and eats healthy. She is only a little closer to those years when a person is supposed to be able to take it easy and enjoy life. Her focus isn’t so much on “retirement,” but on building a sound financial future to protect her family when life hands you a surprise.

Brenda is a woman driven to work hard. She got her first job when she was just 14 years old. She even graduated from high school a year early, and she was happy to be able to attend Iowa Lakes Community College, but always worked to make sure that her own children would be able to get a four-year degree.

Brenda Lastine with son Colten. Saving for college and saving for retirement is a       balancing act for most parents.

Brenda Lastine with son Colten. Saving for college and saving for retirement is a balancing act for most parents.

“I always wanted a better life for my kids,” Brenda says. “I grew up with very little. My parents didn’t have much, and I worked from a very young age. I’ve always been a care-taker, wanting to take care and make a better life for my family.”

That hard work paid off. Her oldest son, Joshua, earned a bachelor’s degree in economics from the University of Northern Iowa and is now in his second year of Law School at Pepperdine University in Malibu, Calif.

Her youngest son, Colten, is a senior at St. Edmond’s and wants to study forensic science, possibly looking to attend Simpson College.

“I’ve always been very conservative, and kind of a saver, so we started a college savings plan when my oldest was probably in kindergarten. And then with Colten, we started right away,” Brenda recalls.

Saving for college and saving for retirement is one of the hardest balancing acts that families can face. Parents can take heart in a recent study from the University of California that found a correlation between better grades and student contributions to their own tuition costs. Paying some of their own way seemed to encourage greater responsibility.

Brenda says her own dedication to saving is something that has been very important for when the unexpected happens in life. She never imagined that she and her former husband would divorce, but that’s just what happened two years ago. By having saved all those years, and by funding her 401(k), she was better able to come through that divorce and ensure that her children would continue to enjoy the same financial quality of life as they had when their parents were married.

It hasn’t been easy, as Brenda really had to start over in building her savings and building her 401(k), but had she not had those savings, it would have been even more life-changing.

“Life would be very different today if I had not had that money set aside,” she notes.

Knowing that life is full of the unexpected, Brenda sees the importance of planning.

“Being able to protect my family was always very important,” she says.

Life insurance, disability insurance and long-term care insurance are a few of the tools that people can talk about with a professional, she suggests.

Making out a will is another important step in the planning process. Many people make out a will when their first child is born in order to choose guardians should both parents die. But couples without children, and couples who have children from previous relationships, also need to have and update their wills as life changes.

If you chose a guardian for your child when that child was born 10 years ago, is that person still the one you want to care for you child should the unthinkable happen?

Life is full of unthinkables. Some people do get to go on safari to Africa, and walk the Great Wall of China.

But most of us don’t.

Some folks are blessed with good health, strong bones and hearts that do not grow weary.

But couples do divorce, and spouses do die early. The road to retirement is full of surprises. Planning makes the road much easier to traverse.

Neither Brenda nor Mitch and Jamie see themselves retiring in the way that it was envisioned for previous generations. Rather, the retirement years — with the help of careful planning — will be years when they continue to be active and pursue the best that life has to offer.

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