Retirement Woes

Google News posted articles from CNN, Yahoo! Finance, The Motley Fool, and The Daily Wire about retirement woes.

CNN reported that individuals continue withdrawing from their 401(k) plans, and according to Yahoo! Finance, 41% of US employees cashed out a portion of their accounts, and 85% took out everything.[1]

The Motley Fool stated that 78% of Americans struggle to save for retirement. The Daily Wire said that 29% of workers under 55 don't think they can ever retire.[2]

Why the angst? Factors include the pandemic, last year's stock market correction, and inflation. What can you do to eliminate your retirement concerns? The two obvious choices are spending less and saving more because those are the items you can control. However, most people don't like those choices, so let's explore a few more options.

• Move. If you live in Los Angeles, San Francisco, New York, or any big city, consider moving to a different part of the country with a lower cost of living. Technology allows you to work from anywhere, and most towns have similar services and opportunities for retirees. U.S. News and World Report states that Tulsa, Pittsburgh, and Little Rock offer affordable living.
• Gig. The gig economy is ideal for retirees through on-demand or part-time work. The IRS gives a few examples, like ridesharing, delivery services, and property rentals. In addition, you can sell crafts or goods online. Also, if the IRS suggests it, they will tax it.
• Create. Can you create video courses or podcasts? Do you have a specialty or niche? If so, start creating and posting. You can become an influencer in no time!
• Consult. Turning your career into a new revenue stream through consulting is possible. Several clients have returned to their industry as consultants, typically at higher pay rates.
• Tutor. Parents are paying top dollar for tutors. Consider tutoring a few of your favorite students if you're a teacher.
• Allocate. US Treasuries are paying attractive rates of 5% or more. If you carry a cash balance at your bank, transfer your money to US Treasuries to generate more income.
• Start. If you're in your twenties or thirties, start investing today. Let the long-term performance of the market help you achieve your financial goals. Today is the day you were worrying about yesterday.
• Participate. If your company offers a 401(k) plan, SEP-IRA, or any retirement account, participate. Other corporate benefits may include an employee stock purchase plan, restricted stock, a cash balance plan, or non-qualified deferred compensation.
• Budget. Do you know how and where you're spending your money? A budget can identify issues and opportunities to create a successful spending plan.
• Rent. Consider selling your home if it has substantial equity. You can redeploy your equity to meet your needs or reduce debt. As a renter, you don't need to worry about property taxes, repairs, or other big-ticket expenses.
• Plan. A financial plan can help you make informed and educated decisions with the above items. It will give you clarity and confidence to stay put or make changes.

Last, owning stocks is a must to maintain your lifestyle. Despite the volatility and corrections, stocks produce superior returns over time, generating an average annual return of 10% since 1926 and 12.3% over the past ten years. Stocks also outperform inflation, not so with bonds or cash.

Retirement is challenging, but you can eliminate many concerns with proper planning.

Casting all your anxieties on him, because he cares for you. ~ 1 Peter 5:7

August 8, 2023

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog; past performance does not guarantee future performance. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren't suitable for every investor. Prices and yields are for today only and are subject to change without notice.