Cultivating The Leader Within - Minority Enterprise Executive Council

Your Spending. You probably do not
limit yourself to spending only 70%
of your salary If you do and/or will
do so for the 10 years or so preceding
your retirement; I can tell you that you
are both rare and likely to be in very
good shape at retirement. However,
most Americans, spend as much as
90% or 95% of it and are unlikely to
spend less unless forced too. Most
people only change spending habits
in response to economic necessity
or in pursuit of new financial goals.
People don’t want to “live on less”
once they have had “more”. Yet in
the world that exists post 2008, it
is clearly time to strongly consider
adjusting to “less is better”.
Personal Health. Almost all of us
will have a major health challenge at
sometime in our life. It could even be
chronic health issues that last for the
balance of our lives. While none of us
like to think about this most unpleasant
possibility, based on our longer life
spans it is prudent to consider. So before
you become a retiree, stop and think
about the potential costs of prescription
medicines, and recurring treatment for
chronic ailments and...make sure you
include them in your contingency plans.
I have seen these costs take a bite out
of retirement income for others, even
when they had a great health care
plan. Even with generics helping to
stem the rising increase of prescription
drug costs, still one estimate found
that a 65-year-old couple who retired
in 2011 would pay $230,000 for health
care costs, excluding insurance and
Medicare, including the costs for
nursing home care. 3,4
Investments. With most people retiring
in the future either without a pension
or a modest one, the importance
of personal savings cannot be over
emphasized. Unfortunately far to many
people retire without haven’t had their
investments reviewed in years. The
asset allocations from three years ago
may have needed to be changed so
clearly the one from 10-15 years ago
is likely no longer appropriate. Retirees
sometimes carry too much investment
risk in their portfolios (including today
too much invested in bonds!) and
other times have not diversified to
achieve needed growth for a 40 year
retirement that must keep pace with
price inflation. The results being that
the retirement income from their
investments fluctuates wildly, which
then creates anxiety and sometimes
panic driven decisions.
Social Security (or lack thereof).
Will Social Security even exist by
the time you’ve retired Not to be
political, yet, a recent study from the
Government Accounting Office (GAO)
compels any retiree or future retiree
to face that question. The study in
summary states that the beloved
program may start to run out of money
by 2036 and may be broke by the end
of that decade. Additionally, to keep it
solvent, the GAO suggests a 20% cut
in benefits, due to increased longevity
(there’s that heredity again) and less
workers. Even if SSI is still a going
concern in 2040, it probably will not be
the same as your Mom and Dad’s. 3,4
Given those factors, creating a
retirement plan makes a lot of sense. A
budget – and the discipline to stick with
it – may make a financial difference.
Do you know if you have enough
When it comes to planning your
retirement just reading articles like
this one, using some calculators, and
making some assumptions may prove
to be a disaster waiting to happen in
the future. Take the time to find and
meet with a retirement planner you
trust, while you are still working to
help you estimate your lifestyle needs,
expenses (short-term & long-term) and
contingency plans. A solid retirement
plan including a budget, along with
the discipline to follow through
will make a big financial difference.
Because once you get a few years into
retirement, the chances of and your
ability to generate additional income
is significantly reduced…and besides,
who wants to have go back to work
Citations
1
- http://fmsadvisors.com/fmsadvisors.
aspxMyMenu=newplanning&MyPage=
nh/calculators.asp&SessionID=87297547
2
- http://transgenerational.org/aging/
demographics.htm
3
- www.nytimes.com/2007/09/21/
business/21generic.html_
r=1&oref=slogin
4
- www.reuters.com/article/2012/02/23/
us-column-miller-retirementcostidUSTRE81M24M20120223
Financial Management Strategies,
LLC (FMS) is a Registered Investment
Advisory firm in the State of Maryland,
providing its advisory services to both
institutions and individuals.
Mr. Petiri is the owner of Financial
Management Strategies, LLC (FMS)
a Registered Investment Advisor
established in the year 2000. His nearly
two decades of financial experience
covers virtually all areas of finance from
tax, insurance, stockbroker, personal
financial planning and personal banking
to corporate credit, business planning
and consumer lending.
Mr. Petiri has frequently been heard
on WEAA (88.9 FM) as a financial
commentator, appeared on WMAR-TV
2 regarding the 2008 & 2009 economic
downturn, and MTA Commuter
Connections regarding residential land
development. He has been interviewed
and quoted by the Investment News
magazine, written for the Journal
of Personal Finance, is a frequent
contributor to the IARFC publication,
The Register, Popular Finance (of
China), and publishes a monthly
financial advice column called the
Foresight. Mr. Petiri was also quoted
in Bankrate.com and currently writes
for the Baltimore Examiner. Walid
also serves on the Finance Committee
of Associated Black Charities and is
member of Bethel African Methodist
Episcopal Church. He is a devoted
parent to his son and daughter.
Minority Enterprise Advocate • March – April 2012
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