Bert Doerhoff CPA says New Year’s Resolution Time—Avoid Dying Broke... Time for some retirement planning.

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Picture a tape measure with 95 inches on it which represents the joint life expectancy of the last to die for a married couple. Pick an age on the tape then look at how many years there are left to retirement.

Take a tape measure and divide it into three segments:

1. Cut off the first segment of the tape measure of life which represents the space from birth to current age. That is where you are today. Look at all those years and the amount saved to this point. People usually don’t start saving early and it is common for a couple at age 40 to have very little set aside for retirement.

2. Now cut off the second segment of the tape measure of life which represents the space from current age to expected retirement date. See how long that segment is compared to the first segment. For example someone currenty age 40 now who wants to retire at age 60 only has 20 years to set aside and grow enough savings to fund retirement. A good rule of thumb is a diversified investor will need to have $250,000 in savings for every $10,000 per year needed in retirement.

3. Now look at the remaining third segment of the tape measure of life which represents the time from expected retirement date until death. For a couple who retires at age 60 and has a joint life expectancy of age 95, they need enough set aside to fund retirement for 35 years. As life expectancy continues to increase there is a real possibility many people could be retired longer than they worked. If someone simply thinks back over how much money is it takes to make ends meet during the working years, it is easy to see how tough it is to adequately fund retirement.

Don’t forget that inflation will double your cost of living every 25-30 years in retirement so a good investment plan must produce an ever increasing cash flow just to maintain your lifestyle.

This year consider a New Year’s Resolution to make changes and not die broke.    

Bert Doerhoff CPA, the founder of Aura Wealth Advisors, is a fee based investment advisor who works with families and small business owners to help them protect and grow wealth for life. He designs comprehensive tailored investment solutions with strategic defensive investment approaches that retain growth potential. Guided by the fiduciary standards he works with clients to build a legacy and deliver ever increasing cash flow in retirement that will protect their lifestyle from the effects of inflation.

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